9911796707
TMI Blog2025 (3) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... e Sale Society Ltd. reported in 322 ITR 283, wherein it was held that interest earned from investments made in any bank not being cooperative society, is not deductible under section 80P(2)(d) of the Act? (ii) "Whether on facts and circumstances of the case and in law, the Hon'ble Tribunal had erred in dismissing the appeal of the Revenue by overlooking the fact that the Hon'ble High Court of Karnataka in the case of Totgars Cooperative Sale Society (2017) 395 ITR, has held that the intention of legislature is clear that cooperative banks are not specie of genus cooperative society, which would entitle to exemption or deduction under the special provisions of chapter VI-A in the form of section 80P of the Act. This finding has also been approved by the Hon'ble High Court of Gujarat in the case Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd. for A.Y.2015-16 in R/SCA No.20585 of 2019?" (iii) Whether on facts and circumstances of the case and in law, the learned Tribunal had erred in law in relying upon the decision of Hon'ble Jurisdictional High Court in the case of Surat Vankar Sahkari Sangh Ltd. vs ACIT [2016] 72 taxmann.com 169 (Guj) which pertained to &A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessee which was a Co-operative Bank was not eligible for deduction under Section 80P(2)(d) of the Income Tax Act. Mr.Sanghani, learned Senior Standing Counsel submitted that the character and the nature of the income determines its taxability or otherwise. According to Mr.Sanghani, learned Senior Standing Counsel, as held in Totgars (Supra), a Co-operative Bank does not fall under the purview of "Co-operative Society" referred to in Section 80P(2)(d) of the Act. In the present case, the Assessee has earned interest income from such co-operative bank and claimed deduction under Section 80P(2)(d) of the Act and therefore, following the decision of Totgars (Supra), the Tribunal has erred in confirming the decision of the CIT(Appeals) which has allowed the deduction. 5. DISCUSSION & FINDINGS : - The present issue has been discussed threadbare and in painstaking detail in the decision in the case of Principal Commissioner of Income -tax Vs. Ashwinkumnar Arban Co-operative Society Ltd. reported in (2024) 168 taxmann.com 314 (Gujarat) wherein, it has been held as under :- "31. The Hon'ble Apex Court in case of Kerala State Cooperative Agricultural & Rural Development Bank L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the Kerala High Court in A.P. Varghese had categorically stated that the "Kerala State Co-operative Bank" is a "state co-operative bank" as defined under the NABARD Act, 1981. Therefore, the appellant bank has not been declared as a state cooperative bank under the provisions of NABARD Act, 1981. Further, in the case of Mavilayi Service Cooperative Bank, this Court observed that a co-operative bank would engage in banking business on obtaining a licence under Section 22(1b) of the BR Act, 1949. In the instant case, the appellant herein is not a co-operative bank having regard to the aforesaid conspectus of the provisions so as to require a licence under the aforesaid provision for carrying on banking business. In the circumstances, the question could still arise as to whether the appellant herein is entitled to benefit of deduction under Section 80P of the Act. 14.2. In Mavilayi Service Co-operative Bank, it has been observed that Section 80P of the Act is a beneficial provision which was enacted in order to encourage and promote the growth of the co-operative sector generally in the economic life of the country and therefore, has to be read liberally in favour of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er independently of or in addition to those activities, then profits and gains attributable to such activity are also liable to be deducted, but subject to the cap specified in subclause (c). viii) Eighthly, sub-clause (d) states that where interest or dividend income is derived by a cooperative society from investments with other cooperative societies, the whole of such income is eligible for deduction, the object of the provision being furtherance of the co-operative movement as a whole. 14.4. In paragraph 42 of Mavilayi Service Co-operative Bank, this Court observed that the object and purpose of sub-section (4) of Section 80P is to exclude only cooperative banks that function on par with other commercial banks i.e. which lend money to members of the public. That on a reading of Section 3 read with Section 56 of the BR Act, 1949, the primary co-operative bank cannot be a primary agricultural credit society. As such co-operative bank must be engaged in the business of banking as defined by Section 5(b) of the BR Act, 1949, which means accepting, for the purpose of lending or investment, of deposits of money from the public. Also under Section 22(1)(b) of the BR Act, 1949, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the learned ITAT has held as under : - "4. I have considered the rival submissions of both the parties and have gone through the orders of the authorities below. I find that the Assessing Officer made addition of Rs.9,56,635/- by disallowing the deduction under Section 80P(2)(d) of the Act. Such income was earned by the assessee on fixed deposit with Surat District Cooperative Bank. I further find that before the ld. CIT(A), the assessee filed detailed written submissions as has been recorded in para 4.1 of his order. The ld. CIT(A) by following the decision of Hon'ble Gujarat High Court in Sabarkantha District Co-operative Milk Producers Union Ltd. Vs CIT in Tax Appeal no. 473 of 2014 and other decisions of Ahmedabad Tribunal, allowed relief to the assessee. The ld. CIT(A) held that the assessee has furnished evidence that Surat District Cooperative Bank is a cooperative society registered under Gujarat State Cooperative Societies Act. I find that in a series of decisions, the various Benches of the Tribunals held that the cooperative banks are primarily cooperative societies and interest earned on deposits with such cooperative bank is exempt under Section 80P(2)(d) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
