2013 (8) TMI 250

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... 11.11.2005, a Coordinate Bench of this Court has admitted the appeal on the following substantial question of law:- "Whether on the fact and circumstances of law, the learned Income Tax Appellate Tribunal was justified in holding that deduction u/s 80P(2)(d) of the Income Tax Act, 1961 is allowable in respect of whole of the amount of interest income received by the Cooperative Society and not on Net Income which has been arrived after allowing the permissible deductions in earning such interest income." The brief facts of the case are that the assessee is a Cooperative Society rendered variety of services to its member against collection of annual subscription from them. The assessee has filed the return of loss. While passing the o....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....osses rendered, the possibility of positive income unlikely. Section 80P(2)(d) of the Income Tax Act on reproduction reads as under:- "Where one co-operative society makes investment in another, the income so earned from such investments would be totally exempt under Section 80P(2)(d). Income from dividend and interest from any other co-operative society will be covered by the said exemption". Hon'ble Supreme Court in the case of CIT vs. U.P. Co-operative Federation Ltd., (1989) 176 ITR 435 (SC), observed that interest on cash security deposited in another co-operative society cannot be treated as investment. Such short-term call deposits, however, were treated as investment, CIT vs. Haryana Co-operative Sugar Mills Ltd., (1989) 18....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....bank on investments. The section does not speak of any adjustment as sought to be made out. The provision does not indicate any such adjustment in regard to interest derived from the co-operative society from its investment in any other co-operative society. The decision was examined by the jurisdictional High Court in the case of CIT vs. Dugdh Utpadak Sahkari Sangh Ltd., (2005) 277 ITR 35 (All), where the decision of Rajasthan High Court (supra) was upheld. Under the facts and circumstances of the instant appeal and in view of the legal position of various High Courts as well as our High Court in Dugdh Utpadak (supra), we agree with the order passed by the AO that deduction is allowable only on net income under Section 80P(2)(d) of t....