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TMI Blog2022 (1) TMI 987X X X X Extracts X X X X X X X X Extracts X X X X ..... fter referred to as "the Act") relevant to the Assessment Years 2013-14 & 2014-15. 2. The assessee has raised following grounds of appeal: 1. The assessee is a co-operative credit society carrying on the business of banking and providing credit facilities to its members and is covered u/s. SOP of the I.T. Act, 1961. 2. The assessee has filed its return of income on 07.01.2014 declaring total income at Rs. Nil/-. The return was processed u/s, 143(1) of the I.T. Act 1961. The case was selected for scrutiny assessment and accordingly notice u/s 143(2) was issued to the assessee. 3. The Ld. AO has not allowed deduction under section 80P(2)(a)(i) of the I.T. Act, 1961. 4. The Hon. CIT (Appeals) -5 has also not allowed deduction under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Being aggrieved by the order of the learned CIT (A) the assessee is in appeal before us. 7. The learned DR before us vehemently supported the order of the authorities below. 8. We have heard the rival contentions of both the parties and perused the materials available on record. The provisions of section 80P(2)(a)(i) of the Act provides the deduction to a co-operative society engaged in the business of banking or providing credit facilities to its members. The provisions of the section are without any ambiguity. In other words, the income from the activity of financing from the members is only eligible for deduction under section 80P(2)(a)(i) of the Act. If there is any income arising to the co-operative society from the non-members that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not liable to be deducted. The essence of this decision is that absolute denial of deduction under Section 80P(2)(a)(i) of the Act to the assessee's (cooperative societies) engaged in the providing credit facilities to the non-members along with its members is not warranted under the Act and only that part of profit and gains that is attributable and/or pertains to the non-members shall not be allowed as deduction under Section 80P(2)(a)(i) of the Act. The pertinent observation of the Hon'ble Court is reproduced as under: "Clearly, therefore, once section 80P(4) is out of harm's way, all the assessees in the present case are entitled to the benefit of the deduction contained in section 80P(2)(a)(i), notwithstanding that they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bank which needs to be excluded from the amount of deduction claimed under section 80P(2)(a)(i) of the Act and the same should be brought to tax under the head income from other sources under the provisions of section 56 of the Act. To determine, the net income on the deposits from the bank, amount of expenses incurred in generating such interest income should be allowed as deduction from the gross income of interest in pursuance to the provisions of section 57(iii) of the Act. The provisions of section 57 of the Act reads as under: (iii) any other expenditure (not being in the nature of capital expenditure) laid out or expended wholly and exclusively for the purpose of making or earning such income; 8.6 The above provisions require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee should be allowed as deduction. 8.7 Thus, in view of above discussion the appeal of the assessee is partially allowed subject to the discussion made in previous paragraph. 8.8 Coming to next issue with regard to basic deduction of Rs. 50000 as prayed by the assessee in the ground of appeal before us. The provisions of section 80P(2)(c) of the Act, provides that a co-operative society engaged in activities other than those specified in clause (a) or clause (b) of section 80P(2) (either independently of or in addition to all or any of the activities so specified), following deduction shall be allowed from its profits and gains attributable to such activities: (i) Rs. 1,00,000 in case of consumers' co-operative society (ii) R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ground of appeal of the assessee is allowed. 8.12 In the result, the appeal filed by the assessee is partially allowed. Coming to ITA No. 1051/Ahd/2019 an appeal by the assessee corresponding to A.Y. 2014-15 10. The assessee has raised following grounds of appeal 1. The assessee is a co-operative credit society carrying on the business of banking and providing credit facilities to its members and is covered u/s. SOP of the I.T. Act, 1961. 2. The assessee has filed its return of income on 17.09.2014 declaring total income at Rs. Nil/-. The return was processed u/s. 143(1) of the I.T. Act 1961. The case was selected for scrutiny assessment and accordingly notice u/s 143(2) was issued to the assessee. 3. The Ld. AO has not allowed d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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