TMI Blog2023 (6) TMI 560X X X X Extracts X X X X X X X X Extracts X X X X ..... eligible for deduction u/s 80P(2)(a)(i) of the Act. Accordingly the appeals of the assessee are allowed. - ITA.No.17/PAN/2020 - - - Dated:- 23-11-2022 - SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER For Assessee : Shri S.B. Godadi For Revenue : Shri N. Shrikant ORDER This assessee s appeal for assessment year 2016- 17, arises against the CIT(A) s Belgaum order dated 28.06.2019 passed in case ITA No. CIT(A)/BGM/10200/2018- 19, in proceedings u/s. 143(3) of the Income Tax Act, 1961 (in short the Act ). 2. Heard both the parties. Case file perused. 3. Delay of 151 days in filing of the instant appeal is condoned as per the assessee s duly sworn in affidavit dated 27.01.2020 attributing reasons thereof to communic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Act (in brevity the Act). In relation to restriction u/s 80P(4) of the Act. The interest was added back with the total income as income amount of Rs. 857,533/- as income from other sources. The Revenue authorities had relied on the order of Hon ble Supreme Court in the case of Totgar Cooperative Sales Society Ltd. V. ITO 188 Taxman 282 (SC). Accordingly the interest earned from Cooperative Bank was added back with the total income of the assessee society. The assessee filed an appeal before the Ld. CIT(A) and the Ld. CIT(A) upheld the order of the Ld. AO, so the assessee filed the appeal for further adjudication before the ITAT. 5. The Ld. Counsel of the assessee vehemently argued and placed a paper book which is kept in record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. Explanation to Section 8OP(4) of the Income-tax Act, 1961 says that the Cooperative Bank and Primary Agricultural Credit Society shall have the meanings respectively assigned to them in Part-V of the Banking Regulation Act, 1949. The following definitions under Banking Regulation Act, 1949 will help in determining whether any particular Co-operative Society can be treated as Co-operative Bank/ Primary Co-operative Bank or not. SI. No Category Clause/section of Banking Regulation Act, 1949 Definition 1 Co-operative Bank Clause (cci) of Section 5 Co-operative Bank means a State Coopera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less than one lakh of rupees; and (3) the bye-laws of which do not permit admission of any other co-operative society as a member. 9. We heard the rival submissions and perused the material available on record. 10. Having discharge the matter in the issue of section 80P(2)(a)(i), the claim of assessee for deduction is viewed as follows:- 10.1. The Cooperative Bank wherein the assessee deposited out of its surplus funds for earning interest. Then, the only interest was earned by the assessee on the deposit would be eligible for deduction u/s 80P(2)(d). The definition of the Cooperative Society is bought in larger umbrella under which the Cooperative Banks is performed. In this consideration we relied on the catena of judgments whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not make any difference for the purposes of qualifying the interest earned by the cooperative bank under Section 80P(2)(a)(i) as the deposits of surplus idle money available from working capital, including reserves, excess collection of interest tax and other incomes are all attributable to the business of banking. The interest from such deposits cannot be said to be beyond the legitimate business activities of the bank. 11. For the aforesaid reasons, we do not find that the Income Tax Appellate Tribunal committed any error in arriving at findings that the interest are not deposits of non-SLR funds and the cooperative bank will qualify for exemption under Section 80P(2)(a)(i) of the Act. c) In the case of Kaliandas Udyog Bhavan Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein to be entitled to claim deduction u/s 80P(2)(d) of the Act. I further find that Co-ordinate Bench of the Mumbai Tribunal in the case of Lady Ratan Tower Cooperative Housing Society Ltd., (supra) and after relying on the decision in the case of Kaliandas Udyog Bhavan Premises Cooperative Society Ltd., (supra) has held that the interest earned on investments held with the Co-operative Banks would be eligible for deduction u/s 80P(2)(d) of the Act. 10.2. In relation to the judgment of Hon ble Supreme Court, Totgars Co-operative Sales Society Ltd, supra the counsel has made a comparative chart which is inserted as follows: 10.3. Thus we also find that section 80P(2)(d) of the Act allows whole deduction of income by way of inte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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