TMI Blog2023 (5) TMI 1301X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) TMI 1084 - KERALA HIGH COURT] we hold that assessee is eligible for deduction of interest income earned from cooperative bank. Decided in favour of assessee. - Shri B.R. Baskaran, Accountant Member And Shri Amit Shukla, Judicial Member For the Assessee : Shri Subrata Sen. For the Revenue : Ms. Mahita Nair. ORDER PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against the order dated 06/03/2023 passed by NFAC, Delhi for the quantum of assessment passed u/s. 143(3) for the A.Y. 2015-16. 2. In the grounds of appeal, assessee has challenged the disallowance made u/s. 80 P(2)(d) of the Act of Rs.13,85,628/- 3. The facts in brief are that that assessee is a co-operative housing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of interest received by the assessee from various cooperative banks. The ld. CIT(A) has held that the provision of Section 80 P(2)(d) and Section 80 P(2)(a)(i) only extend the benefit of deduction towards income earned by cooperative society engaged in the business of providing banking facility to its members and does not extend to the interest received from the investments made in the cooperative banks. The ld. AO has invoked Section 80P (4) holding that since investments have been made in the cooperative banks and therefore, deduction is to be denied. Here, we are not dealing with, whether assessee can be treated as cooperative bank or not. Here the issue is, assessee had made investment in the cooperative banks, whether interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agricultural credit society shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949) (b) primary co-operative agricultural and rural development bank means a society having its area of operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities.] 7. Thus, assessee being a cooperative society cannot be reckoned as cooperative bank carrying out banking business. The Hon ble Jurisdictional High court in the case of Quepem Urban Co-operative Credit Society Ltd. vs. ACIT reported in (2015) 377 ITR 272 (Bom), after analyzing the relevant provision of Section 80P including Sub-section (4) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be held that the words used in Section 80P the whole of the amount of profits and gains of business emphasise that the income in respect of which deduction is sought must constitute the operational income and not the other income which accrues to the society and as such interest earned on funds which are not required for business purposes falls under the category of other income taxable under the Income Tax Act? 6. According to the learned counsel, the present appeal should be admitted on these two substantial questions of law. 7. However, the contention being taken by the learned counsel is untenable. For the issue that was before the ITAT, was a limited one, namely whether for the purpose of Section 80P(2)(d) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said amount of interest earned from a Co- operative Society Bank would be deductable from the gross income of the Co-operative Society in order to assess its total income. Therefore, the Assessing Officer was not justified in denying the said deduction to the assessee respondent. 11. The learned counsel has relied on the case of The Totgars Co-operative Sale Society Ltd. Vs. Income Tax Officer, (supra). However, the said case dealt with the interpretation, and the deduction, which would be applicable under Section 80P(2)(a)(i) of the I.T. Act. For, in the present case the interpretation that is required is of Section 80P(2)(d) of the I.T. Act and not Section 80P(2)(a)(i) of the I.T. Act. Therefore, the said judgment is inapplicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowable, if there is any interest income which is earned on deposits or investment made with cooperative societies, the same must fall in the category activity or the business, but still is eligible for deduction under the specific provision of section 80P(2)(d). Thus, the interest derived by the assessee from cooperative bank is eligible for deduction u/s 80P(2)(d) because as noted above, cooperative are also cooperative societies for this purpose. This has been held so by the Hon ble Karnataka High Court and latest judgment of Hon ble Kerala High Court. 10. Lastly, in so far as judgment of Hon ble Karnataka High Court in the case of Totagars Cooperative Sale Society (395 ITR 611), which has been referred and relied upon by the Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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