TaxTMI 
TaxTMI 
2021 (3) TMI 933
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....ed in holding that the interest earned by the assessee from deposit made with Co-operative Banks amounting to Rs. 15,77,910 is chargeable to tax u/s 56 of the I.T.Act. 3. The brief facts of the case are as follow: The assessee is a Co-operative Society, registered under the Karnataka Co-operative Societies Act. It is providing credit facilities to its members. For the assessment year 2016-2017, the return of income was filed declaring `Nil' income after claiming deduction u/s 80P of the I.T.Act amounting to Rs. 26,86,206. The return was selected for scrutiny and assessment was completed u/s 143(3) of the I.T.Act vide order dated 17.12.2018. The Assessing Officer treated the interest received from other Co-operative Banks as income from ot....
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.... it was submitted that the same is attributable to carrying on the business activity of the assessee, and therefore, is eligible for deduction u/s 80P(2)(a)(i) of the I.T.Act. 6. The learned Standing Counsel relied on the assessment order and the CIT(A)'s order. 7. I have heard rival submission and perused the material on record. The Hon'ble Apex Court in the case of The Mavilayi Service Co-operative Bank Ltd. & Ors. v. CIT (supra) had held that the expression "members" is not defined under the Income-tax Act. Hence, it is necessary to construe the expression "members" in section 80P(2)(a)(i) of the I.T.Act as it is contained in the respective State Co-operative Act. The Hon'ble Apex Court had held that providing credit facilities to asso....
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....309 (Kar.), wherein the Hon'ble Karnataka High Court considered the decision of the Hon'ble Apex Court in the case of The Totagar's Co-operative Sales Society (supra) and held that interest income in respect of temporary parking of own surplus funds not immediately required is eligible for deduction u/s 80P(2)(a)(i) of the Act. The learned DR relied on a subsequent decision of the Hon'ble Karnataka High Court in the case of Pr.CIT v. Totagars Co-operative Sale Society Ltd. (supra). I notice that on identical facts the co-ordinate bench of the Tribunal in the case of M/s.Raithara Seva Sahakara Sangh v. ITO in ITA No.1992 & 2596/Bang/2018 (order dated 02.01.2019) had restored the matter to the A.O. for de novo consideration. The relevant find....
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....t assessee under Section 80P(2)(d) of the Act and not under section 80P(2)(a) of the Act which was the claim in AY 1991-92 to 1999-2000. The reason given by the Assessee was that in AY 2007-08 to 2011-12 investments and deposits after the Supreme Court's decision against the assessee Totgar's Cooperative Sale Society Ltd. (supra), were shifted from Schedule Banks to Co-operative Bank. U/s.80P(2)(d) of the Act, income by way of interest or dividends derived by a Co-operative Society from its investments with any other Co-operative Society is entitled to deduction of the whole of such interest or dividend income. The claim of the Assessee was that Co-operative Bank is essentially a Co-operative Society and therefore deduction has to b....