9911796707
Advanced Search 
TMI Blog2024 (11) TMI 423X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the last many years and it has been allowed also by the Department. 4. The assessee had claimed deduction of Rs.55,06,948 under Chapter VI-A. The ld. AO noted that assessee being a co-operative credit society had earned income from interest received from members on loan and has made FDs in various co-operative banks and it has earned interest of Rs.10,10,768/- which was maintained with co-operative banks. The ld. AO had disallowed the interest received from co-operative banks on FDs amounting to Rs.10,10,768 as is not eligible for deduction u/s.80P. The ld. CIT(A) too has confirmed the said disallowance following the decision of Totgars Co-Operative Sale Society Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess 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 80P(2)(a)(i) is not in respect of interest received from members. In this case, we are only concerned with interest which accrues on funds not required immediately by the assessee(s) for its business purposes and which have been only invested in specified securities as "investment". Further, as stated above, assessee(s) markets the agricultural produce of its members. It retains the sale proceeds in many cases. It is this "retained amount which was payable to its members, from whom produce was bought, which was invested in short- term deposits/securities. Such an amount, which was retained by the assessee-Society, was a liability and it was shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility 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 in the cooperative banks and therefore, deduction is to be denied. Here, we are not dealing with, whether assessee can be treated as cooperative bank or not. Here the issue is, assessee had made investment in the cooperative banks, whether interest earned from such investment falls in the category of interest earned from cooperative society or not so as to get benefit u/s 80 P(2)(d)? 5. Section 80P provides that in case of assessee being a cooperative society, the gross total income which includes any income referred to sub-section 2 shall be deducted in accordance with subject to provision of this section. Sub-section 2 of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties 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 Society Ltd., Vs. Income Tax Officer in Civil Appeal Nos.1622 to 1629/2010 decided by the Apex Court on 08.02.2010 or not? 2. Whether, in the facts and circumstances of the case, the Tribunal is justified in not following the decision rendered by the Hon'ble Supreme Court in Civil Appeal No. 1622 of 2010, wherein the Apex Court has to be held that the words used in Section 80P "the whole of the amount of profits and gains of business" emphasise that the income in respect of which deduction is sought must constitute the operational income and not the other income which accrues to the societ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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) 442 ITR 141 (Kerala) dated 01.11.2021, wherein one of the question before the Hon'ble High Court was, whether the interest income earned from deposits with the banks is eligible for deduction u/s 80P(2). The Hon'ble Kerala High Court has also considered the judgment of Hon'ble Supreme Court in the case of Totagars Cooperative Societies Ltd. 322 ITR 323, wherein the Hon'ble High Court has held that interest income earned from district cooperative bank or state cooperative bank, come within the ambit of section 80P (2)(d), therefore the income constitutes income from othe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
