TaxTMI 
TaxTMI 
TaxTMI 
2018 (12) TMI 1912
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....ed in allowing the deduction u/s.80P to the tune of Rs. 71,07,151/-without appreciating the facts that the interest income earned from nationalized Bank ft other institutions needs to be considered as income from other sources and not as business income as held in the case of Totgars Co-op. Sale Society Ltd. v. ITO Karnataka [2010] 188 Taxman 282 (SC). 3. On the facts and in the circumstances of the case and in Law, the Ld. CIT(A) has erred in holding that the claim of deduction u/s.80P(2)(d) of the Act is Rs. 4,96,37,547 which is much higher than the Gross total income of Rs. 2,60,99,821/- and amount of Rs. 71,07,151 was included. However, an amount of Rs. 71,07,151/- representing interest income earned from deposits held with representing interest income earned from deposits held with nationalized banks is considered as income from other sources and no any deduction u/s. 80P is allowable against this income. The amount of Rs. 71,07,151/- is separate from business income and cannot be included in the business income and assessee Co-operative society is separately required to be taxed on this amount. 4. On the facts and in the circumstances of the case and in Law, the Ld. CIT(A....
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....ith Nationalized Banks. While completing the assessment, the Ld. AO also relied upon the decision in the case of CIT v. Secunderabad Club Picket [2012] 21 taxmann.com 54/ 340 ITR 121 (AP) and the decision of the Hon'ble Supreme Court in the case of Bangalore Club v. CIT [2013] 29 taxmann.com 29/ 212 Taxman 566 / 330 ITR 509, wherein it was held that interest income on Bank FD is liable for tax and concept of mutuality is absent. Accordingly, the Ld. AO has held that interest income earned from other than co-operative societies are not eligible for deduction u/s. 80P and accordingly made addition of Rs. 71,07,151/- to the total income. The assessee has preferred appeal against the above addition of Rs. 71,07,151. 4. Being aggrieved, the assessee filed an appeal before the Ld. CIT(A). After considering the submissions of the assessee, the CIT(A) has allowed the appeal of the assessee by observing as under: '6. Submission filed by the appellant along with 'material brought on record has been duly considered inter alia the findings of the assessment order passed by the AO. This is an admitted fact that during the year under consideration, the assessee has shown earned Rs....
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.... Vibhag Gram Vikas Co-op Credit Society Ltd. [2018] 96 taxmann.com 529 (Surat - Trib.) and also by decision of Tribunal in Asstt. CIT v. Bardoli Vibhag Gram Vikas Co-op Credit Society Ltd. [2018] 97 taxmann.com 381 (Surat - Trib.) . 7. We have heard the rival submissions and perused the relevant material on record. We find that the issue is covered by the order of Tribunal dtd. 28.06.2018 in which it was held as under: 8. We heard both the sides, we find that there is not direct specific or definite expenditure factually incurred to earn income of dividend and or intent from investments with other co-operative societies eligible for deduction u/s.80P(2)(d) of the Act. hence, the action of the AO in assuming expenditure alleged to have incurred or deemed to have incurred for earning dividend, without bring any evidence or record to prove the nexus between expenditure disallowed and dividend/interest income earned from investment with other co-operative societies in wholly arbitrary imaginary, hence, not sustainable in law. It is seen that the assessee has been statutorily investing its surplus fund from the year 1992 with other co-operative societies including co-operative banks. ....
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....f interest or dividends 'derived by the co-operative society from its investment with any other 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. The provision does not indicate any such adjustment in regard to interest derived from the co-operative society from its investment in any other co-operative society. Therefore, we do not agree with the argument advanced by learned counsel for the Revenue. In our opinion, the learned Tribunal was right in law in allowing deduction under Section 80P(2)(d) of the Income-tax Act, 1961. In respect of interest of Rs. 4,00,919 on accoun....