2020 (9) TMI 67

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....6,17,450 which was interest earned by the assessee on surplus funds available with it is eligible for deduction u/s. 80P(2)(a)(i) or 2(d) of the Act. 3. Under section 80P(2)(a)(i) of the Act, in the case of a co-operative society engaged in carrying on business of banking or providing credit facilities to its members, the whole of amount of profits & gains of business attributable to carrying on business of banking or providing credit facilities to its members is allowed as deduction in computing total income. 4. Under section 80P(2)(d) of the Act, income by way of interest or dividend derived by a co-operative society from its investments with any other co-operative society, the whole of such income is entitled to deduction. 5. It....

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....efore not eligible for deduction u/s. 80P(2)(a)(i) of the Act. 7. As far as deduction u/s. 80P(2)(d) of the Act is concerned, the AO took the view that the said section will apply only if interest income is received from a co-operative society and since the interest income received by the assessee was on investments with co-operative banks, the assessee would not be eligible to deduction u/s. 80P(2)(d) of the Act. In this regard, the AO also made a reference to provisions of section 80P(4) of the Act, which provided that provisions of section 80P shall not apply to co-operative banks governed by the Banking Regulation Act, 1949. 8. The AO also placed reliance on the decision of the Hon'ble High Court of Karnataka in the case of DCI....

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....Vs. Totgars Co-operative Sale Society Ltd., 395 ITR 611 (Karn.). We have carefully gone through the said judgment. The facts of the case before the Hon'ble Karnataka High Court was that the Hon'ble Court was considering a case relating to Assessment Years 2007-08 to 2011-12. In case decided by the Hon'ble Supreme Court in the case of the very same assessee, the Assessment Years involved was Assessment Years 1991-92 to 1999- 2000. The nature of interest income for all the Assessment Years was identical. The bone of contention of the Assessee in AY 2007-08 to 2011-12 was that the deduction under Section 80P(2) of the Act is claimed by the respondent assessee under Section 80P(2)(d) of the Act and not under Section 80P(2)(a) of the Act which w....

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....the Hon'ble Karnataka High Court in the case of Tumukur Merchants Souharda Co-operative Ltd. (supra) still holds good. Hence, on this aspect, the issue should be restored back to the AO for a fresh decision after examining the facts in the light of these judgment of the Hon'ble Apex Court rendered in the case of The Totgars Co-operative Sale Society Ltd. (supra) and of Hon'ble Karnataka high Court rendered in the case of Tumukur Merchants Souharda Co-operative Ltd. (supra)." 5. We find that in that case, the matter was restored back to the file of AO by the Tribunal for a fresh decision after examining the facts in the light of the judgment of Hon'ble Apex Court in the case of The Totgars Co-operative Sales....