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TMI Blog2011 (6) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest income earned from the Non-SLR investments. 3. Briefly stated the facts are as follows:- The assessee is a cooperative bank. It is engaged in the business of banking. For the concerned asst. year, return of income was filed declaring NIL income after claiming deduction u/s 80P to the tune of ₹ 62,57,450/-. The case of the assessee was selected for scrutiny and the assessment u/s 143(3) was completed vide order dated 19.11.2007 determining the total income at ₹ 17,10,000/-. In the scrutiny assessment completed, the claim of deduction u/s 80P was restricted to ₹ 45,47,450/- instead of ₹ 62,57,450/- claimed by the assessee. The reason for restricting the claim u/s 80P was that the assessee had earned interest i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ahakari Bank Ltd., allowed the appeal of the assessee. 7. The revenue being aggrieved by the order of the first appellate authority is in appeal before us. 8. The learned DR submitted that the first appellate authority has erred in allowing the appeal of the assessee by referring to the order of the Tribunal and the High Court. It was submitted that in the latest judgment of the Hon'ble Supreme Court in the case of The Totgars Cooperative Sale Society Limited v ITO 322 ITR 283, it has been categorically held that interest income earned by the assessee did not qualify for deduction u/s 80P(2)(a)(i) of the Act and the same is to be brought to tax u/s 56 of the Act. 9. The learned AR, on the other hand, submitted that the assessee is a coop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unting bills of exchange, issue cheques, demand drafts (DD), Pay Orders, Gift cheques, lockers, bank guarantees etc. 3. Cooperative Banks can act as clearing agent for cheques, DDs, pay orders and other forms. 4. Banks are bound to follow the rules, regulations and directions issued by Reserve Bank of India (RBI). 1. As per the bye laws of the cooperative society. 2. Society cannot open savings bank account, current account, issue letter of credit, discounting bills of exchange, issue cheques, demand drafts, pay orders, gift cheques, lockers, bank guarantees etc. 3. Society cannot act as clearing agent, for cheques, DDs, pay orders and other forms. 4. Society are bound by rules and regulations as specified by in the cooperative societies a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivity. 10.2 Income from investments in government securities, fixed deposit with banks, investment in Indira Vikas Patra/Kisan Vikas Patra and other approved mode of investment out of the surplus funds available out of working capital including voluntary reserves are an integral part of the normal banking activities carried on by cooperative banks and the banks are entitled to grant of deduction in respect of such income under the main provisions of section 80P(2)(a)(i) of the Act. The Hon'ble Karnataka High Court in the case of CIT v Sri Ram Sahakari Bank Ltd. 266 ITR 632 has held that interest and dividend income derived out of investment in NSC, IVP, KVP, short term fixed deposit in banks and shares of Maharashtra Finance Cooperation o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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