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TMI Blog2024 (11) TMI 423X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee against order dated 05/02/2024 passed by NFAC, Delhi for the quantum of assessment passed u/s.143(3) for the A.Y.2018-19. 2. In the grounds of appeal, assessee has raised the following grounds:- 1. The learned CIT Appeals National Faceless Appeal Centre, Delhi has erred in confirming the order of the AO which disallowed the deduction u/s 80P(2)(d) for the Interest received by the Appellant from Co-operative Banks to the tune of Rs 10,10,768/- 2. The learned CIT Appeals National Faceless Appeal Centre, Delhi failed to appreciate the fact that the said Interest received is also eligible for the deduction u/s 80P(2)(a)(i) itself 3. The appellant craves leave to add, alter, amend, and modify the aforesaid grounds of appeal. 3. The brief facts are that the assessee is BSNL Employees Co-operative Credit Society Ltd. Kalyan. The BSNL Employees are the members of the Society. The membership of the Society is restricted to only the Employees of BSNL. The deposits in the Society are generated through deduction from Salary and the Advances are strictly given to members only. The Society was established in 1955 and has been consistently claiming the deduction u/s. 80P(2)(a) for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the same is pending adjudication. Therefore, the same cannot be accepted. iii. The case of the appellant is squarely covered by the judgment of the Hon'ble Supreme Court in the case of M/s. The Totgars Cooperative Sale Society Limited Vs. Income Tax Officer, Karnataka wherein, it was held as under The Parliament has included specifically business profits into the definition of the word income Therefore, we are required to give a precise meaning to the words profits and gains of business mentioned in Section80P(2) of the Act. In the present case, as stated above, assessee- Society regularly invests funds not immediately required for business purposes Interest on such investments therefore, cannot fall within the meaning of the expression profits and gains of business Such interest Income cannot be said also to be attributable to the activities of the society, namely, carrying on the business of providing credit facilities to its members or marketing of the agricultural produce of its members. When the assessee-Society provides credit facilities to its members, it earns interest income. As stated above, in this case, interest held as ineligible for deduction under Section 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .80P(2)(d) is relying upon the judgment of the Hon ble Supreme Court in the case of Totagars Cooperative Societies Ltd. (supra) and decision of the Hon ble Karanataka High Court in the case of PCIT vs. Totagars Cooperative Sale Society (395 ITR 611). Now this issue is covered by the decision of Tribunal in the case of Premium Tower Co-operative Housing Society Ltd., wherein all these judgments have been discussed. For the sake of ready reference, the relevant portion of the order is reproduced hereunder:- 4. After hearing both the parties and on perusal of the impugned order, we find that the only issue is with respect of allowability of deduction of Rs.13,85,628/- claimed u/s. 80P(2)(d) on account of interest received by the assessee from various cooperative banks. The ld. CIT(A) has held that the provision of Section 80 P(2)(d) and Section 80 P(2)(a)(i) only extend the benefit of deduction towards income earned by cooperative society engaged in the business of providing banking facility to its members and does not extend to the interest received from the investments made in the cooperative banks. The ld. AO has invoked Section 80P (4) holding that since investments have been made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of Section 80P including Sub-section (4) had categorically held that cooperative banks are to be treated as cooperative society. In so far as deduction of interest earned on investment made in cooperative bank, Clause (d) of section 80P(2) provides that any income by way of interest on dividend derived from cooperative societies from its investment with any other cooperative societies, the whole of such income is deductable u/s 80P. The cooperative bank has been defined in part 5 of the Banking Regulation Act 1949. Section 56(ccv) provides that primary cooperative bank means cooperative societies other than a primary agriculture society. This view had come up for the Hon ble Karnataka High Court in the case of PCIT vs. Totagars Co-operative Sale Society (2017) 392 ITR 74 (Kar.) dated 5th Jan. 2017, wherein the Hon ble High Court had observed as under:- 1. Whether the learned Tribunal was justified in deleting the additions made by the Assessing Authority being the disallowed deduction claimed u/S 80P(2)(d) of the Income Tax Act and in the light of the decision of the Supreme Court with regard to the same exact assessee as the present one, namely, The Totgars Co-operative Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interest which the assessee respondent had earned was from a Co-operative Society Bank. Therefore, according to Sec. 80P(2)(d) of the I.T. Act, the said amount of interest earned from a Co- operative Society Bank would be deductable from the gross income of the Co-operative Society in order to assess its total income. Therefore, the Assessing Officer was not justified in denying the said deduction to the assessee respondent. 11. The learned counsel has relied on the case of The Totgars Co-operative Sale Society Ltd. Vs. Income Tax Officer, (supra). However, the said case dealt with the interpretation, and the deduction, which would be applicable under Section 80P(2)(a)(i) of the I.T. Act. For, in the present case the interpretation that is required is of Section 80P(2)(d) of the I.T. Act and not Section 80P(2)(a)(i) of the I.T. Act. Therefore, the said judgment is inapplicable to the present case. Thus, neither of the two substantial questions of law canvassed by the learned counsel for the Revenue even arise in the present case. 8. This view has further been reiterated by the judgment of Hon ble Kerala High Court in the case of PCIT vs. Percoorkada Service Co. Bank Ltd. (2022 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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