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TMI Blog2025 (3) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... d rural development bank in accordance with the objects and by laws of the cooperative society and the same was approved by the Registrar of Cooperative Societies, West Bengal. not a primary cooperative bank. The activities pursued by the assessee during the Financial Year 2015- 16 relevant to the assessment year 2016-17 are identical and same like earlier years in conformity with the objects and also claimed deduction under section 80P(2) of the Act for the assessment year 2016-17. The ld. Assessing Officer disallowed an amount of Rs. 766,340/- out of the total claim of deduction of Rs. 26,14,728/- on the alleged ground that the tax liability of interest income on investment with any other bank deposits other than cooperative bank is treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Cooperative Societies, West Bengal. The assessee Society carried out two kinds of activities i.e. (i) selling fertilizer, seeds etc. to the farmer members of the society; and (ii) providing credit facilities to the members for agricultural activities. It was the further submission of the assessee that the appellant-Society also claimed deduction under section 80P(2) of the Act for the earlier assessment years, but the same was allowed by the Department in accordance with law. Ld. Counsel for the assessee further submitted that the only grievance of the assessee is that the interest income of Rs. 7,66,340/- has been received from the savings bank account of the assessee-society, which was not earned from the Cooperative Bank. He further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when it is invested with any other cooperative society. The Ld. AO also placed heavy reliance in the case of M/s. Totgars Cooperative Sale Society Ltd (supra) while disallowing the claim made by the assessee u/s. 80P(2)(a)(i) of the Act. I have perused the ratio laid down by the Hon'ble Apex Court in the case of M/s. Totgars Cooperative Sale Society Ltd (supra) and found that in that case the society is engaged in marketing of the agricultural produce by its members as per section 80P(2)(a)(iii) while carrying on the business of banking or providing credit facilities to its members u/s. 80P(2)(a)(i) of the Act. In that case, the Society retained the sale proceeds which was otherwise payable to its members from whom the produce was bought w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivities:" 8. Further, I also extract below the provisions of section 80P(2)(d) and (e) of the Act for reference: "(d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income; (e) in respect of any income derived by the cooperative society from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities, the whole of such income;" 9. From the plain reading of section 80P(2)(a)(i) of the Act, the whole amount of profits and gains of the business attributable to one or more of such activities shall be allowed as a deduction. Further, section 80P(2)(d) and 80P(2)(e) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Vavveru Cooperative Rural Bank Ltd vs. Chief Commissioner of Income Tax and Another [2017] 396 ITR 0371 (AP) in para 34 has discussed about the decision of the Hon'ble Supreme Court in the case of Totgar's Cooperative Sale Society Ltd (supra) and distinguished the facts while deciding the case. For the sake of brevity, I extract the relevant para 34 of the judgment of the Hon'ble Andhra Pradesh and Telangana High Court herein below: "34. The case before the Supreme Court in Totgar's Cooperative Sale Society Ltd.'s case (supra) was in respect of a co operative credit society, which was also marketing the agricultural produce of its members. As seen from the facts disclosed in the decision of the Karnataka High Court in T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aras 35 to 37, which reads as under:- "35. But, as rightly contended by the learned senior counsel for the petitioners, the investment made by the petitioners in fixed deposits in nationalized banks, were of their own monies. If the petitioners had invested those amounts in fixed deposits in other co-operative societies or in the construction of godowns and warehouses, the respondents would have granted the benefit of deduction under clause (d) or (e), as the case may be. 36. The original source of the investments made by the petitioners in nationalized banks is admittedly the income that the petitioners derived from the activities listed in sub-clauses (i) to (vii) of clause (a). The character of such income may not be lost, especially ..... X X X X Extracts X X X X X X X X Extracts X X X X
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