TaxTMI 
TaxTMI 
TaxTMI 
2017 (3) TMI 260
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....osed to the law and not on the facts and circumstances of the case. 2. The Commissioner of Income Tax (Appeals), Davangere, erred in deleting the additions made u/s. 80P(2)(a)(i) by deciding the Co-operative Societies are distinct from Co-operative Banks and deduction U/s 80P(2)(a)(i) is applicable to Co-operative Societies as well as deduction U/s 80P(2)(d). On similar issues, SLP filed in Supreme Court in the case of Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha, Bagalkot and also in the case of M/s. Honnali Urban Co-operative Society, Honnali. 3. For these reasons, the order of the CIT(A) may be reversed and that of the AO may be restored. 4. For these and other grounds that may be urged upon, the order of the CIT(A) may be ....
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....titled for deduction u/s. 80P in view of amendments to Banking Regulation Act, according to which, co-operative societies engaged in providing credit facilities to its members will come under the purview of RBI and therefore are akin to co-operative banks, hence all the provisions of section 80P(4) of the Act apply to them also. The AO further held that provisions of section 80P(4) r.w.s. 2(24)(viiia) of the Act does not allow the co-operative society engaged in the business of banking (co-op. Banks) to claim deduction u/s. 80P from the AY 2007-08, except in the case of primary agricultural credit society or a primary co-operative agricultural and rural development bank. The AO accordingly held that assessee is not eligible for deduction u/....
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....u/ s. 80P(2)(a)(i). He has also made clear distinction between a Co-operative Society and a Co-operative Bank. Respectfully following this order, I hold that the income earned by cooperative societies are covered by exemption u/s. 80P(2)(a)(i) of the Act. 7. In this case, the assessee, a co-operative society, is providing credit facilities to its members. It is not carrying on any other business. The interest income earned by the assessee by providing credit facilities to its members is deposited in the banks for a short duration which has earned interest. Therefore whether this interest is attributable to the business of providing credit facilities to its members is the question that requires to be decided or whether the interest earned o....
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....u/ s. 80P(2) (a) of the Act, the whole or such income is eligible for deduction u/ s. 80P of the Act. 4. The interest income stems from the deposits made by a mandatory requirement for carrying on the activity of providing credit facilities to the members. 5. If such deposits are not made as required as per the statute then it would be an offence under the law and it would not be in a position to carry on its business. 6. The interest income earned from deposits are thus incidental to and inextricable to and inextricably linked with the activity of providing credit to its members and consequently the interest thereon can't be considered as a source of income having distinct identity for itself. 7. The word "attributable to" is m....
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....t the restrictive interpretation given to co-operative society u/ s. 80P(2) (d) was *not warranted. The ITAT B'lore Bench in this case through a detailed reasoning came to conclusion that the interest and dividend earned by the appellant from co-operative bank was eligible for deduction u/ s. 80P(2) (d) of the Act. 11. In conclusion it is held that the interest income earned on deposits made with other co-operative banks/society are fully deductible u/s. 80P(2)(a)(i) from the income liable to tax though the assessee has claimed the same as exempt u/ s. 80P(2) (d) and the same is also exempt u/ s. 80P(2)(d) as stated above. 12. In the result the appeals for the three assessment years viz, 2010-11, 2012-13 & 2012-13 are allowed in favou....