TaxTMI 
TaxTMI 
2021 (3) TMI 1210
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....neither the assessee nor its authorized representative appeared before the Bench on the above date. As there is non-compliance by the assessee, we are proceeding to dispose off this appeal after examining the materials available on record and after hearing the Ld. Departmental Representative (DR). 2. The grounds of appeal filed by the assessee read as under : 1. The Ld. CIT(A) erred in holding that the interest income of Rs. 16,49,464/- earned by the appellant from investment of surplus funds with co-operative banks is not eligible for deduction u/s 80P(2)(d) or 80P(2)(a)(i). 1.1 The Ld. CIT(A) overlooked the fact that the part of the investments with co-operative banks were statutory (mandatory) investments and not of surplus funds an....
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....lities to its members only. The society collects/accepts/raise funds in the form of share capital, deposits from members and provide credit facilities to the members only, and the society invest the remaining funds as per the provisions of section 66, 70 and rules 54 and 55 and the bye laws of the society...... The total funds which is contributed/collected from members or generated in the activity or business of society has to be utilized by the society in the following manner and priorities. a) To provide credit societies to members within the framework of the Act, Rules & Bye Laws of the Society. b) To invest the statutory Reserve & funds as per the provisions of section 66 & 70 of the Maharashtra State Co-operatives Societies Act ....
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....80P w.e.f. AY 2007-08. Thus it is held by him that as per the explanatory note and the new sub-clause (viia) in clause (24) of section 2 of the Income Tax Act, a co-operative society providing credit facilities to its members is also covered by the amended provisions of the Act. Therefore, the AO disallowed the claim of deduction of Rs. 21,16,023/- made by the assessee u/s 80P of the Act. 4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). We find that vide order dated 10.06.2019 the Ld. CIT(A) held that the interest income earned by the assessee from co-operative bank is not eligible for deduction u/s 80P(2)(d) of the Act. Relying on the judgment of the Hon'ble Supreme Court in the case of Totgars Co-o....
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....neys by way of deposits on general public, would not be treated as Co-operative Bank ; it would be entitled to deduction u/s 80P." In CIT v. Nilgiris Co-operative Marketing Societies Ltd. (2017) 77 taxmann.com 23 (Madras), again the Hon'ble Madras High Court has held that "where assessee co-operative credit society was providing credit facilities to its members alone and not general public large and it also did not receive monies by way of deposits on general public, it would not be turned as co-operative banks." 6.1. Further the Hon'ble Karnataka High Court in the case of PCIT and Another vs. Totagars Co-operative Sale Society 392 ITR 0074 has held in para 8 to 11 as under:- "8. The issue whether a Co-operative Bank is considered t....
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.... Ltd. v. ITO [2010] 322 ITR 283/188 Taxman 282 (SC). However, the said case dealt with the interpretation, and the deduction, which would be applicable under Section 80P(2)(a)(i) of the I.T. Act. For, in the present case the interpretation that is required is of Section 80P(2)(d) of the I.T. Act and not Section 80P(2)(a)(i) of the I.T. Act. Therefore, the said judgment is inapplicable to the present case. Thus, neither of the two substantial questions of law canvassed by the learned counsel for the Revenue even arise in the present case." Thus, the Hon'ble High Court has held that for purpose of section 80P(2)(d) a Co-operative Bank should be considered as a Co-operative Society 6.2 Let us conclude with a recent judgment dated 12th Ja....
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....lent provision enacted by Parliament to encourage and promote the credit of the cooperative sector in general must be read liberally and reasonably, and if there is ambiguity, in favour of the assessee. A deduction that is given without any reference to any restriction or limitation cannot be restricted or limited by implication, as is sought to be done by the Revenue in the present case by adding the word "agriculture" into Section 80P(2)(a)(i) when it is not there. Further, section 80P(4) is to be read as a proviso, which proviso now specifically excludes co-operative banks which are co-operative societies engaged in banking business i.e. engaged in lending money to members of the public, which have a licence in this behalf from the RBI. ....