TMI Blog2018 (7) TMI 2281X X X X Extracts X X X X X X X X Extracts X X X X ..... n claimed u/s 80P(2)(a)(i) - AO will allow the expenses incurred by the assessee in the earning of such interest income not eligible for deduction u/s 80P(2)(a)(i). Similarly we also note that the income earned by the assessee on the investment made with the any other cooperative society will be eligible for the deduction u/s 80P(2)(d). We direct the AO to exclude the amount of net interest income from the deduction claimed u/s 80P(2)(a)(i) - Thus the AO will allow the expenses incurred by the assessee in the earning of such interest income not eligible for deduction under section 80P(2)(a)(i) - we also direct the AO to allow the deduction to the assessee for the amount of interest earned from the co-operative bank u/s 80P(2)(d). Henc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed u/s 56 of the Act may please be deleted. 2. Notwithstanding the decision of Gujarat High Court in the case of State bank of India vs. CIT, the appellant co.op.credit society ltd is entitled to exemption u/s 80 P of the Income Tax Act on the Interest income of Rs 28,87,397/- also. 3. Without prejudice to the above ld. A.O. has erred in taxing the whole Interest Income u/s.56 of the Act amounting Rs.28,87,397/- received by appellant from Panchmahal Dist Co op. Bank Ltd Interest from nationalized Banks without appreciating the fact that expenditure incurred for earning such Income must be allowed u/s 57 of the Act and Pro-rata Interest Income received from Co. Op. Bank Interest from nationalized Banks only can be taxed. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny bank is not deductible under section 80P(2)(a)(i) of the Act. In this view of the matter, we dismiss the appeal of the assessee. However, we direct the AO to exclude the amount of net interest income from the deduction claimed u/s 80P(2)(a)(i) of the Act. Thus the AO will allow the expenses incurred by the assessee in the earning of such interest income not eligible for deduction under section 80P(2)(a)(i) of the Act. In this connection we find support guidance from the order of this Tribunal in the case of Shreeji Co-operative Credit Society Ltd vs. ITO pertaining to the assessment year 2013-14 in ITA No.2751/Ahd/2016 vide order dated 15- 02-2018 wherein it was held as under: 3. At the outset, the ld. Counsel for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(a)(i) 80P(2)(d) of the Act on the interest and dividend income received from the Banaskantha Dist.Central Co-operative Bank Ltd. is identical to the issue involved in those above appeals decided by the Coordinate Bench of this Tribunal. The Coordinate Bench while deciding the issue has observed as follows: 4. We now advert to the lead issue of Section 80(P)(2) disallowance of Rs.27,97,019/- in respect of assessee s interest income derived from its deposits with the Banas Co-operative Bank. Both the lower authorities quote the legislative amendment vide Finance Act, 2006 w.e.f. 01.04.2007 inserting subsection 4 in Section 80P as well as CBDT s explanatory notes to the above Finance Act dated 28.122006 in holding that the impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest earned on the fixed deposit with Cooperative Bank and the Societies and it has been found that as such the income was received from the investment in Cooperative Societies and Cooperative Bank. Considering Section 80(P)(2)(d) of the Act when the only requirement was that the income should be received from investment in Cooperative Societies and the Cooperative Bank which in the present case has been fulfilled, it cannot be said that the learned Tribunal has committed any error in deleting disallowance of Rs.1,42,19,515/- under section 80(P)(2)(d) of the Act. We are in complete agreement with the view taken by the learned Tribunal. Under the circumstances, proposed question B is also answered against the revenue. We therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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