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TMI Blog2024 (7) TMI 1592X X X X Extracts X X X X X X X X Extracts X X X X ..... that construction which favour the assessee must be adopted". Neither of the rival parties are able to submit any contrary order of the Hon'ble Jurisdictional High on this issue.
Interest from co-operative bank and the nationalized bank. But during the hearing, AR was unable to distinguish the part of interest related to co-operative bank and related to nationalized bank. Accordingly, we remit the matter to the file of AO for verification of interest income and allow the deduction u/s 80(P)(2)(d) to interest earned from cooperative bank. X X X X Extracts X X X X X X X X Extracts X X X X ..... s of refunds of the future years by the CPC which is initiated or may be initiated in future against your appellant in this respect till the disposal of this appeal." 3. Brief fact of the case is that the assessee is a co-operative credit society registered under Maharashtra Co-operative Societies Act, 1960 and providing credit facility to its members. The assessee availed the exemption under section 80P of the Act and filed the return accordingly. The proceedings under section 143(3) was initiated and finally, the order was framed and the total income is assessed at an amount of Rs. 2,24,44,873/- by holding that interest income of Rs. 2,24,19,754/- earned by the assessee from investment with co-operative banks is eligible for deduction under section 80P(2)(d) of the Act. Being aggrieved, the assessee filed an appeal before the ld. CIT(A).Ld. CIT(A) partly allowed the appeal. The deductions U/s 80P(2)(d) and 80P(2)(a)(i) related to interest of co-operative and nationalized bank are rejected. Only Rs. 50,000/- deduction U/s 80P(2)(C)(ii) of the Act is directed for deduction. Being aggrieved on the appeal order, the assessee filed an appeal before us. 4. The Ld.AR argued and filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lear that only a state co-operative bank would be within the scope and meaning of a banking company under section 2(c) of the BR Act, 1949 on obtaining licence under section 22 of the said Act. Conclusion: In the instant case, although the appellant society is an apex co-operative society within the meaning of the State Act, 1984, it is not a co-operative bank within the meaning of section 5(b) read with section 56 of the BR Act, 1949. In the result, the appeals filed by the appellant are allowed and the order(s) of the Kerala High Court and other authorities to the contrary are set aside. Consequently, we hold that the appellant is entitled to the benefit of deduction under section 80P of the Act. The questions for consideration are answered accordingly." 5.2. Hon'ble High Court of Bombay Tahnee Heights CHS Ltd. v. Income-tax Officer, [2023] 147 taxmann.com 335 (Bombay) "12. We cannot forget that the order of assessment passed in the case of the assessee was under section 143(3) of the Act. The Petitioner had specifically claimed the deduction under section 80P of the Act which was not only reflected in the return of income but also gone into specifically as can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue even arise in the present case. 12. For the reasons stated above, this Court does not find any merit in the present appeal. Hence, the appeal is dismissed." 5.4.ITAT Bangaluru Menasi Seemeya Group Gramagala Seva Sahakari Sanga Niyamitha ITA No. 609 & 610/Bang/2014 dated 6/2/2015, holding that the " co-operative bank cannot be excluded from the co-operative society engaged in the business of banking for the purposes of sec.80P(2)(d)of the Act." 5.5. ITAT-Mumbai-D Bench. Reserve Bank Staff and Officers co-op credit society Ltd vs ITO ITA Nos. 3114 to 3118/Mum/ 2023 date of pronouncement 22/01/2024 "013. For A.Y. 2017-18, the assessee filed its return of income at ₹nil on 7th November 2017, which was picked up for scrutiny and therefore, a show cause notice was issued to the assessee that why on interest income earned of ₹2,68,31,658/- being interest received from co-operative banks on which deduction under Section 80P is clamed should not be disallowed. After hearing the case of the assessee, the learned Assessing Officer disallowed the deduction under Section 80P(2)(a) as well as under Section 80P(2)(d) of the Act and assessed the total income at & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;s own members. This Court finds that the writ applicant had failed to disclose 'fully and truly' all material facts necessary for assessment, more particularly, to examine the nature of transaction vis-a-vis the deduction under section 80P(o)(/') and section 80P(2)(c/). The Court further finds that in fact it was the duty of the assessee to make fully and truly material disclosure at the time of assessment. Mere production of the audit report without further reference of the interest derived from other than Cooperative Societies would not fall in the category of material evidence which the Assessing Officer with due diligence could have discovered and therefore, the Assessing Officer has rightly invoked proviso to section 147 of the Act having satisfied for formation of belief which has bearing on the question of escape of income of the assessee from the assessment because of his failure or omission to disclose fully and truly all material facts. 