9911796707
TMI Blog2024 (6) TMI 1018X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is a co-operative society registered under the Karnataka State Cooperative Societies Act, 1959. It is engaged in the business of providing credit facilities to its members. For the Assessment Year 2018-19, the return of income was filed on 14.10.2018 declaring Nil income after claiming deduction of Rs.81,61,682/- under section 80P of the Act. The assessment was selected for scrutiny and notice under section 143(2) of the Act was issued on 20.09.2019. The assessment was completed under section 143(3) r.w.s. 143(3A) and 143(3B) of the Act vide order dated 25.02.2018. In the said Assessment Order, claim of deduction under section 80P was denied and the total income was determined at Rs.81,61,689/- as against the Nil income declared by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re detailed below: 1. Sec.80P(2)(a)(i) Banking/Credit Facilities to its members 8,01,565 2. Sec.80P(2)(a)(iii) Marketing of Agricultural produce grown by its members 1,71,558 3. Sec.80P(2)(d) Interest/Dividend from Investment in other co-operative society 70,49,366 4. Sec.80P(2)(e) Income from Letting of godowns / warehouses for storage, processing / facilitating the marketing of commodities 1,39,200 Total deduction claimed u/s 80P 81,61,689 7. Before the Tribunal, assessee has raised 10 grounds. All the grounds relate to the following issues: i. Issue No.1 : Deduction claimed under section 80P(2)(a)(i) of the Act on interest / dividend income earned from co-operative bank (Grounds 5, 7 and 8) ii. Issue No.2 : Deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laid down by the Hon'ble jurisdictional High Court in the case of PCIT Vs. Totgars Co-operative Society Ltd., reported in 395 ITR 611 (Karnataka) which was followed by the Bangalore Bench of the Tribunal in the case of Vasavamba Co-operative Society Ltd., Vs. PCIT in ITA No.453/Bang/2020 (order dated 13.08.2021). The CIT(A) has elaborately extracted the order of the Tribunal in the case of Vasavamba Co-operative Society Ltd., (supra) (refer para 8.1 of the CIT(A)'s order). Therefore, we are not reiterating the same in this order. The Bangalore Bench of the Tribunal in the case of Vasavamba Co-operative Society Ltd., (supra) had categorically held that with regard to interest / dividend income earned out of investments made with banks / gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble for deduction under section 80P(2)(a)(i) of the Act. This identical contention of the assessee has also been dealt with by the Bangalore Bench of the Tribunal in the case of Vasavamba Co-operative Society Ltd., Vs. PCIT (supra). The Bangalore Bench of the Tribunal, in the aforesaid case, had restored the matter to the AO for fresh examination. The relevant finding of the Bangalore Bench of the Tribunal reads as follows: "18. The issue raised by the Assessee in the aforesaid grounds require examination because if there are statutory compulsions that the money should be invested in a particular manner to run business of the Assessee then the interest income arising from such investments have business nexus and should be considered as in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that a copy of the agreement was submitted along with the submissions dated 11.10.2022. The CIT(A), however, dismissed and upheld the addition made by the AO. The CIT(A) stated that agreement has not been enclosed along with the submission and there is no indication as to how signing of the agreement facilitate the complete marketing of the agricultural produce of its members which shall include performance of activities involved in the flow of agricultural produce from the point of initial agricultural production till they reach hands of the ultimate users / consumers. 9.2.3 Aggrieved, assessee has raised this issue before the Tribunal. The learned AR had submitted that in the return of income the assessee had mistakenly claimed deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiate its claim. It is ordered accordingly. 9.3 Issue No. 3 : Deduction under section 80P(2)(e) of the Act (Ground 9) 9.3.1 Assessee had made a claim of deduction under section 80P(2)(e) of the Act amounting to Rs.1,39,200/-. The AO disallowed the claim of deduction due to the absence of details to establish the entire facts (refer pages 9 and 10 of Assessment Order). 9.3.2 Aggrieved by the Assessment Order, assessee filed appeal before the FAA. The CIT(A) rejected the contention of the assessee by holding that the activities of storing the pledged agricultural produce against loans given do not qualify for deduction under section 80P(2)(e) of the Act. 9.3.3 Aggrieved by the Order of the CIT(A), assessee has raised this issue before th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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