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TMI Blog2025 (2) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2021-22. 2. The Assessee during the assessment year under consideration has earned the amount of Rs. 5,73,516/- on account of interest from investments in fixed deposits with Apna Sahakari Bank Ltd. which is a co-operative bank, wherein the Assessee has maintained saving bank account and fixed deposits. The Assessee therefore claimed the deduction of the said amount u/s 80P(2)(d) of the Act, however, the same was denied by the CPC, vide intimation dated 19.10.2022 u/s 143(1) of the Act. 3. The Assessee, being aggrieved, challenged the said addition/disallowance before the Ld. Commissioner, however, could not succeed and therefore the Assessee is in appeal before this Court. 4. The Assessee claimed that it is entitled for the deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed as a deduction to an assessee being a Co-operative Society. Further, section 80P(2)(d) of the Act, reads as under: "80P. Deduction in respect of income of co-operative societies. (1) ...... (2) The sums referred to in sub-section (1) shall be the following, namely:- (a) ..... (b) ..... (c) ..... (d) in respect of any income by way of interest or dividends derived by the cooperative society from its investments with any other co-operative society, the whole of such income;" 10. Thus, for the purpose of provisions of section 80P(2)(d) of the Act, two conditions are required to be cumulatively satisfied- (i) income by way of interest or dividend is earned by the Co-operative Society from the investments, and (ii) s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s CIT, Calicut, [2021] 431 ITR 1 (SC) while analysing the provisions of section 80P(4) of the Act held that section 80P(4) is a proviso to the main provision contained in section 80P(1) and (2) and excludes only Cooperative Banks, which are Co-operative Societies and also possesses a licence from RBI to do banking business. The Hon'ble Supreme Court further held that the limited object of section 80P(4) is to exclude Co-operative Banks that function at par with other commercial banks i.e. which lend money to members of the public. Thus, we are of the considered view that section 80P(4) of the Act is of relevance only in a case where the assessee, who is a Co-operative Bank, claims a deduction under section 80P of the Act which is not the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he lower authorities that with the insertion of Sub-section (4) of Sec. 80P, vide the Finance Act, 2006, with effect from 01.04.2007, the provisions of Sec. 80P would no more be applicable in relation to any co-operative bank, other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank, but however, are unable to subscribe to their view that the same shall also jeopardise the claim of deduction of a cooperative society under Sec. 80P(2)(d) in respect of the interest income on their investments parked with a co-operative bank. We have given a thoughtful consideration to the issue before us and are of the considered view that as long as it is proved that the interest income is being deriv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s deposits kept with a Cooperative Bank, was not eligible for deduction under section 80P(2)(d) of the Act. We find that in an earlier decision the Hon'ble Karnataka High Court in Pr.CIT v/s Totagars Co- operative Sales Society, [2017] 392 ITR 74 (Karn.) held that according to section 80P(2)(d) of the Act, the 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. Thus, there are divergent views of the same Hon'ble High Court on the issue of eligibility of deduction under section 80P(2)(d) of the Act in respect of interest earned from Co-operative Bank. No decision of the Hon'ble jurisdictional High Court was brought to our notice ..... X X X X Extracts X X X X X X X X Extracts X X X X
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