TaxTMI 
TaxTMI 
2017 (4) TMI 1545
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....ll measure with proper evidences. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that no expenses were incurred for earning such income on which assessee has claimed deduction u/s.80P(2)(d) despite the fact that the assessee had been using interest bearing funds for its normal business activity of advancing credit to members. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that such income on which assessee has claimed deduction u/s.80P(2)(d) was earned from investments made from non-interest bearing funds. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that provisions of Sec.80P(2)(d) and 80P(4) of the Act clearly states that tahe interest received from other co-operative societies are eligible for deduction and not from co-op, banks. As per the provisions of Sec. 80P(4) of the Act, it is clear that co-op. banks do not fall under the category of co-op.societies. Thus, the AO has rightly held that the interest income received from co-op, banks are not allowable u/s.80P of the Act in the c....
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....ereafter, AO computed the income claimed by assessee as eligible for deduction u/s. SOP of the Act as under:- Surat Dist. Co-op. Bank 23,08,316/- Madhi Vibhag Khand Udyog Mandali 7,14,286/- Khedut Sahakari Jin & Press. Society 15,77,351/- Gujarat State Fruits and Veg. Federation Ltd. 1,97,260/- Mota Vibhag Seva Sahakari 1,86,575/- Surat Dist. Co-op. Bank 2,50,44,943/- Surat Dist. Co-op. Bank 24,11,547/- Share Dividend 81,00,375/- Total 4,05,40,653/- . The assessing officer further noticed that during the year, the assessee has earned total gross interest income of Rs. 5,99,05,576/-. The assessing officer observed that assessee was not having any funds for investment to earn interest income and whatever deposit received from the members were provided loan out to the other member. The excess amount was deposited in the bank from which the assessee has earned interest income. He further observed that whatever assessee has accepted from the members it has paid interest and on the amount of loan given to its members and on the amount deposited in the bank it has earned interest income. He observed that there was direct nexus betwe....
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....appeal of the assessee by observing as under:- "5. I have considered the facts of the case, basis of disallowance by AO and submissions of appellant. The AO has worked out the deduction u/s. 80P(2)(d) at Rs. 26,75,475/- by excluding the interest received by appellant from Co-operative banks including Surat Dist. Co-operative Bank Ltd. This amount is further reduced on proportionate basis by taking into account the total receipts and total expenses as shown by appellant and finally the allowable deduction is worked out by him at Rs. 21,45,140/-. Thus, the AO has not allowed the deduction on the interest and dividend received from Co-operative banks and also on gross amount of interest and dividend received from other Co-operative societies. This stand taken by AO does not find support from the facts of the case. As submitted, the appellant society has been statutorily investing its surplus fund from the year 1992 with other Co-operative Societies which include Co-operative Banks. On such investments, the appellant has been receiving interest and dividend which has been claimed as deduction u/s. 80P(2)(d) of the Act. It is not a case where this income has derived out of inve....
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....tate from bank and bank commission, which was claimed by the appellant u/s. 80P(2)(d)(a)(i). For the sake of convenience, we are reproducing sections as under: Section 80P(2)(a)(i)- Carrying on the business of banking or providing credit facilities to its members. Section 80P(2)(d)- In respect of any income by way of interest or - dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income. After considering the factual as well as legal position on this issue, the appellant had not incurred any expenditure on the earning of the dividend and interest from other co-operative society as this investment was made long back. No new investment had been made by the appellant during the year under consideration. Thus, we confirm the order of the CIT(A) in all the years." In view of above, Hon'ble ITAT confirmed the order of CIT(A) who had deleted the addition made by AO by disallowing the deduction claimed on account of interest received from other Co-operative societies. Thus, in the case of appellant also, the proportionate disallowance of interest and dividend cannot be held susta....
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....mary Agricultural Credit societies or a Primary Co-op agricultural and Rural Development Bank. Regarding eligibility for receiving interest received from the co-operative bank we have noticed from the judicial pronouncement in the case of Surat Vankar Sahakari Sangh Ltd. v. Assistant Commissioner of Income Tax (2016)72 taxmann.com 169(Gujarat) in which the Hon'ble High Court of Gujarat held as under:- "8. Section 80P(2)(d) of the Act allows whole deduction of an income by way of interest or dividends 'derived by the co-operative society from its investment with any other co-operative society. This provision does not make any distinction in regard to source of the investment because this Section envisages deduction in respect of any income derived by the co-operative society from any investment with a co-operative society. It is immaterial whether any interest paid to the co- operative society exceeds the interest received from the bank on investments. The Revenue is not required to look to the nature of the investment whether it was from its surplus funds or otherwise. The Act does not speak of any adjustment as sought to be made out by learned counsel for the Revenue.....