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TMI Blog2024 (9) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... the order the business income of the assessee is taken at Rs. 48,34,258/- as against the income from business before deduction under 80P returned by the assessee of Rs. 48,16,187/-. 4. That we are not able to file a rectification petition online due to non-availability of the option. 5. That we have filed an appeal before the Ld. CIT(A), NFAC . in the appeal filed in addition to the ground with respect to disallowance of deduction u/s. 80P(2)(a()(i) we have also raised the ground with respect to the calculation mistake in the income computation. 6. The Ld. CIT(A), NFAC vide his order dated 20/10/2023 disallowed the claim for deduction under section 80P but remanded the matter back to the jurisdictional Assessing Officer to allow proportionate expenses incurred for earning the income after affording the assessee an opportunity of hearing and after verifying the same with documentary evidence. The Ld. CIT(a) has not decided the issue of mistake of business income in the computation sheet. 7. The ITO, Ward-1, Srikakulam has not yet passed consequential order giving effect to the directions of the Ld CIT(A), NFAC and we have been waiting for the same to take further course of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. AO disallowed the assessee's claim of deduction u/s. 80P of the Act amounting to Rs. 22,64,026/- against the interest income received on deposits made with Andhra Bank and assessed the total income at Rs. 31,04,866/-. Aggrieved by the order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A). Before the Ld. CIT(A)-NFAC, the assessee submitted that on identical issue, the Ld. CIT(A)-9, Hyderabad vide his order in Order No. 10220/CIT(A)-9, Hyd/2017-18 allowed the assessee's claim of deduction u/s. 80P(2)(a)(i) of the Act for the AY 2014-15. Before the Ld. CIT(A)NFAC, the assessee also made various submissions along with bye-laws of the society, certification of registration, computation of income etc. However, the Ld. CIT (A)-NFAC did not consider the submissions and explanations of the assessee and confirmed the disallowance made by the Ld. AO. Further, the Ld. CIT(A)NFAC also held that the assessee is neither eligible to get benefit of deduction u/s. 80P(2)(a)(i) of the Act nor u/s. 80P(2)(d) except in respect of proportionate cost, administrative and other expenses which are incurred in order to earn such interest income and the accordingly directed the Ld. AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A)-NFAC has rightly upheld the addition made by the Ld. AO as the assessee is not eligible to claim deduction u/s 80P of the Act. The Ld. DR, therefore, pleaded to uphold the order passed by the Ld. CIT(A) -NFAC and dismiss the appeal of the assessee. 7. I have heard both the parties and perused the material placed on record. Now the question before me is to decide whether the assessee is eligible for deduction u/s 80P with respect to the interest earned on deposits with sponsor Bank ie., Andhra Bank, or not? On this very same issue, I have perused the Tribunal's order dated 29/02/2024 (supra) relied on by the Ld. AR in the assessee's own case for the AY 2020-21 in ITA No. 310/Viz/2023 (supra). For the sake of reference, the relevant paras-7 & 8 from the said Tribunal's order (supra) are extracted herein below for immediate reference: "7. I have heard both the parties and perused the material placed on record. Now the question before me is to decide whether the assessee is eligible for deduction u/s 80P with respect to the interest earned on deposits pertaining to reserve fund with sponsor Bank ie., Andhra Bank, or not? It is an admitted fact that the assessee has claimed de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was otherwise payable to its members from whom the produce was bought which was invested in short term deposits / securities. It is also found that the amount payable to its members realized from sale proceeds of the agricultural produce of its members was retained by the society and was shown as liability on the balance sheet. Therefore, the Hon'ble Apex Court has held that interest earned from retaining the amount payable to its members shall not be considered as income from other sources. However, in the instant case the facts are distinguishable and hence in our view the ratio laid down in the case of M/s. Totgars Cooperative Sale Society Ltd (supra) shall not be applied. Section 80P(1) of the Act entitles the Cooperative Societies to deduct the sums specified in sub-section (2) from its gross total income while computing the total income. Sub-section (2) of section 80P, in the sub-clause (a) allows deduction to cooperative society which is engaged in the following activities: "(a) in the case of a co-operative society engaged in- (i) carrying on the business of banking or providing credit facilities to its members, or (ii) a cottage industry, or [(iii) the marketing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cooperative society may claim the benefit of clause (d) or (e) as per the conditions laid down therein. In the instant case, the original source of investments made by the assessee in Nationalized Banks is admittedly the income of the assessee derived from the activities listed in sub-clauses (i) to (vii) of clause (a). The character of such income must be last, especially when the statute uses the expression "attributable to" and not any one of the expressions viz., "derived from" or "directly attributable to". The Hon'ble jurisdictional High Court of Andhra Pradesh and Telangana in the case of Vavveru Cooperative Rural Bank Ltd vs. Chief Commissioner of Income Tax and Another [2017] 396 ITR 0371 (AP) in para 34 has discussed about the decision of the Hon'ble Supreme Court in the case of Totgar's Cooperative Sale Society Ltd (supra) and distinguished the facts while deciding the case. For the sake of brevity, we extract the relevant para 34 of the judgment of the Hon'ble Andhra Pradesh and Telangana High Court herein below: "34. The case before the Supreme Court in Totgar's Co-operative Sale Society Ltd.'s case (supra) was in respect of a co operative credit society, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wo expressions, namely, "derived from" or "directly attributable to". 37. Therefore, we are of the considered view that the petitioners are entitled to succeed. Hence, the writ petitions are allowed, and the order of the Assessing Officer, in so far as it relates to treating the interest income as something not allowable as a deduction under section 80P(2)(a), is set aside." 12. Further, the Coordinate Bench of Hyderabad in Tirumala Tirupati Devasthanams Employees Coop. Credit Society vs. ITO also affirmed the same view by following the decision of the Hon'ble AP High Court in the case of Vavveru Cooperative Rural Bank Ltd (supra). In the instant case also, the assessee has invested surplus funds out of the activities carried out as per the provisions of section 80P(2)(a) of the Act. We therefore by respectfully following the jurisdictional High Court are of the view that interest income should be allowed as deduction u/s. 80P(2)(a)(i) of the Act and thereby the Ld. CIT(A)-NFAC has rightly held by deleting the addition made by the Ld. AO and hence we find no infirmity in the order of the Ld. CIT(A)-NFAC. 13. In the result, appeal of the Revenue is dismissed." 8. Respectfull ..... X X X X Extracts X X X X X X X X Extracts X X X X
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