https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=754780 https://www.taxtmi.com/caselaws?id=754780 Deduction u/s 80P(2)(a)(i) and 80P(2)(d) in respect of bank interest and dividend income - DR submitted that from the assessment order it is not clear whether assessee had given loans exclusively to the members or no, therefore, case may kindly be set-aside to the Assessing Officer for de-novo adjudication - HELD THAT:- Admittedly, the Assessee is a Co-Operative Society registered under the Maharashtra State Co-Operative Society Act 1960 vide registration certificate dated 12/03/1986. AO has held assessee to be a Co-Operative Bank based on the Capital and Reserve of the assessee and based on the activities of the Assessee. No where neither the AO nor the CIT(A) has stated that the Assessee has received Banking License from RBI under the Banking Regulation Act. As decided in MAVILAYI SERVICE COOPERATIVE BANK LTD. ORS. [ 2021 (1) TMI 488 - SUPREME COURT] a Co-Operative Society will be treated as a Co-Operative Bank only if it has received License from RBI. In the case of the Assessee neither the AO nor the CIT(A) has stated that the Assessee is in receipt of License from RBI. Therefore, in the absence of Banking License, respectfully following the Hon ble Supreme Court (Supra), it is held that the assessee is not a Co- Operative Bank as envisaged in section 80P(4) of the Income Tax Act. Hence, provisions of Section 80P(4) will not be applicable in the case of the Assessee. As specifically mentioned in the Assessment Order that Assessee has invested Surplus funds in the PDCC and other banks and earned Interest Income. Thus, it is an admitted fact by the Assessing officer that the investment is of the income derived from the Business of the assessee. As per Assessment Order the main object of the assessee society is to provide credit facility to its members and also accept deposits from members. Thus, admittedly the assessee is providing credit facility to its members. Thus, the investments made by the assessee are from the Surplus generated by assessee during the course of providing credit facility to its members and the assessee has earned Interest Income by investing these surplus funds in PDCC Bank. Therefore, the section 80P(2)(a) is applicable in the case of the assessee. As decided in THE VAVVERU CO-OPERATIVE RURAL BANK LTD. [ 2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] interest Income earned by investing Income derived from Business of providing credit facility by a Co-Operative Society was eligible for deduction u/sec.80P(2)(a) of the Act. Thus we are of the considered view that the Interest earned by the assessee is eligible for deduction u/s 80P(2) of the Act. Accordingly, the AO is directed to delete the addition made by AO of the Interest Income. Assessee has also earned Dividend - The assessee has claimed deduction u/sec.80P(2)(d) of the Act. For all the reasons discussed in earlier paras, we hold that the assessee is eligible for deduction u/s 80P(2)(d) of the Act for the dividend earned from investments made in PDCC Bank. Assessee appeal allowed. Case-Laws Income Tax Tue, 04 Jun 2024 00:00:00 +0530