2016 (4) TMI 854

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.... 2012-13 respectively. The assessee has raised various grounds of appeal for both the years but the solitary issue in all these grounds is regarding denial of deduction u/s 80P(2)(a)(i) of the Act at Rs. 55,731/- for Asst. Year 2011-12 and Rs. 69,486/- for Asst. Year 2012-13 for interest income earned from short term deposits with banks out of liquid funds with the assessee. 2. Briefly stated facts of the case are that the assessee is a credit co-op. society and it filed its return of income at Rs.NIL for Asst. Year 2011-12 on 5.10.2011 and for Asst. Year 2012-13 on 25.12.2007. Assessee's case was selected for scrutiny assessments and proceedings u/s 143(2) of the Act were initiated and income of the assessee was assessed u/s 143(3) of t....

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....ee. In support of his contention ld. AR relied on the decision of Hon. Karnataka High Court in the case of Tumkur Merchants Souharda Credit Co-op. Ltd. vs. ITO in ITA No.307 of 2014 dated 28th October 2014 and on the decision of co-ordinate bench in the case of Dhanlaxmi Credit Co-op. Society Ltd. vs. ITO in ITA No.2342/Ahd/2012 for Asst. Year 2008-09 vide order dated 8/2/2013. 5. On the other hand, ld. DR supported the orders of lower authorities. 6. We have heard the rival contentions and perused the material on record. The only issue before us is whether the assessee is eligible for deduction u/s 80P(2)(a)(i) of the Act at Rs. 55,731/- and Rs. 69,486/- for asst. years 2011-12 and 2012-13 respectively for interest income earned from....

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....st and amount as decided by the managing committee. But the total amount of deposits / and loan should not be more than twelve times of accumulated loss after deduction of recovered share amount, reserve fund and building fund but this limit can be enhanced with the permission of registrar for fixed time and conditions from time to time (6) If the funds of society is not engaged in the working of society then it will be invested as mentioned in section -71 of cooperative rules. But in special circumstances investment can be made at any other place with prior approval of registrar. 7. From the above we find that the assessee's main object is to take deposits from its members and to provide loan to the needy members for various bu....

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....attributable to carrying on the business of banking and therefore it is liable to be deducted in terms of Section 80P(1) of the Act. In fact similar view is taken by the Andhra Pradesh High Court in the case of COMMISSIONER OF INCOME-TAX III, HYDERABAD vs. ANDHRA PRADESH STATE COOPERATIVE BANK LTD., reported in (2011) 200 TAXMAN 220/12. In that view of the matter, the order passed by the appellate authorities denying the benefit of deduction of the aforesaid amount is unsustainable in law. Accordingly it is hereby set aside. The substantial question of law is answered in favour of the assessee and against the revenue. Hence, we pass the following order. 9. We also find that similar issue was dealt by the Tribunal, Delhi Bench in ITA No.2....