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2017 (10) TMI 923

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.... the expenditure incurred for earning such income must be allowed u/s.57 of the Act and Pro-rata interest income received from fixed deposit of Sardar Sarovar Nigam Limited only can be taxed. It is submitted that the same be allowed now. 2. The relevant facts as culled out from the materials on record are as under:- The appellant had filed return of income declaring total income at Rs. Nil after claiming deduction of Rs. 13,14,930/- u/s.80P(2)(a)(i) of the Act. The return was processed u/s.143(1) of the Act at the income of Rs. 13,93,850/- after disallowing deduction u/s.80P(2)(a)(i) and depreciation of Rs. 78,923/- by CPC, Bangalore. The AO on verification of the accounts and details submitted by the appellant noticed that the appellant is a co-operative society set up by primary school teachers of Taluka for the purpose of providing financial services by giving loan and accepting deposits from its members. The society has claimed deduction of Rs. 13,14,930/- u/s.80P(2)(a)(i) of the Act. The AO after considering the reply made before him by the appellant held as under: "3.5 In support of his claim, assessee has relied upon the decision of 1TAT, Ahmedabad in the case of Jafari....

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....Report" of the society does not reflect that society is meant to provide loans to members for agriculture purpose. Business of the society as per Audit Report is providing credit facilities to members. Perusal of loan applications furnished with the submission shows that the loans were granted for the purpose other than agriculture i.e. for social and housing purpose. Decision of Jafri Momin Vikas Co-op Credit Society Ltd relied upon by assessee has not been accepted by the department. In the same case in different year i.e. for AY 2009-10 also on similar facts, the issue is being disputed in appeal by department, Hence the issue is riot finally settled. Facts in the case of Dediyasan Industrial Co-op Credit So. Ltd, Mehsana decision relied upon, are different from the present case. 3.9 In view of the aforesaid, it is amply clear that the assessee is a 'Primary Credit Society' and not a primary agriculture Credit Society. Hence deduction u/s.80.P of the Act claimed by the assessee is not allowable. Accordingly, an amount of Rs. 13,14,930/- claimed as deduction u/s 80P(2)(a)(i) of the IT Act is disallowed and added to the total income for the year under consideration."....

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....n the Finance 2006. It is respectfully submitted that the above matter is already covered and decided in favor of assessee by Hon'ble CIT in its own case in Appeal No.CIT(A)/GNR/li9/2011-12 for A.Y.2009-10. The copies of which are enclosed herewith vide Page No.29 to 44. Against Order of CIT, Revenue made an appeal before ITAT on 13/06/2012 But Same is dismissed by the ITAT by stating on Page No.2 &3 "CIT(A) has recorded a finding that the assessee has been claiming to be eligible for deduction u/s 80P(2)(a)(i) for past many years and in earlier years has also been allowed the deduction and facts of the assessee have not changed during the year." The copy of the Hon'ble ITAT order is also enclose herewith vide page no. 45 to 47. Further the entire income earned and claim by the Co. Operative Society u/s 80P(2)(a)(i) of the I.T. Act, 1961 belongs to activities undertaken for members of the societies only. The main purpose of the society is to undertake the various activities to help the members for their promotion and development. Therefore, the whole income earned by the Society should be eligible for the deduction u/s.80P(2)(a)(i) of the" I.T. Act, 1961. The Appellan....

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....to 90. Further the Appellant relies on following decisions, wherein the consistent view have been taken by the Hon'ble Apex Court and other Authorities on the same issue: (i) M/s. The Totgars' Co. operative Sale Society Ltd V/s I.T.O., Karnataka [Civil Appeal No.1622 of 2010 (S.C.)] [Refer Page no.91 to 104] (ii) Mehsana District Central Co-Operative Bank Ltd. V/s I.T.O. [119 Taxman 785 (S.C.)] (Refer Page no. 105 & 106] (iii) ACIT Vs. The State Transport Employees Co-Op. Credit and Thrift Society Ltd. [ITA No. 2673/Ahd/2012] [Refer Page no. 107 to 115] (iv) I.T.O. Vs. Vardhaman Nagari Sahakari Patsanstha Ltd. [ITA No.1142/PN/2O11 ] [Refer Page No. 116 to 121]." 3. After considering the facts and circumstances of the case learned CIT(A) partly allowed the appeal of the assessee. 4. Now appellant's appeal is before us. 5. We have gone through the relevant record and impugned order. On the other hand learned DR cited a judgment of Gujarat High Court [2016] 389 ITR 578 (Guj), State Bank of India vs. Commissioner of Income Tax, in this case, Hon'ble High Court has held that: "The assessee had claimed deduction under section 80P and not specifically under sectio....