TMI Blog2020 (10) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... Certificate issued by the Registrar of Cooperative Societies. Once Jaipur Central Cooperative Bank is found to be a Cooperative Society, the interest received from the said Cooperative Bank/Society is eligible for deduction under section 80P(2)(d). As relying on SHREE KESHORAI PATAN SAHAKARI SUGAR MILL AND VICE-VERSA [ 2018 (2) TMI 499 - ITAT JAIPUR] held Jaipur Central Cooperative Bank is a Cooperative Society registered under Cooperative Societies Act, the interest received by the assessee from the said Cooperative Bank is eligible for deduction under section 80P(2)(d) of the Act. The disallowance/addition made by the AO and confirmed by the ld. CIT (A) is deleted. - ITA No. 767/JP/2019 - - - Dated:- 15-10-2020 - Shri Vijay Pal Rao, Judicial Member For the Assessee : Shri Brijesh Agarwal For the Revenue : Smt. Chanchal Meena (Addl. CIT) ORDER PER VIJAY PAL RAO, JM : This appeal by the assessee is directed against the order dated 25th March, 2019 of ld. CIT (A)-2, Jaipur for the assessment year 2015-16. The assessee has raised the following grounds :- 1. That the Appellate order dated 25.03.2019 of the ld. CIT (A)-2, Jaipur is unjustified, ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rival submissions and careful perusal of the orders of the AO as well as the impugned order of the ld. CIT (A), it is noted that the ld. CIT (A) has not disputed the claim of the assessee in respect of the interest received from Jaipur Central Cooperative Bank as allowable in view of section 80P(2)(d) if the said cooperative bank is a Cooperative Society. The claim of the assessee was denied by the ld. CIT (A) in para 2.3 and 2.3.1 as under :- 2.3. I have perused the facts of the case, the assessment order and the submissions of the appellant. On perusal of overall facts, it is seen that the Assessing Officer disallowed deduction under section 80P in respect of interest received from M/s. Jaipur Central Co-operative Bank by holding that the same is not allowable in view of the section 80P(2)(d). 2.3.1. Ld. Authorized Representative argued that this interest is allowable under section 80P(2)(a)(i). I find that under section 80P(2)(a)(i) only interest received from credit facility to its members is allowed. Interest received is on FDR with Co-operative Bank. The appellant has not provided any documents which prove that M/s. Jaipur Central Cooperative Bank is a Co-operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the interest income on investment in such cooperative bank u/s 80P(2)(d) the Mumbai Bench of this Tribunal in case of Lands End Co-operative Housing Society Ltd. vs. ITO (Supra), after considering the decision of the Hon ble Supreme Court in case of Totagar s Co-operative Sale Society Ltd. Vs. ITO (Supra) has considered and decided this issue in para 8.3 as under:- 8.3 We have heard the rival submissions and perused the material on record. We find that the CIT(A) enhanced the income of the assessee by rejecting the deduction u/s 80P(2)(d) of the Act of ₹ 14,88,107/- being interest on investment with other Coop. banks by following the decision in the case of Bandra Samruddihi Co-operative Housing Society Ltd.(Supra) which was passed on the basis of the decision passed by the Hon'ble Supreme Court in the case of Totagar's Co-operative Sale Society Ltd. In the case of Totagar's Co-operative Sale Society Ltd v/s ITAT (supra) the Hon'ble Supreme Court while interpreting the section 80P(2)(a)(i) of the Act held that surplus funds not immediately required in the business and invested in the short term deposit would be assessable under the head income from o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the head business whereas for claiming u/s 80P(2)(d) it must have income of interest and dividend on investments with other Co-operative society may or may not be engaged in the banking for providing credit facilities to its members and the head under which the income is assessable is not material for the claim of deduction under this section. Now will evaluate the assessee's case in the light of the decision of the Hon'ble Supreme court. The Honble Supreme Court in the case of Totagar's Co-operative Sale Society Ltd.(Supra) held that a society has surplus funds which are invested in short term deposits where the society is engaged in the business of banking or providing credit facilities to its members in that case the said income from short term deposits shall be treated and assessed as income from other sources and deduction u/s 80(P)(2)(a)(i) would not be available meaning thereby that deduction u/s 80(P)(2)(a)(i) is available only in respect of income which is assessable as business income and not as income from other sources. Whereas in distinction to this , the provisions of section 80(P)(2)(d) of the Act provides for deduction in respect of income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is under that head that the interest paid on the loan taken from the bank is deducted. The net amount of interest contemplated by Section 80AB should take in the net amount arrived at after meeting the expenses deductible from that item under the provisions of the Act as explained above. That is not the case here. Therefore, Section 80AB has no application to the facts of these cases. The interest paid on the loan transactions has to be deducted from the business income, and not from the interest received from the bank on the fixed deposits. The assessees were therefore right in the submissions which they made before the Commissioner of Income-tax in the revision petitions which they filed. This aspect of the matter has been overlooked by the Commissioner in passing the order, exhibit P-5.' 8.1 Similarly, in the case of Doaba Co-operative Sugar Mills Ltd (supra), the Punjab Haryana High Court has held as under: '5. The contention of Mr. Gupta, learned counsel appearing for the Revenue, is that the Tribunal was wrong in allowing deduction under Section 80P(2) (d) of the Act because it is not established that the assessee had derived the interest by investing al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operative society. Therefore, we do not agree with the argument advanced by learned counsel for the Revenue. In our opinion, the learned Tribunal was right in law in allowing deduction under Section 80P(2)(d) of the Income- tax Act, 1961. in respect of interest of RS. 4,00,919 on account of interest received from Nawanshaln Central Co-operative Bank without adjusting the interest paid to the hank. Therefore, the reference is answered against the Revenue in the affirmative and in favour of the assessee.' 8.2 Moreover, the Bombay High Court in the case of Bai Bhuriben Lallubhai (supra) has held that the purpose for which the assessee borrowed money had no connection whether direct or indirect with the income which she earned from the fixed deposit and that she was not entitled to the deduction claimed under Section 12(2). The High Court held that if an assessee had no option except to incur an expenditure in order to make the earning of an income possible, then undoubtedly the exercise of that option is compulsory and any expenditure incurred by reason of the exercise of that option would come within the ambit of section 12(2) of the Indian Income-Tax Act but where the option ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty Bank. Therefore, according to Sec. 80P(2)(d) of the I.T. Act, the said amount of interest earned from a Co-operative Society Bank would be deductable from the gross income of the Co-operative Society in order to assess its total income. Therefore, the Assessing Officer was not justified in denying the said deduction to the assessee respondent. 11. The learned counsel has relied on the case of The Totgars Cooperative Sale Society Ltd. Vs. Income Tax. Officer,(supra). However, the said case dealt with the interpretation, and the deduction, which would be applicable under Section 80P(2)(a)(i) of the I.T. Act. For, in the present case the interpretation that is required is of Section 80P(2)(d) of the I.T. Act and not Section 80P(2)(a)(i) of the I.T. Act. Therefore, the said judgment is inapplicable to the present case. Thus, neither of the two substantial questions of law canvassed by the learned counsel for the Revenue even arise in the present case. 6.4 Thus, the Hon ble High Court has held that the Co-operative Bank is considered to a cooperative society for the purpose of section 80P(2)(d). Accordingly, in view of the decisions as cited (supra), we do not find ..... X X X X Extracts X X X X X X X X Extracts X X X X
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