TMI Blog2023 (9) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... rying on the business of banking and therefore it is liable to be deducted in terms of Section 80P(1) of the Act. See Andhra Pradesh State Co-operative Bank [ 2011 (6) TMI 215 - ANDHRA PRADESH HIGH COURT] . We respectfully following the view taken in the case of PCIT Anr. Vs. Totagars Cooperative Sale Society [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] and State Bank Of India [ 2016 (7) TMI 516 - GUJARAT HIGH COURT] hold that the interest income earned by a cooperative society on its investments held with a cooperative bank would be eligible for claim of deduction under Sec. 80P(2)(d) of the Act. It is directed that the interest earned by the assessee from commercial banks may be considered under the head income from other sources and relief may be granted as available to the assessee u/s 57 of the Act in accordance with law. Accordingly ground No. 2 and 3 raised by the assessee stands partly allowed for statistical purposes. - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER For the Assessee by : Shri Prakash Hegde, C.A For the Revenue by : Ms. Neera Malhotra, CIT (DR) ORDER PER BENCH The present appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law by considering that the interest received by the Appellant from Co-operative Bank is not eligible for deduction even under section 80P(2)(a)(iii) of the Act. 6. The learned CIT(A) has erred on facts and in circumstances of the case and in law by confirming the Assessment Order passed by the learned Assessing Officer ('AO') who has held that the interest received by the Appellant from Co-operative Banks for deposit of amount of Cash Reserve and Liquid Assets which are required to be statutorily maintained (in accordance with the Karnataka Co-operative Societies' Act, 1959 read with the Order of the Registrar of Co-operative Societies) is not eligible for deduction under section 80P(2)(a)(i) of the Act. 7. The learned CIT(A) has grossly erred on facts and in circumstances of the case and in law by confirming the Assessment Order passed by the learned Assessing Officer ('AO') who has held that the Appellant is not entitled for deduction claimed by it under section 57 of the Act for the cost / expenses incurred by it against interest received from Cooperative Banks and by ignoring the unambiguous judgement and direction of the Honourable High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of deduction under chapter VIA: On perusal of ITR, it is seen that the assessee has claimed total deduction of Rs. 84778465/- u/s 80P of the Act from gross total income earned during the year. The deduction for the asst. year 2015-16 are as follows a) 80P(2)(a) Rs. 30221435 b) 80P(2)(d) Rs. 54051877 c) 80P(2)(e) Rs. 505163 4.1 The assessee has also submitted details in response to notice u/s 133(6) of the Act before reopening of assessment proceedings. Subsequently, the assessee was also asked to furnish relevant details during the reassessment proceedings vide notice u/s 142(1) of the Act. 4.2 It is seen from submissions that the assessee has claimed deduction of Rs. 54051877/- u/s 80P(2)(d) of the Act on receipt of interest and dividend from cooperative societies. The assessee has submitted details for the claim of deduction u/s 80P of the Act. The following has be submitted by the assessee 4.3 The claim of assessee u/s 80P(2)(d) of the Act at Rs. 54051877/- is disallowed by the AO. 5. Aggrieved by the order of the AO, the assessee filed appeal before the ld. CIT(A). 6. The ld. CIT(A) passed impugned order by granting partial relief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uce grown by its members. The sale consideration received from marketing agricultural produce of its members was retained in many cases. The said retained amount payable to its members from whom produce was bought, was invested in a short-term deposit/security. Such amount retained by the assessee therein was a liability and it was shown in the balance sheet on the liability side. Therefore, to that extent, such interest income cannot be said to be attributable either to the activity mentioned in Section 80P(2)(a)(i) of the Act or under Section 80P(2)(a)(iii) of the Act. On these facts Hon ble Supreme Court held the assessing officer was right in taxing the interest income indicated above under Section 56 of the Act. Hon ble Supreme Court, also clarified that, they are confining the said judgment to the facts of that case. 9.1 In the instant case, the amount which was invested in banks to earn interest was not any amount due to its members. Further the claim of the assessee in u/s 80P(2)(d) was not the liability. It was not shown as liability in their account. In fact this amount which is in the nature of profits and gains, was not immediately required by the assessee for lendin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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