TaxTMI 
TaxTMI 
2020 (12) TMI 341
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....m other cooperative banks. 2.2. The learned CIT(A) vide their order has not dealt with the issue of not filing the return of income in time and thereby erred in allowing the deduction u/s.80P, overriding the provisions of section 80A(5) which stipulates that no deduction shall be allowed if the assessee fails to make a claim in the return of income. {Reliance is placed in the case of Kadachira Service Co-Op. Bank Limited Vs. ITO Ward-1 Kunnur reported in "141 lTD 270" by the Honourable Cochin Tribunal's decision- Wherein it was held that filing of Return of Income and making a claim therein in respect of deduction u/s 80P is mandatory as per provisions of section 80A(5)}. 2.3 The learned CIT(A) failed to appreciate that the assessee society has not earned any interest from any other Co-operative society but has earned interest from a Co-operative Bank where it has parked some of its funds and hence not eligible for deduction u/s.80 P(2)(d). {Reliance is placed in the case of "Totagars Co-Operative Sales Society Limited Vs. ITO in 188 Taxman 282 (2010) by time Honourabie Supreme Court's decision" Wherein it was held that the interest earned by the....
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....80P(2)(a)(i) of the Act, the assessee has got other income of Rs. 55,14,785/- being interest received on deposits kept in other co-operative banks and the same has been claimed as income earned from business to be eligible for deduction u/s.80P(2)(a)(i) of the Act. The AO further noted that however as per provisions of u/s.80P(2)(d) of the Act, the assessee is not entitled for claiming deduction for interest income earned from deposits kept in co-operative banks or commercial banks and hence was of the opinion that the assessee is not entitled for deduction u/s.80P(2)(d) of the Act on interest income. Accordingly rejected the claim of the assessee and disallowed total deduction claimed u/s.80P(2)(a)(i) for Rs. 2,19,45,464/-. 4. Being aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the ld.CIT(A), the assessee submitted that it is entitled for deduction u/s.80P(2)(a)(i) of the Act in respect of profit and gains derived from its business because the assessee being a co-operative society is mainly engaged in providing banking business to its members. The assessee further contented that although it has earned interest income from depos....
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.... co-operative society comes under "other sources" as such the societies are not eligible for deduction u/s.80P of the Act in respect of such interest income. 7. The ld.AR for the assessee on the other hand strongly supporting the order of the CIT(A) submitted that the assessee is entitled for deduction u/s.80P(2) of the Act in respect of its income including interest income because the assessee is mainly engaged in providing credit facilities to its members and as per the provisions of Section 80P(2)(a)(i) of the Act, in the case of a co-operative society engaged in carrying on the business of banking or providing credit facilities to its members the profit derived from such activity is eligible for deduction. The AR further submitted that as per Section 80P(2)(d) of the Act, a cooperative society can claim deduction towards income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society. In this case, the assessee has kept surplus funds with other co-operative banks and the same is part of its business activity and hence total income including interest earned from deposits is eligible for deduction. The CIT(A) ....
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....(1) or 148 of the Act can also be accepted and acted upon provided further proceedings in relation to such assessments are pending in the statutory hierarchy of adjudication in terms of the provisions of the IT Act. In all such situations, it cannot be treated that a return filed at any stage of such proceedings could be treated as non est in law and invalid for the purpose of deciding exemption under Section 80P of the Act." 9. Coming back to the issue of interest income earned from fixed deposits and claimed deduction u/s.80P(2)(d) of the Act. The AO has denied deduction claimed u/s.80P(2)(d) of the Act in respect of interest income earned from a co-operative bank on the ground that as per the said provisions, interest earned from any other co-operative society is only eligible for deduction u/s.80P(2)(a)(i) of the Act. The AO has taken support from the decision of the Hon'ble Supreme Court in the case of M/s. Totagars Co-operative Sales Society Ltd., supra. We have gone through the findings recorded by the AO in the light of the decision of the Hon'ble Supreme Court in the said case and find that the fact of the case before the Hon'ble Supreme Court is entirely different f....