TMI Blog2023 (5) TMI 1244X X X X Extracts X X X X X X X X Extracts X X X X ..... ding Counsel for Dept. ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal filed by assessee against order dated 20.02.2023 passed by NFAC, Delhi for A.Y. 2016-17. 2. Brief facts of the case are as under: 2.1 Assessee is a employees housing co-operative society having objects exclusively of providing housing, residential sites, house or loans for construction of house to members. The Ld.AO noted that assessee is covered by the provisions of Karnataka Co-operative Society Act, 1959 and was having 1690 regular members, 141 associate members and 1 nominal member. The Ld.AO noted that for year under consideration, assessee had filed its return of income on 31.03.2018 declaring total income at Nil. Assessee had also declared income under the head income from other sources. It was noted that assessee had claimed exemption of Rs.21,99,628/- u/s. 80P(2)(d) of the act. Details were called for by the Ld.AO in respect of the same. 2.2 The assessee filed its submissions and furnished bank account statements. It was noted that funds received from members towards the provision of residential sites were deposited in the cooperative banks and was used for business of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the case of PCIT Vs. Totgars Cooperative Sale Society Ltd., reported in 395 ITR 611. We have perused the submissions advanced by both sides in the light of records placed before us. 5. The Ld.AR submitted that an identical issue was considered by Coordinate Bench of this Tribunal in case of M/s. Bhavasar Kshtriya Co-operative Credit Society Ltd. vs. ITO/ADIT in ITA Nos. 581 to 583/Bang/2022 by order dated 19.10.2022 wherein it was held as under: 2.6. We have heard both sides in light of records placed before us. The Ld.AO denied the claim of the assessee on the ground that interest income earned by making investment of surplus funds has to be assessed under the head Income from Other Sources and not income from business and since interest income is not assessed as business income, the claim for deduction under section 57 of the Act cannot be allowed. In upholding the above conclusions, the Ld.CIT(A), inter alia, relied on the decision of the Hon'ble Supreme Court in the case of The Totgar's Co-operative Sales Society Ltd., Vs. ITO reported in 322 ITR 283, wherein, Hon'ble Supreme Court held that the benefit of deduction under section 80P(2)(a)(i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the members. Therefore, in our view, the section envisages deduction in respect of any income derived by the co-operative society from any investment with a co-operative society. 2.10. We have also considered the case of Totgars Cooperative Sale Society Ltd., reported in 322 ITR 283 relied upon by the Ld.DR, and find that, the Hon'ble Supreme Court has deliberated on the issue of deduction u/s 80P(2)(a)(i) but not on Section 80P(2)(d). We also observed that in the case of Totgars Co-operative Sale Society Ltd. itself the Hon'ble High Court of Karnataka has allowed the claim of deduction u/s 80P(2)(d) vide order dated 05.01.2017 and also in Tumukur Merchants Souharda Credit Co-operative Ltd., reported in 230 taxman 309. 2.11. Similar is the view taken by coordinate bench of this Tribunal in case of Thannirupantha Primary Agricultural Credit Co-operative Society Ltd vs.ITO in ITA no.276- 277/Bang/2020 by order dated 30/07/2021, wherein it was held as under: 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 resto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs involved was Assessment Years 1991-92 to 1999-2000. The nature of interest income for all the Assessment Years was identical. The bone of contention of the Assessee in AY 2007-08 to 2011-12 was that M/s.Thannirupantha Primary Agri.Cr.Coop.So.Ltd. the deduction under Section 80P(2) of the Act is 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecurities], any reasonable sum paid by way of commission or remuneration to a banker or any other person for the purpose of realising such dividend [or interest] on behalf of the assessee; [(ia) in the case of income of the nature referred to in sub-clause (x) of clause (24) of section 2 which is chargeable to income-tax under the head Income from other sources , deductions, so far as may be, in accordance with the provisions of clause (va) of subsection (1) of section 36 ;] (ii) in the case of income of the nature referred to in clauses (ii) and (iii) of sub-section (2) of section 56, deductions, so far as may be, in accordance with the provisions of sub-clause (ii) of clause (a) and clause (c) of section 30, section 31 and [sub-sections (1) [***] and (2)] of section 32 and subject to the provisions of [section 38]; [(iia) in the case of income in the nature of family pension, a deduction of a sum equal to thirty-three and one-third per cent of such income or [fifteen] thousand rupees, whichever is less. Explanation. For the purposes of this clause, family pension means a regular monthly amount payable by the employer to a person belonging to the family ..... X X X X Extracts X X X X X X X X Extracts X X X X
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