TMI Blog2016 (2) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... dabad on the appeals of assessee for A.Ys.2010-11 2012-13. Since, common issues are involved, therefore, we heard both the appeals together and it may be appropriate to dispose of them by this common order. 2. First we take ITA No.2401/Ahd/2015 i.e. appeal for A.Y. 2012-13. The grounds of appeal taken by assessee are not in consonance with Rule 8 of ITAT Rules, 1963. They are descriptive and argumentative in nature. In brief, the grievance of the assessee is that ld. CIT(A) erred in denying the claim of assessee for grant of deduction u/s.80P(2)(a)(i) on a sum of ₹ 3,77,515/- which was earned by the assessee as interest income on fix deposits with the banks. 3. The brief facts of the case are that the assessee is a Co-operative Society registered under Gujarat Co-operative Society Act, 1961 carrying on the business of providing credit facilities to its member. It has filed its return of income on 29th of September, 2012 declaring total income at NIL. The case of the assessee was selected for scrutiny assessment and a notice u/s.143(2) of the Income Tax Act was issued and served upon the assessee. On scrutiny of the accounts, it revealed to the Assessing Officer that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Board of Direct Taxes, on the above given subject. 2. In this regard, I have been directed to state that sub-section(4) of section 80P provides that deduction under the said section shall not be allowable to any cooperative bank other than a primary agricultural credit society or a primary cooperative agricultural and rural development bank. For the purpose of the said subsection, co-operative bank shall have the meaning assigned to it in Part V of the Banking Regulation Act, 1949. 3. In Part V of the Banking Regulation Act, 'co-operative bank' means a State cooperative bank, a Central co-operative bank and a primary co-operative bank. 4. Thus, if the Delhi Co-op. Urban Thrift and Credit Society Ltd. does not fall within the meaning of 'co-operative bank' as defined in Part V of the Banking Regulation Act, 1949, sub-section (4) of section 80P will not apply in this case. 5. This is issued with the approval of the Chairman, Central Board of Direct Taxes. 7. From the above clarification, it can be gathered that sub-section (4) of section 80P will not apply to an assessee which is not a co-operative bank. In the case clarified by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account. The assessee is a Co-operative Society providing credit facilities to its members. It is not carrying on any other business. The interest income earned by the assessee by providing credit facilities to its members is deposited in the banks for a short duration which has earned interest. Therefore, whether this interest is attributable to the business of providing credit facilities to its members, is the question. 8. In this regard, it is necessary to notice the relevant provision of law i.e., Section 80P(2)(a)(i):- 80P Deduction in respect of income of co- operative societies:- (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. (2) The sums referred to in sub-section (1) shall be the following, namely: (a) in the case of co-operative society engaged in- (i) carrying on the business of banking or providing credit facilities to its members, or (ii) to (vii) ** ** ** t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies to its members. The interest income so derived or the capital, if not immediately required to be lent to the members, the society cannot keep the said amount idle. If they deposit this amount in bank so as to earn interest, the said interest income is attributable to the profits and gains of the business of providing credit facilities to its members only. The society is not carrying on any separate business for earning such interest income. The income so derived is the amount of profits and gains of business attributable to the activity of carrying on the business of banking or providing credit facilities to its members by a co-operative society and is liable to be deducted from the gross total income under Section 80P of the Act. 11. In this context when we look at the judgment of the Apex Court in Totgars Cooperative Sale Society's case (supra), on which reliance is placed, the Supreme Court was dealing with a case where the assessee/Co-operative Society, apart from providing credit facilities to the members, was also in the business of marketing of agricultural produce grown by its members. The sale consideration received from marketing agricultural produce of its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Assessing Officer. 7. On due consideration of the facts and circumstances, we find that issue in dispute is purely covered in favour of the assessee partly by the decision of Hon ble Karnataka High Court wherein it has been specifically held that interest income earned by the Credit Co-operative Society from deposits made with scheduled bank would also qualify for grant of deduction u/s.80P(2)(a)(i) of the Income Tax Act. Therefore, we allow the appeal of the assessee and direct the Assessing Officer to grant deduction u/s.80P(2)(a)(i) of the Income Tax Act and the interest income of ₹ 3,77,517/-. 8. Now we take ITA No.2400/Ahd/2015 i.e. appeal for A.Y. 2010-11. 9. In this appeal, the grievance of the assessee is that ld. CIT(A) has erred in upholding the denial of deduction u/s.80P(2)(a)(i) of the Income Tax Act of ₹ 56,359/- which was earned by the assessee as interest income. 10. The brief facts of the case are that assessee has filed its return of income on 08.10.2010 declaring total income at Nil. The ld. Assessing Officer has passed an assessment order u/s.143((3) of the Act on 07.12.2012. The ld. Assessing Officer has held that assessee society is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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