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TMI Blog2024 (10) TMI 1272X X X X Extracts X X X X X X X X Extracts X X X X ..... t variation in figures, which arose out of identical set of facts and circumstances, therefore, as a matter of convenience, these appeals were heard together and are being disposed off by way of this consolidated order. ITA no.404/Nag./2023 Assessee's Appeal - A.Y. 2018-19 4. The assessee has raised following grounds:- "On the facts and in the circumstances of the case and in law........ 1. The Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in confirming action of Ld AO of disallowing the deduction claimed u/s 80P(2)(a)(i) of Rs. 38,88,015/-. 2. The Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in confirming action of AO not allowing the deduction u/s 80P(2)(d) of Rs. 38,88,015/-. The appellant craves leave to add, amend, modify or delete any grounds of appeal." 5. Facts in Brief:- The assessee is a credit-cum-consumer Co-operative Society registered under Maharashtra State Co-operative Societies Act, 1960, and also running Gas Agency for its members. The return of income for the year under consideration was filed on 25/09/2018, offering the gross total income at Rs. 1,08,57,078, and total income at Rs. 3,42,861, after claiming deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , wherein the very same Bench was a party to that order rendered in The Ismailia Urban Co-operative Society v/s ITO, ITA no.122/Nag./2023, order dated 18/06/2024, wherein the Tribunal has considered this issue in detail and held that interest income earned by the assessee trust is eligible for deduction under section 80P(2)(a)(i) / 80P2(d) of the Act. The relevant portion of the order reproduced below:- "9. Upon hearing both the counsel and perusing the record, we find that the issue involved is covered in favour of the assessee by a catena of decisions from ITAT as well as a decision of jurisdictional High Court. In this regard we may gainfully refer the Hon'ble Jurisdictional High Court decision in the case of CIT vs. Solapur Nagri Audyogik Sahakari Bank Ltd. 182 Taxman 231 wherein the following question was raised. "Whether the interest income received by a Co-operative Bank from investments made in Kisan Vikas Patra ("KVP" for short) and Indira Vikas Patra ("IVP" for short) out of voluntary reserves is income from banking business exempt under Section 80P(2)(a)(i) of the Income Tax Act, 1961?" After considering the issue, the Hon'ble Jurisdictional High Court has conclude ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a short term deposit with the banks. This issue was thoroughly discussed by the ITAT "B" Bench Ahmedabad in the case of The Income Tax Officer vs. M/s.Jafari Momin Vikas Co-op Credit Society Ltd., bearing ITA No. 1491/Ahd/2012 (for A.Y. 2009-10) and CO No. 138/Ahd/2012 (by Assessee) order dated 31/10/2012. The relevant portion is reproduced below :- "19. The issue dealt with by the Hon'ble Supreme Court in the case of Totgars (supra) is extracted, for appreciation of facts as under : What is sought to be taxed under section 56 of the Act is interest income arising on the surplus invested in short term deposits and securities, which surplus was not required for business purposes? The assesse(s) markets the produce of its members whose sale proceeds at times were retained by it. In this case, we are concerned with the tax treatment of such amount. Since the fund created by such retention was not required immediately for business purposes, it was invested in specified securities. The question before us, is whether interest on such deposits/securities, which strictly speaking accrues to the members" account, could be taxed as business income under section 28 of the Act? In our vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral produce of its members; (2) in the case of present assessee, it had not carry out any activity except in providing credit facilities to its members and that the funds were of operational funds. The only fund available with the assessee was deposits from its members and, thus, there was no surplus funds as such; - in the case of Totgars, the Hon'ble Supreme Court had not spelt out anything with regard to operational funds; 19.5 Considering the above facts, we find that there is force in the argument of the assessee that the assessee not a co-operative bank, but its nature of business was coupled with banking with its members, as it accepts deposits from and lends the same to its members. To meet any eventuality, the assessee was required to maintain some liquid funds. That was why, it was submitted by the assessee that it had invested in short-term deposits. Furthermore, the assessee had maintained overdraft facility with Dena Bank and the balance as at 31.3.2009 was Rs. 13,69,955/- [source : Balance Sheet of the assessee available on record]. 19.6 In overall consideration of all the aspects, we are of the considered view that the ratio laid down by the Hon'ble Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts of the present case. We, therefore, respectfully following the decision of the Co-ordinate Bench in The Ismailia Urban Co-operative Society v/s ITO, ITA no.122/ Nag./2023, order dated 18/06/2024, we set aside the impugned order passed by the learned CIT(A) and hold that the assessee is eligible to claim deduction under section 80P(2)(a)(i) of the Act. Thus, grounds no.1 and 2 are allowed. 11. In the result, appeal filed by the assessee is allowed. ITA No.405/Nag./2023 Assessee's Appeal - A.Y. 2020-21 12. The assessee has raised following grounds:- "On the facts and in the circumstances of the case and in law, 1. The Ld. Commissioner of income Tax (Appeals), NFAC, Delhi has erred in confirming action of Ld AO of disallowing the deduction claimed u/s 80P(2)(a)(i) of Rs. 46,86,362/-. 2. The Ld Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in confirming action of AO not allowing the deduction u/s 80P(2)(d) of Rs. 46,86,362/-. The appellant craves leave to add, amend, modify or delete any grounds of appeal." 2. Having heard the learned D.R. appearing for the Revenue, we find that, except variation in figures, the facts and circumstances of the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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