TaxTMI 
TaxTMI 
2018 (4) TMI 1678
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....assessee which is a co-operative society had filed its return of income on 23/09/2014, declaring total income of Rs. 10,87,320/- after claiming deduction of Rs. 50,000/- under section 80P of the Act. The case of the assessee was taken up for scrutiny assessment under section 143(2) of the Act. 3. During the course of the assessment proceedings, the Assessing Officer observed that the assessee had earned an amount of Rs. 27,72,529/- from its investments held with co-operative banks and Bank of India. It was observed by the Assessing Officer that the said interest was transferred to various funds and only an amount of Rs. 23,976/- was shown as "income from other sources" in the return of income. The assessee submitted before the Assessing Officer that the interest income on fixed deposits with banks in co-operative sector was not included in the gross total income while computing the taxable income for A.Y. 2014-15, as the same was fully exempt under section 80P(2)(d) of the Act. It was claimed by the assessee that section 80P(2)(d) exempted "sums in respect of any income or dividends derived by the cooperative society from its investments with any other cooperative society". Howeve....
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....of the Hon'ble Supreme Court in the case of Totgars Co-operative Sale Society Ltd. vs. ITO (2010) 322 ITR 283(S.C), wherein the Hon'ble Apex Court had held as under:- "10. At the outset, an important circumstance needs to be highlighted. In the present case, the interest held not eligible for deduction under Section 80P(2)(a)(i) of the Act is not the interest received from the members for providing credit facilities to them. What is sought to be taxed under Section 56 of the Act is the interest income arising on the surplus invested in short term deposits and securities which surplus was not required for business purposes. Assessee(s) markets the produce of its members whose sale proceeds at times were retained by it. In this case, we are concerned with the tax treatment of such amount. Since the fund created by such retention was not required immediately for business purposes, it was invested in specified securities. The question, before us, is whether interest on such deposits/securities, which strictly speaking accrues to the members' account, could be taxed as business income under Section 28 of the Act? In our view, such interest income would come in the category....
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.... bought, which was invested in short-term deposits/securities. Such an amount, which was retained by the assessee-Society, was a liability and it was shown in the balance-sheet on the liability-side. Therefore, to that extent, such interest income cannot be said to be attributable either to the activity mentioned in Section 80P(2)(a)(i) of the Act or in Section 80P(2)(a)(iii) of the Act. Therefore, looking to the facts and circumstances of this case, we are of the view that the Assessing Officer was right in taxing the interest income, indicated above, under Section 56 of the Act." The CIT(A) further relied on the orders of the coordinate benches of the ITAT, Mumbai in the case of (i) Shri Saidatta Cooperative Credit Society Ltd. vs. ITO (ITA No. 2379/MUM/2015, dated 15/01/2016); and (ii) Vaibhav Cooperative Credit Society vs. ITO (ITA No. 5819/MUM/2014, dated 17/03/2017). It was, thus, observed by the CIT(A) that in a case where the funds created by the activities of the co-operative housing society, which are not required immediately for its intended purpose are invested for the purpose of earning interest, than as has been held by the Hon'ble Apex Court in the case of Totga....
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....ia (SBI) vs. CIT (2016) 389 ITR 578 (Guj) and the CBDT Circular No. 14, dated 28/12/2006, wherein the issue as regards withdrawal of tax benefit available to certain co-operative banks had been deliberated upon by the CBDT. Lastly, the ld. AR in order to support his contention that the decision of one High Court is neither a binding precedent for another High Court nor for Courts or Tribunals outside its own territorial jurisdiction, relied on the judgment of the Hon'ble High Court of Bombay in the case of CIT vs. Thana Electricity Supply Ltd. [(1994) 206 ITR 727 (Bom). The ld. A.R taking support of the aforesaid judicial pronouncements, submitted that the Hon'ble High Court had observed that in a case there is a conflict between the decisions of the Non-Jurisdictional High Courts, then the view which is in favour of the assessee is to be adopted, in preference to that against him. Per contra, the ld. Departmental Representative (for short, 'D.R') supported the orders of the lower authorities. The ld. D.R relied on the judgment of the Hon'ble High Court of Karnataka in the case of Pr.CIT vs. Totgars Co-operative Sale Society Ltd. (2017) 395 ITR 611(Kar). The ld. D.R to ....
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....e 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)............................................................................................ (b)............................................................................................ (c)............................................................................................ (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;" Thus, from a perusal of the aforesaid Sec. 80P(2)(d) it can safely be gathered that income by way of interest income derived by an assessee cooperative society from its investments held with any other cooperative society, shall be deducted in computing the total income of the assessee. We may herein observe, that what is relevant for claim of deduction under Sec. 80P(2)(d) is that the interest income shoul....
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....P(2)(d) for the interest income derived from its investments held with a cooperative bank is covered in favour of the assessee in the following cases: (i) Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum) (ii) M/s C. Green Cooperative Housing and Society Ltd. Vs. ITO- 21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated 31.03.2017 (iii) Marvwanjee Cama Park Cooperative Housing Society Ltd. Vs. ITO Range- 20(2)(2), Mumbai (ITA No. 6139/Mum/2014, dated 27.09.2017. We further find that the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Hon'ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), had also held that the interest income earned by the assessee on its investments held with a co-operative bank would be eligible for claim of deduction under Sec. 80P(2)(d) of the Act. Still further, we find that the CBDT Circular No. 14, dated 28.12.2006, as had been relied upon by the ld. A.R, also makes it clear beyond any scope of doubt, that the purpose behind enactment of sub-section (4) of Sec. 80P was to provide tha....