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State Bank of India Supervising Official’s Co-operative Credit Society Ltd. Versus The Income Tax Officer, Ward 3 (4) , Ahmedabad

2016 (3) TMI 1113 - ITAT AHMEDABAD

Eligibility of deduction u/s 80P(2) - Held that:- In the present case, it is undisputed that the amount in question, which was invested in SBI to earn interest, was not an amount due to any members. It was not the liability. It was also not shown as liability in their account. This amount, which is in the nature of profits and gains, was not immediately required by the assessee for lending money to the members, as there were no takers. Therefore, the assessee had deposited the money in SBI so as .....

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CIT-DR O R D E R PER SHAILENDRA K. YADAV, JUDICIAL MEMBER: This appeal by the assessee is directed against the order of the Commissioner of Income-Tax, Ahmedabad-1, Ahmedabad, dated 28.11.2013 for Assessment Year 2010-11, on the following grounds:- (1) That on facts, and in law, the learned CIT-Ahmedabad-I, has grievously erred in assuming jurisdiction u/s 263 of the Act. (2) That on facts, and in law, the learned CIT-Ahmedabad-I, has grievously erred in holding that appellant is not entitled t .....

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The order u/s 143(3) dated 05.11.2012 was passed after disallowing a deduction u/s 80P(2) to the extent of ₹ 1,09,632/- which was income derived from guesthouse. The assessed income, as per assessment order dated 05.11.2012, was ₹ 1.09,632/-. 2.1. Subsequently, it was found that the assessee had earned interest income of ₹ 42,14,854/- from SBI. The assessee has claimed this interest income from SBI as deductible u/s 80P of the Act. As per the provisions of section 80P(2)(d), a .....

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onsidered the contentions on behalf of the assessee, the CIT in concluding paragraph of his order held as under:- 8. Considering the above facts and findings, it is amply clear that the AO has erred in treating the interest income derived by the assessee from SBI as deductible u/s 80P(2) in contravention of the provisions of section 80P(2)(d), which are applicable to all co-operative societies. As a result thereof, there was substantial loss of revenue to the exchequer since the interest income .....

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the assessee by the order of Hon ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd vs. ITO, reported in [2015] 55 taxmann.com 447 (Karnataka), wherein in similar set of facts, the Hon ble Karnataka High Court held as under:- A Cooperative Society which is carrying on the business of providing credit facilities to its members, earns profits and gains of business by providing credit facilities to its members. The interest income so derived or the capital, if .....

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f 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. [Para 8] 10. In the instant case, the amount which was invested in banks to earn interest was not an amount due to any members. It was not the liability. It was not shown as liability in their account. In fact this amount which is in the nature of profits and gains, was not immediately required by the assessee for lending money t .....

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