TMI Blog2021 (4) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... ed vs. ITO (Supra) is applicable in the facts of the present case then it should be held that the assessee is not entitled to deduction u/s. 80P in respect of interest from bank but if it is found that the judgment of Hon'ble Karnataka High Court rendered in the case of Tumkur Merchants Souhadra Credit Cooperative Ltd. Vs. ITO (Supra) is applicable then it should be held that the assessee is entitled to deduction u/s. 80P in respect of interest from bank Disallowance of pigmy commission paid to pigmy agents u/s. 40(a)(ia) - HELD THAT:- As before the lower authorities the assessee has not furnished details of payment and whether it is liable for TDS. Hence this issue is remitted to the AO for fresh consideration with a direction to the assessee to furnish the details of TDS. - ITA No. 171/Bang/2020 - - - Dated:- 5-4-2021 - Chandra Poojari, Member (A) For the Appellant : Ishwar S. Yanni, CA For the Respondents : Ganesh R. Ghale, Standing Counsel ORDER This appeal by the assessee is against the order dated 12.12.2019 of the CIT(Appeals), Hubballi, relating to assessment year 2013-14. 2. The concise grounds of appeal raised by the assessee are as foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax (Appeals) went on to direct the Ln AO to verify the TDS made on Interest on deposits paid to associate members in excess of ₹ 10,000.00. As the law is very clear for non making of TDS, but the Ld. CIT Appeal went one step ahead of Income Tax Act, which is not acceptable against the law. 7. Each of the above grounds is without prejudice to one another and the appellant craves leave to add, delete, amend or otherwise modify or withdraw one or more of the above grounds either before or at the time of hearing of this appeal. 3. The assessee is a Co-operative society registered under Karnataka Co-operative Societies Act. The ld. AR submitted that the assessee in its return of income for the AY 2013-14 declared total income as Nil after claiming deduction u/s. 80P(2)(a)(i) of ₹ 28,26,387.00. The AO denied the deduction on the ground that income of a co-op. society, including the profits and gains of banking or providing credit facility carried on by such co-op. society is not eligible for deduction if it is a co-op. bank within the meaning of section 80P(4) of the Act. 4. The CIT(Appeals) agreed with the contention of the assessee that it is a co-op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l in the case of M/s. The Karnataka Alpsankyatar Pattin Sahakari Sangh Niyamit in ITA No. 1189 (Bang) 2019 for AY 2013-14 and vide order dated 26.3.209, it was held as under:- 4. I have considered the rival submissions and gone through the orders of the lower authorities. I find that the learned CIT(A) is not justified in holding that the assessee is not eligible for deduction u/s. 80P in respect of interest earned from associate members because as per Karnataka Co Operative Societies Act, associate members are also members and restriction on no. of associate members up to 15% of total members is by way of a subsequent amendment which is not applicable in the present year. Hence, on this issue, the order of CIT(A) is set aside and I hold that for allowing deduction u/s. 80P in respect of interest from members, regular members and associate members are to be considered at par in the present year which is before amendment in Karnataka Co Operative Societies Act, In respect of interest from regular members, learned CIT(A) has directed the AO to allow deduction u/s. 80P. I modify this direction and direct the AO to allow deduction u/s. 80P as per law in respect of interest income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act to include profits and gains. This sub-section is an inclusive provision. The Parliament has included specifically business profits into the definition of the word income . Therefore, we are required to give a precise meaning to the words profits and gains of business mentioned in s. 80P (2) of the Act. In the present case, as stated above, assessee society regularly invests funds not immediately required for business purposes. Interest on such investments, therefore, cannot fall within the meaning of the expression profits and gains of business . Such interest income cannot be said also to be attributable to the activities of the society, namely, carrying on the business of providing credit facilities to its members or marketing of the agricultural produce of its members. When the assessee-society provides credit facilities to its members, it earns interest income. As stated above, in this case, interest held as ineligible for deduction under s. 80P(2)(a)(i) is not in respect of interest received from members. In this case, we are only concerned with interest which accrues on funds not required immediately by the assessee(s) for its business purposes and which have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted vs. ITO (Supra) and of Hon'ble Karnataka High Court rendered in the case of Tumkur Merchants Souhadra Credit Cooperative Ltd. Vs. ITO (Supra) to find out which judgment is applicable in the facts of the present case. If it is found that the judgment of Hon'ble apex court rendered in the case of Totgars Co-Operative Sale Society Limited vs. ITO (Supra) is applicable in the facts of the present case then it should be held that the assessee is not entitled to deduction u/s. 80P in respect of interest from bank but if it is found that the judgment of Hon'ble Karnataka High Court rendered in the case of Tumkur Merchants Souhadra Credit Cooperative Ltd. Vs. ITO (Supra) is applicable then it should be held that the assessee is entitled to deduction u/s. 80P in respect of interest from bank. 10. Respectfully following the above order, I remit the issue to the file of Assessing Officer with similar directions. This issue is partly allowed for statistical purposes. 11. With regard to disallowance of pigmy commission paid to pigmy agents u/s. 40(a)(ia) of the Act, before the lower authorities the assessee has not furnished details of payment and whether it is liable fo ..... 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