9911796707
TMI Blog2023 (5) TMI 1244X X X X Extracts X X X X X X X X Extracts X X X X ..... see 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 providing residential sites. However, the Ld.AO denied the exemption claimed by assessee u/s. 80P(2)(d) by relying on the decision of Hon'ble Supreme Court in case of Totgar's Co-operative Sale Society Ltd. vs. ITO reported in (2010) 322 ITR 283. Aggrieved by the disallowance made by the Ld.AO, assessee filed appeal before the Ld.CIT(A). 3. Before the Ld.CIT(A), assessee contended that for the purpose of section 80P(2)(d), the co-operative bank has to be considered to be a co-operative society and therefore deduction u/s. 80P(2)(d) cannot be denied. The Ld.CIT(A), rejected the submissions of the assessee by placing reliance on the decision of Hon'ble Karnataka High Court in case of Tumkur Merchants Souharda Credit Coopera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) of the Act is only on income which is assessable under the head "Income from Business". Interest earned on investment of surplus funds not immediately required in short term deposits and securities by a Co-operative Society providing credit facilities to members or marketing agricultural produce to members is not business income but income from other sources and the society is not entitled to special deduction. 2.7. While Ld.AR relied on the decision of the Hon'ble Karnataka High Court in the case of Tumukur Merchants Souharda Credit Co-operative Ltd., reported in 230 taxman 309. We have carefully gone through the said judgment. 2.8. We have also considered, whether the co-operative bank wherein the assessee made deposits out of its surp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 restored the issue to the files of the A.O. for de novo consideration. The narration of facts, contentions and the findings of the Tribunal in the case of M/s.The Jayanagar Co-operative Society Ltd. (supra) reads as follow:- "4. The issues that arise for consideration in this appeal by the assessee are as to whether the Revenue authorities were justified in holding that the assessee was not entitled to the benefit of deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961 (in short 'the Act') on interest income earned and under section 80P(2)(d) of the Act in respect of interest received from Co-operative institutions. The Assessing Officer (AO) denied the claim of the assessee on the ground that interest income earned by making investment of surplus fund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erived 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 Court in The Totgars Co-operative Sales Society Ltd. (supra) and held that interest earned from Schedule bank or cooperative bank is assessable under the head income from other sources and therefore the provisions of Sec.80P(2)(d)of the Act was not applicable to such interest income. It is thus clear that the source of funds out of which investments were made remained the same in AY 2007-08 to 2011- 12 and in AY 1991-92 to 1999-2000 decided by the Hon'ble Supreme Court. Therefore whether the source of funds were Assessee's own funds or out of liability was not subject matter of the decision of the Hon'ble Karnataka High Court in the decision cited by the learned DR. To this extent the decision of the Hon'ble Karnataka High Court in the case of Tumukur Merchan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of an employee in the event of his death ;] (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; [(iv) in the case of income of the nature referred to in clause (viii) of sub-section (2) of section 56, a deduction of a sum equal to fifty per cent of such income and no deduction shall be allowed under any other clause of this section.]" 2.14. We have heard the submissions advanced by both sides on this aspect. We direct the Ld.AO to allow the expenditure incurred while computing income under the head, 'Income from Other Sources', in relation to earning of interest from the commercial banks. Accordingly the grounds raised by the assessee for assessment year 2015-16 stands allo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
