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TMI Blog2024 (2) TMI 1378X X X X Extracts X X X X X X X X Extracts X X X X ..... these appeals; hence, they were heard together and are disposed off by this consolidated order. Identical grounds are raised for both the Assessment Years except for variation in figures. The grounds raised for Assessment Year 2017-18 reads as follows: 1. Was C.I.T. (A) justified in upholding the addition for interest on investments derived from S.C.D.C.C. Bank and P.L.D. Bank (Primary Co-op. Agriculture & Rural Development Bank) as per Para 6.4 of the impugned order to deny the benefit of exemption u/s. 80P of the Act to appellant to the extent of deduction claimed in the ITR being Rs. 14,27,029/-. 2. Whether in law and on facts, the impugned order is sustainable in holding that Interest on Investments derived by the appellant from S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under section 80P of the Act for the interest income earned from Scheduled Banks and Co-operative Banks. The AO held that assessee is not entitled to deduction under section 80P(2)(a)(i) of the Act or under section 80P(2)(d) of the Act. In support of the view taken by the AO, reliance was placed on the judgment of the Hon'ble Apex Court in the case of Totgar's Co-operative Sales Society Ltd., Vs. ITO reported in (2010) 322 ITR 283 and on the judgment of the Hon'ble jurisdictional High Court in the case of PCIT Vs. Totgars Sales Society reported in 395 ITR 611 (Karnataka). 4. Aggrieved by the part disallowance of claim of deduction under section 80P of the Act, assessee filed appeals before the First Appellate Authority (FAA) for Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussed judgment, being the latest judgment of the Hon'ble jurisdictional High Court on the issue involved sets a binding precedent to be followed in the instant case. In view thereof, other case laws to the contrary relied upon by the appellant are not applicable to the instant case. Thus, respectfully following the aforesaid binding judgement of the Hon'ble jurisdictional High Court on the issue on similar facts & circumstances, I hereby hold that the interest/dividend of Rs. 30,24,844/- earned by the appellant society from scheduled banks and Co-op Bank other than co-op society is to be assessed u/s 56 under the head 'Income from Other Sources' as rightly done by the Assessing Officer in the impugned assessment order. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal in the case of Canara Bank Staff Credit Co-operative Societies Ltd., in ITA No.517/Bang/2023 (order dated 03.10.2023) had restored the matter to the AO to examine whether the amounts invested with the Co-operative Banks are out of compulsion under the Karnataka Co-operative Societies Act and the relevant Rules. It was further held by the Tribunal that if the investments are out of compulsion under the Act and the relevant Rules, the interest income received out of the investment made under such compulsion would be liable to be taxed as 'income from business' which would entail the benefit of deduction under section 80P(2)(a)(i) of the Act. The relevant finding of the Bangalore Bench of the Tribunal reads as follows: "7. I have heard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative Societies Act and the Karnataka Co-operative Societies Rules, which showed that the investments that had been made by the assessee were in compliance with the statutory -provisions and in order to carry on the business of banking. They were necessary and consequently, they were part of the business activities of the assessee falling within the scope of section 80P(2)(a)(i). 5. We do not agree with the finding of the Bench which decided the Bangalore District Co-operative Central Bank Ltd.'s case (supra) that the decision in the case of M.P. Co-operative Bank Ltd. (supra) was rendered on its own facts. The latter decision was clearly a reasoned decision. 6. The question is whether we agree with the reasoning in M.P. Cooperati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of M/s. The Bharathi Co-operative Credit Society Vs. ITO in ITA No.793/Bang/2022 (order dated 28.11.2022) for Assessment Year 2015-16, following its earlier order in the case of M/s. Vasavamba Co-operative Society Ltd., Vs. The PCIT in ITA No.453/Bang/2020 (Order dated 13.08.2021), had rendered a similar finding which reads as follows: "7.1 In the instant case, it was contended that majority of the interest income is earned out of investments made with Cooperative Banks and is in compliance with the requirement under the Karnataka Co-operative Societies Act and Rules. 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 enta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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