2022 (3) TMI 1283

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....1 (hereinafter 'the Act'). 2. The brief facts as per the records are that the appellant/assessee is co-operative society, engaged in the business of providing credit facilities to its members. During the course of assessment proceedings, the AO has assessee the income of the assessee at Rs. 1,86,26,312/- as against the returned income filed by the assessee on 27/09/2012 at Rs. NIL, by way of disallowing the assesee's claim of deduction u/s 80P(2)(a)(i). 3. Aggrieved the assessee carried the matter in appeal before the ld. CIT(A) who has confirmed the finding of the AO by observing as under:- "......... 7. Thus, income earned from persons other than its regular members would not be eligible for deduction U/s.80P(2)(a)....

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....d gains, vis a vis funds from other sources like deposits, loans, etc, and to show that there was no subsequent requirement of funds for its business activities, to justify keeping such funds invested, but it was unable to do so. The AO in his order stated that the assessee earned an interest income of Rs. 33,02,928/-, through fixed deposits held with various banks. The assessee was also asked to produce the details of income earned through investments during the year. Despite giving numerous opportunities, the assessee failed to produce the details of the investments. 8.8 Respectfully following the above judgments, I, hold that the income interest earned by the assessee from investments and deposits, other than SB account....

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....co-operative bank". He further submitted that, the AO has also disallowed the interest paid to the members in excess of Rs. 10,000/- in each instance and such disallowance aggregate to Rs. 1,07,95,292/- by invoking provisions u/s 40(a)(ia) of the Act as the assessee was held to be a co-operative bank. In support of the proposition that co-operative societies are not co-operative banks and that the claim of deduction under section 80P(2)(a)(i) are to be allowed in case of co-operative banks, reliance has been placed on the decision of the Hon'ble High Court of Karnataka in the case of CIT vs. Shri Biluru Gurubasava Pattina Sahakari Sangh Niyamit, Bagalkot in ITA No. 5006/2013 dated 05/02/2014. The ld. Counsel for the assessee contented that ....