22. So far as the submission of learned advocate Mr. Divatia for the writ applicant regarding in absence of 'tangible material' reopening as regards escapement of income from the assessment amounting to 'chang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and providing credit facilities to its members. Thus, there is no doubt that the writ applicant being society engaged in providing credit facilities is entitled to the deductions available in terms of section 80P(2)(a)(i) of the Income Tax act, 1961. The writ applicant has placed on record the original computation of Income along with audit report. Bare perusal of the same reveals that the writ applicant has disclosed Gross total income of Rs.2117353 as against that the writ applicant has disclosed deductions under Chapter VI-A of Rs. 2117353, thereby declaring Net taxable income 'NIL'. Now, under head of Gross Total Income, the deductions (Chapter VI-A) refers to section 80P providing credit facilities to its members is shown Rs. 2121935 whereby the assessee writ applicant has claimed eligible deductions of Rs.2121935 by pressing Allowable deductions of Rs. 2117353. The Audit report of the writ applicant further explains return of Income wherein amount of Rs.18,08,444:00 is shown under the head of interest derived from investment and Rs. 69,33,052 under the head of income derived from credit. The record of limited scrutiny reveals that under original assessment, the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 (except Assessment Year 1995-1996) holding that such interest income earned by the assessee was taxable under the head 'Income from Other Sources' under Section 56 of the Act and was not 100% deductible from the Gross Total Income under Section 80P of the Act, is not applicable to the present Assessment Years 2007-2008 to 2011-2012 involved in the present appeals and therefore, whether the Income Tax Appellate Tribunal as well as CIT (Appeals) were justified in holding that such interest income was 100 percent deductible under section 80P(2)(d) of the Act?" That while holding the aforesaid issues in favour of the revenue department, the Court followed the decision of the Hon'ble Supreme Court in the case of same asses see which was later on followed by this Court in the case of State Bank of India Vs . CIT, reported in MANU/GJ/1053/2016 : (2016) 389 ITR 578 (Guj), relevant par as are reproduced as under : "16. In case where the co-operative society is a bank, one of its objects would be to carry on the general business of banking. Like other banks, money would be its stock-in-trade or circulating capital and its normal business is to deal in money an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 80P(2)(d) of the Act. 17. Section 71 of the Gujarat Co-operative Societies Act, 1961 permits a society to invest or deposit its fund in the State Bank of India. Therefore, while investment in the State Bank of India is permissible under section 71 of that Act, there is no statutory obligation cast upon the appellant to deposit funds as a part of its business. The said provision also permits investment of funds in any co-operative bank or any banking company approved for this purpose by the Registrar on such conditions as the Registrar may from time to time impose. However, insofar as the provisions of the Income Tax Act are concerned, under section 80P(2)(d) thereof, it is only the in- come by way of interest or dividends derived by a cooperative society from its investments with any other cooperative society which is required to be deducted while computing the total income of the assessee." Thus, following the decision of the Hon'ble Supreme Court in the case of Totagar's Co-operative Sale Society ltd., (2010) 322 ITR 283(SC) it was held that interest earned from investments made in any bank, not being cooperative society, is not deductible under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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