TMI Blog2022 (5) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... erest income earned by a co-operative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. Interest earned by the assessee on surplus held with cooperative bank would be eligible for deduction under Sec.80P(2)(d). Appeal of assessee allowed. : - ITA No. 57/Ahd/2022 - - - Dated:- 6-5-2022 - Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member For the Assessee : None For the Revenue : Shri Umesh Agarwal, Sr. D.R. ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This is an appeal filed by the assessee against the order of National Faceless Appeal Centre (NFAC), Delhi in DIN Order No. ITBA/NFAC/S/250 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned AO noticed that the assessee had claimed deduction under section 80P of the Act amounting to _ 29, 05, 816/-. The assessee submitted that assessee had earned an interest of INR 4,68,333/- from fixed deposits kept with Bhavnagar District Cooperative Bank. Since the cooperative bank is not a member of the cooperative society, the assessee claimed deduction u/s 80P(2)(d) of the Act. The learned AO held that in view of ITAT Ahmedabad decision in the case of The Government Servants Cooperative Society v ITO Ward 3(1), income by way of interest earned by deposit or investment of idle surplus does not change its character irrespective of the fact whether such income of interest is earned from a scheduled bank or a cooperative bank. Accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on surplus funds deposited with nationalized bank and the cooperative Bank and the same is not attributable to business operation of the assessee cooperative society as interest earned on the fund invested with the commercial bank is not operational income from providing credit facilities to its members. We consider that earning of such interest income either from nationalized or cooperative bank will not change nature and character of the income. On perusal of the provision of section we observe such deduction is pertinent to the operational income earned by the co-operative society from the activities in which it is engaged and not the other income which accrues to the society in the form of interest from investment of surplus funds with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons and decisions quoted in the order of Ld. CIT(A). 6. We have heard the arguments of Ld. Departmental Representative and perusal the material on record. The issue for consideration before us is whether the assessee is eligible to claim deduction on interest earned from Co-Operative Banks u/s 80P(2)(d) of the Act. The Hon ble Gujarat High Court in the case of State Bank of India Vs. CIT (2016) 389 ITR 578 (Guj), held that the interest income earned by a co-operative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. The Honourable Gujarat High Court made following observations in respect of interest earned from deposits kept with a cooperative bank: The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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