TMI Blog2020 (6) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... There is no prohibition u/s 80P not to allow deduction to such co-operative societies in respect of these facilities provided to its members. The provisions of Sec. 80P(2)(a)(i) are applicable to a co-operative society which is engaged in carrying on banking business facilities to its members if it is not a co-operative bank. The ratio laid down in the judgment of Totagars Co-operative Sale Society Ltd. vs. ITO [ 2010 (2) TMI 3 - SUPREME COURT] cannot apply in present case as the facts are different in that case. Thus, the CIT(A) wrongly applied the ratio in present case. Therefore, interest on saving bank account of the members is business income and cannot be termed as income from other sources as it has direct nexus of this income wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with directions for appropriate relief. 3. The assessee is a registered cooperative society. The business activities of the society are giving loans and accepting deposits from the members only and derives income from interest. The assessee filed return of income for Assessment Year 2014-15 on 19/7/2014 declaring income NIL which was processed u/s 143(1) of the Income Tax Act, 1961. The assessee in its return of income has shown certain income and expenditure and claimed entire profit of ₹ 42,78, 591/- as exempt to tax and declared NIL income in its return of income. The income exempt to tax as claimed by the assessee included interest on fixed deposits from the Catholic Syrian Bank amounting to ₹ 9,85,138/-, Karur Vysya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee received from interest on FDR and ₹ 1,52,187/- as interest from saving bank account. The assessment was completed on 28/10/2016. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that there is a delay on 36 days which was explained by filing separate application for condonation of delay by the Ld. AR. The Ld. AR submitted that the assessee is a Thrift and Credit Society Ltd. registered under the Cooperative Act. It is into the business of landing and accepting deposits from the members. Income of the Society is mainly from interest. During assessment the Assessing Officer exempted the profit and loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is the prescribed head for incomes like interest. That does not means that the general conditions for allowing deduction against the other sources income would apply to such a situation also. When it is business income though it is an assessed under other sources, the principals applicable to the assessment of business income would apply. The Assessing Officer agreed that Society is into finance business and security deposits from members and lends loans to members. Income in that process is shown in the profit and loss account. Thus, the inviolable principal of mutuality those dealings are involved in the present working of the Society. The Ld. AR further submitted that the situation has to be looked in the way that whatever surplus is g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard was dismissed with the observations. On the basic point as to whether the assessment of interest income in the case of a Thrift and Credit Society Ltd. has to be done in the same manner as is done for the orthodox income under other sources. Thus, the Ld. AR pleaded that the appeal of the assessee be allowed. 6. The Ld. DR relied upon the assessment order and the order of the CIT(A). 7. We have heard both the parties and perused the material available on record. The delay of 36 days in filing the appeal is condoned as the reason given by the delay is genuine. Now we take up the appeal. The assessee is a registered Co-operative Society and the business activities of the society is giving of loans and accepting deposits from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts members. Therefore, where a co-operative society is engaged in carrying on business of giving loans and accepting deposits from its members, the income which relates to the business of these facilities to its members or providing credit facilities to its members will be eligible for deduction u/s 80P(2)(a)(i). There is no prohibition u/s 80P not to allow deduction to such co-operative societies in respect of these facilities provided to its members. The provisions of Sec. 80P(2)(a)(i) are applicable to a co-operative society which is engaged in carrying on banking business facilities to its members if it is not a co-operative bank. The ratio laid down in the judgment of the Hon ble Supreme Court in case of Totagars Co-operative Sale Soci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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