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TMI Blog2025 (1) TMI 1180X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(Appeals)-NFAC, Delhi dated 12.06.2024 and 18.06.2024 for the assessment years 2016-17, 2017-18 and 2018-19 in denying deduction u/s 80P(2)(d) of the Act on certain interest incomes derived by the assessee. 2. Ld. Counsel for the assessee, at the outset, referring to page 2 of the assessment order for the AY 2016-17 submitted that the Assessing Officer denied deduction u/s 80P in respect of interest income of Rs. 47,93,807/- received on FDs with banks, interest from cooperative bank and interest on savings accounts from banks. Ld. Counsel for the assessee submits that the Assessing Officer denied deduction u/s 80P(2)(a)(i) of the Act and assessed the entire interest income under the head "income from other sources". However, the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mits that the Hon'ble Karnataka High Court noted the issue before the Hon'ble Supreme Court in the case of Totagars Cooperative Sale Society Ltd. Vs. ITO (322 ITR 283) by observing that the issue before the Hon'ble Supreme Court was the allowability of interest as deduction was u/s 80P(2)(a)(i) and not under 80P(2)(d) of the Income Tax Act, 1961 and, therefore, the interest earned by assessee cooperative society on the investments made with cooperative bank is eligible for deduction u/s 80P(2)(d) of the Act. Therefore, the contention of the Ld. Counsel for the assessee is that the deduction u/s 80P(2)(d) is to be allowed on the income from cooperative banks and cooperative societies. It is further submitted that if the income is being treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cooperative banks and (c) interest on savings bank account used by the assessee in scheduled banks for day to day business operations. 8. In so far as the interest from fixed deposits with scheduled banks is concerned the issue came up for adjudication before the Tribunal in assessee's own case in ITA No.3034/Del/2019 for the AY 2013-14 and the Tribunal by order dated 11.09.2023 following the decision of the jurisdictional High Court in the case of Mantola Cooperative Thrift & Credit Society Ltd. Vs. CIT (2014) (90 CCH 0075) held that the deduction u/s 80P on interest income earned from deposits placed with scheduled banks other than the banks in the nature of cooperative societies is not allowable. However, following the very same judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d would be taxable under the head income from other sources and thus would be taxable u/s 2(24) of the Act. 8. In the light of the judgment of Hon'ble Delhi High Court in the case of Mantola Cooperative Thrift & Credit Society Ltd. (supra), we do not see any merit in the plea of the assessee for claim of deduction. However, we notice that there is no discussion or finding on allowability of expenditure u/s 57 of the Act incurred in relation to earning of interest taxable income u/s 56 of the Act. Hence, we consider it expedient to remit the matter back to the file of the AO for re-determination of taxable income for giving appropriate allowances towards expenditure connected to the earning of interest income in accordance with law." 9. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of M/s Veer Cooperative Group Housing Society vs. ITO in ITA No.2787 & 2788/Del/2018 dated 4.9.2018 the cooperative bench of the Delhi Tribunal held that the interest earned by the assessee a cooperative society from its investment with other cooperative societies would be entitled for deduction u/s 80P(2)(d) of the Act. Thus, respectfully following the above said decisions, we hold that the assessee is entitled for deduction u/s 80P(2)(d) in respect of interest income earned by the assessee from cooperative bank/societies other than scheduled and nationalized banks. 11. In so far as the interest income earned by the assessee on the savings bank accounts which were operated for day to day operations of the assessee is concerned in on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the CIT(A)." Ld. Counsel for the assessee submits that even after denial of deduction u/s 80P on the interest income earned on fixed deposits the taxable income according to the assessee should not exceed Rs. 19,84,618/- as against Rs. 75,05,223/-. On hearing both the sides, we observe that this ground raised by the assessee appears to be consequential in nature. However, these grounds are restored to the file of the Assessing Officer to examine the contentions of the assessee in accordance with law while passing the consequential orders. 14. Since the issues in appeal for AY 2017-18 and 2018-19 which are common are similar to the issues in appeal for AY 2016-17 the decision taken therein for AY 2016-17 shall apply mutatis mutandis fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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