2020 (5) TMI 135

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....lls Ltd., the assessee, a cooperative society manufacturing sugar claimed deduction u/s. 80(P) from the interest earned from its investments with the Dharmapuri district central co-op bank Ltd. While making the assessment for the assessment year 2015-16, the AO held that the interest earned from investments made in any bank, not being a co-op society, is not eligible for deduction u/s. 80P(2)(d) and rejected the assessee's claim. Aggrieved, the assessee filed an appeal before the CIT(A). The Ld. CIT(A) dismissed the appeal. Aggrieved against the order of the Ld. CIT(A), the assessee filed this appeal. 3. The Ld. AR submitted that the assessee received an amount of Rs. 10.93 crores as interest from the investment with Dharmapuri Distri....

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....rities. 5. We heard the rival submissions, gone through the relevant material and find merit in the submission of the Ld. AR. The fact remains that the assessee is a co-operative society. It has earned the impugned interest from Dharmapuri District Co-operative Bank Ltd., which is also a co-operative society engaged in banking business. The relevant portion of the order of the Jurisdictional High Court in the case of CIT vs Salem Agricultural Producers' Cooperative Marketing Society in TCA No. 5/2015 dated 10.08.2016 is extracted as under: "6. Addressing the said issue, at paragraph No.8, in I.T.A.No.732/MDS/2014 dated 30/6/2014, the Tribunal has ordered as hereunder:- "The case of the assessee is that the income by way....

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....ive Bank Ltd., (supra), we hold that the assessee is eligible for benefit under Section 80 P (2) (d) of the Act and also this being a beneficial section to the co-operative Societies." 7. Let us consider the decision in KANGRA CO-OPERATIVE BANK LTD'S case referred to by the tribunal. The question of law framed therein is as follows:- "Whether on the facts and circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the interest income earned by the assessee on deposits made with H.P.State Co-operative Bank in the shape of F.D.Rs. is income derived from banking business and therefore, eligible for deduction under Section 80 P (2) (a) (i) of the Income Tax Act?" 8. After cons....

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....nts have been made in the H.P.State Co-operative Bank which is also a cooperative Society and, therefore, even under Section 80 P (2) (d) of the Act, interest income from investments made in any co-operative Society would also be entitled for deduction." 9. Though Mr.J.Narayanasamy, learned Senior Standing Counsel for Income Tax Department submitted that the Tribunal was not right in holding that the interest earned from the Salem Agricultural Producers Co-operative Marketing Society Ltd., for reduction under Section 80 P (2(a) (i) of the Income Tax Act, we are not inclined to accept the said contentions. For the reason that a District Central Co-operative Bank, is also a Society, in which event, the income by way of interest and d....