TMI Blog2021 (8) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... deration. A similar view has been held by the Bangalore Bench of the Tribunal in the case of M/s.Kadaba Sahakari Vyavasayika Bank Ltd.[ 2021 (8) TMI 1 - ITAT BANGALORE] - It is ordered accordingly. Deduction u/s 80P(2)(d) - HELD THAT:- We noticed that the issue raised is an alternative contention to the claim of deduction u/s 80P(2)(d). Since we have already restored the issue of claim of deduction u/s 80P(2)(d) to the files of the A.O., the issue raised in ground No.8 relating to the allowability of expenditure on income assessed as income from other sources is also restored to the files of the A.O. - ITA No.276/Bang/2020, ITA No.277/Bang/2020 - - - Dated:- 30-7-2021 - Shri George George K, JM And Shri B.R.Baskaran, AM For the Appellant : Sri.V.Srinivasan, Advocate For the Respondent : Sri.Nethrapal, Addl.CIT-DR ORDER PER GEORGE GEORGE K, JM These appeals at the instance of the assessee are directed against two orders of the CIT(A), both dated 09.01.2020. The relevant assessment years are 2015-2016 and 2016-2017. 2. Common issues are raised in these appeals, hence, they were heard together and are being disposed of by this consolidated order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. QUEP~M URBAN COOPERATIVE CREDIT SOCIETY LTD in ITA No. 22 to 24 of 2015 dated 17104/2015 under the facts and in the circumstances of the appellant's case. 6. The learned CIT[A] ought not to have upheld the assessment of income earned by the appellant of ₹ 55,01,889/- under the head Other Sources as against the claim of the appellant that the said interest income formed part of the income from business of providing credit facilities to the members and thus, was entitled to deduction u/s. 8OP [2][a][i] of the Act following the judgment of the Hon'ble Karnataka High Court in the case of TUMKUR MERCHANTS SOUHARDA CREDIT CO-OPERATIVE LTD reported in [2015] 230 Taxman 309 [Kar] under the facts and in the circumstances of the appellant's case. 7. The learned CIT[A] ought to have appreciated that the appellant had earned the interest income from investments statutorily required to be maintained under the Karnataka Cooperative Societies Act from out of the profits besides 25% of the total deposits as SLR with co-operative banks and 3% of the total deposits towards CRR and thus, the income earned therefrom ought to have been assessed as part of the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its members with a view to promote the agricultural activities undertaken by its members. It was further submitted that the amounts invested in District Central Co-operative Banks are surplus funds of the society, which are not immediately required and interest income / dividend received is part of banking business of the society and entitled for deduction u/s 80P(2)(a)(i) or deduction u/s 80P(2)(d) of the I.T.Act. The Assessing Officer rejected the contentions raised by the assessee and disallowed the claim of deduction u/s 80P(2)(a)(i) as well as 80P(2)(d) of the I.T.Act. 5. Aggrieved by the assessment orders completed for assessment years 2015-2016 and 2016-2017, the assessee preferred appeals to the first appellate authority. The first appellate authority confirmed the view taken by the Assessing Officer in denying the benefit of deduction u/s 80P of the I.T.Act. The first appellate authority held that the assessee has violated the principles of mutuality by having dealing with the nominal members. Further, the first appellate authority also rejected the claim of deduction u/s 80P(2)(d) of the I.T.Act by relying the judgment of the Hon ble Apex Court in the case of Totagars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the decision rendered by it in the case of Mavilayi Service Co-operative Bank Ltd. and Ors. v. CIT Anr. (supra). Facts prevailing in the instant case needs to be examined afresh in the light of the principles enunciated by the Hon ble Apex Court. Therefore, we are of the view that the issue of deduction u/s 80P(2)(a)(i) of the I.T.Act requires de novo consideration by the A.O. Accordingly, we set aside the orders of the CIT(A) for the assessment years 2015-2016 and 2016-2017 and restore them to the files of the A.O. for fresh consideration. A similar view has been held by the Bangalore Bench of the Tribunal in the case of M/s.Kadaba Sahakari Vyavasayika Bank Ltd. (supra). It is ordered accordingly. Therefore, ground Nos. 3 to 5 are allowed for statistical purposes. 9.1 As regards the claim of deduction u/s 80P(2)(d) of the I.T.Act, the Bangalore Bench of the Tribunal in the case of M/s.The Jayanagar Co-operative Society Ltd. (supra), on identical facts, had restored the issue to the files of the A.O. for de novo consideration. The narration of facts, contentions and the findings of the Tribunal in the case of M/s.The Jayanagar Co-operative Society Ltd. (supra) reads as fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claimed by the respondent assessee under Section 80P(2)(d) of the Act and not under Section 80P(2)(a) of the Act which was the claim in AY 1991-92 to 1999- 2000. The reason given by the Assessee was that in AY 2007-08 to 2011-12 investments and deposits after the Supreme Court's decision against the assessee Totgar's Co-operative Sale Society Ltd. (supra), were shifted from Schedule Banks to Cooperative Bank. U/s.80P(2)(d) of the Act, income by way of interest or dividends derived by a Co-operative Society from its investments with any other Co-operative Society is entitled to deduction of the whole of such interest or dividend income. The claim of the Assessee was that Co-operative Bank is essentially a Co-operative Society and therefore deduction has to be allowed under Clause (d) of Sec.80P(2) of the Act. The Hon'ble Karnataka High Court followed the decision of the supreme Court in The Totgars Co-operative Sales Society Ltd. (supra) and held that interest earned from Schedule bank or cooperative bank is assessable under the head income from other sources and therefore the provisions of Sec.80P(2)(d)of the Act was not applicable to such interest income. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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