TMI Blog2023 (10) TMI 1350X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant Rules. As decided in the case of CIT Vs. Karnataka State Co-operative Apex Bank [ 2001 (8) TMI 9 - SUPREME COURT] had held that when amounts are invested by the Co-operative Societies as per the statutory requirements, the same would be entitled to deduction under section 80P(2)(a)(i) of the Act. The Bangalore Bench of the Tribunal in the case of M/s. The Bharathi Co- operative Credit Society [ 2022 (12) TMI 30 - ITAT BANGALORE] held that If the amounts are invested in compliance with the Karnataka Co-operative Societies Act, necessarily, the same is to be assessed as income from business, which entails the benefit of deduction u/s 80P(2)(a)(i) of the I.T.Act. Insofar as deduction u/s 80P(2)(d) of the I.T.Act is concerned, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities below are not justified in disallowing the deduction of Rs. 15,06,020/- claimed u/s. 80P(2)(a)(i) and also u/s 80(2)(d) of the Act under the facts and in the circumstances of the appellant's case. 3. Without prejudice to the above, the authorities below have also erred in denying the claim of the appellant u/s. 80P(2)(d) of the Act under the facts and circumstances of the Appellant's case. 4. Without prejudice to the above, the authorities below have erred in denying the claim of the Appellant u/s. 80P(2)(a)(i) on Rs. 13,68,973/- being the Interest earned of the Statutory deposits maintained by the Society against the reserve fund in terms of the provisions of the Bye Laws of the Society as well as the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;ble jurisdictional High Court in the case of PCIT Vs. Totgars Co-operative Sales Society reported in 395 ITR 611 (Karn.). 4. Aggrieved by the Assessment Order, the assessee society filed appeal before the First Appellate Authority. The CIT(A) partly allowed the appeal of the assessee by allowing the claim of deduction under section 80P(2) of the Act amounting to Rs.2,09,329/- [refer para 7.15 of the impugned order of CIT(A)]. However, the CIT(A) did not grant deduction under section 80P(2)(a)(i) nor under section 80P(2)(d) of the Act to the extent of Rs.17,15,349/-. 5. Aggrieved, assessee has filed this appeal before the Tribunal. The learned AR submitted that the assessee society is mandated to maintain a reserve fund in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al was right in law in holding that the interest income arising from the investment made out of reserve fund is exempt under section 80P(2)(a)(i) of the Income-tax Act, 1961? 8. In considering the above question, the Hon'ble Apex Court rendered the following findings: 4. This judgment was cited before the Bench of two learned Judges which decided the case of the Bangalore District Co-operative Central Bank Ltd. (supra). It was considered as having been rendered on its own facts and not applicable to the case of Bangalore District Co-operative Central Bank Ltd. (supra) in view of the finding of the Tribunal that the income in question was attributable to the business of that assessee. The Court referred to the Banking Regulatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk Ltd. (supra) that only income derived from circulating or working capital would fall within section 80P(2)(a)( i). There is nothing in the phraseology of that provision which makes it applicable only to income derived from working or circulating capital. 7. In the premises, we take the view that the decision of this Court in the case of M.P. Co-operative Bank Ltd. (supra) does not set down the correct law and that the law is as we have put it above. The question, accordingly, is answered in the affirmative and in favour of the assessee. 9. A similar view that has been held by the Hon'ble Andhra Pradesh High Court in the case of CIT-II, Hyderabad Vs. Andhra Pradesh State Cooperative Bank Ltd., reported in 336 ITR 516 (AP). ..... X X X X Extracts X X X X X X X X Extracts X X X X
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