AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (5) TMI 188
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.... are the return of income for the AY 2013-14 was e-filed on 03.10.2013 declaring total income at Rs. NIL/-. The return of income was processed u/s. 143(1) of the IT Act. The case was selected for scrutiny under CASS. The assessee has shown Gross Total Income of Rs.7,65,358/- and claimed deduction u/s.80P(2) of the IT Act of Rs.7,65,358/- thereby declaring total income at Rs. Nil. During the course of assessment proceedings, various details/explanation were, called for and placed on record. After careful consideration, The AO held that the assessee's case falls within the mischief of sub-section (4) of section 80P and the assessee has not following the principal of mutuality concept and therefore, the deduction claimed u/s. 80P(2) was disallowed. Also the assessee earned interest income from FD/Deposit from ICICI Bank Ltd. and Central Bank of India amounting Rs.1,56,227/- and Rs.32,101/- respectively but not offered for tax. Therefore, interest income amounting to Rs.1,88,328/- was added to the total income of the assessee under the head income of other sources. 4. Upon assessee's appeal learned CIT(A) held as under :- "7.1.6 Considering the aforesaid judicial pronouncements,....
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....er it is observed that the Assessing Officer has not disallowed any deduction u/s 80P(2)(c) of Rs.50,000/-. Hence, such mention by the appellant in his ground cannot be taken up for adjudication as it is not arising from the assessment order against which the appeal is filed. It is also not forthcoming from the submission of the appellant whether such a claim for deduction u/s.80P(2)(c) was made in the return of income filed for the impugned assessment year. In the given facts & circumstances this ground of appeal is dismissed.'' 5. Against the above order assessee is in appeal before the ITAT. 6. Learned Counsel of the assessee in written submission has submitted as under :- GROUNDS OF APPEAL NO.1 The Ld. CIT(A) has erred in affirming with the Ld. AO in considering income earned by the society in normal course of business as income from other sources and denying deduction u/s 80P(2)(a)(i). SUBMISSION: During the year the society has earned income from following sources: a) Commission from Future General Insurance Rs. 31040/- b) Commission from ICICI Bank Rs. 61,559/- c) Interest from ICICI Bank Rs. 32,101/- d) Interest from Central Bank of India Rs. 1....
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....he business of bank falling under the head "Profits and gains of business" and thus deductible under section 80P(2)(a)(i) of the Income-tax Act 1961." Relying on the decision of the Hon Supreme Court in the case of CIT v/s. Nawanshahar Central Co-operative Bank Ltd [2007] 289 ITR 6 (SC) CBDT has issued Circular no. 18/2015 from which it is clear that "Investments made by a co-operative societies / banks are part of the business of banking and therefore, the income arising from such investments is attributable to the business of the banking falling under the head 'Profits and Gains of Business and Profession and eligible to claim deduction u/sec.80P (2)(a)(i)of the Act". (Copy of the CBDT Circular-18/2015 is enclosed) The Hon. ITAT Mumbai bench, in the case of ITO-17(3)(4), Mumbai Vs. State Bank of India Employees M.S Patel Co-op. Credit Society Ltd., held that "the assessee is a cooperative credit society, which is engaged in the activity of providing credit facilities to its members after accepting deposits from its members. In the course of assessment proceedings, the Assessing Officer noted that assessee had inter-alia, earned interest on fixed deposit with State Ba....
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.... ITAT Mumbai Bench in the case of Jaoli Taluka Sahakari Patpedhi Maryadit for AY 2010-11 in ITA No 6627/Mum/2014 dated 10/08/2015 is revealing and covers the matter squarely in favor of the appellant, In that case, the issue was identical on facts. In that case, the CIT(A) held that the interest income earned by the society from its investments in various cooperative banks as well as scheduled banks is to be held as income from other sources as that interest could not be said to be generated from business activities, in the said order, the ITAT has followed the decision of the Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd (2015) 230 Taxman 309. The Hon'ble Karnataka High Court has considered the decision of the Hon'ble Supreme Court in Totgars case (cited by the AO in the present appeal), and held that the interest income arising from investments of the society in both cooperative as well as scheduled banks is "attributable" to the business activities of the assessee and is therefore eligible for a deduction u/s 80P(2)(a)(i). The ITAT Mumbai in its order has followed the decision of the Karnataka High Court and held that in....
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....e Bank Ltd. [1992] 196 ITR 174. In our view, the assessee-society was entitled to get deduction from the profits and gains attributable to its activity of letting out the shops to persons other than its members to the extent of Rs. 20.000 in each of the said assessment years. 6. Accordingly, we answer the question in the affirmative, that is, in favour of the assessee-society subject, however, to the limit as mentioned in clause (c) of subsection (2) of section 80P of the Act." (Copy of order is attached) In our case the same has not been granted by the Assessing Officer. We hereby appeal to allow the deduction for the same." 7. I have heard learned Departmental Representative and perused the records. As regard ground for interest from banks the same is covered in favour of the assessee by the ITAT decision in the case of State Bank of India Employees M.S. Patel Co-operative Credit Society Ltd. (ITAT No. 1970/Mum/2016 vide order dated 31.7.2017) wherein it was held that : "3. In brief, the relevant facts are that the assessee is a co-operative credit society, which is engaged in the activity of providing credit facilities to its members after accepting deposits from its m....
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....ot a cooperative society), could be said to be "attributable" to the business activity of the appellant. In this connection the decision of the Hon'ble ITAT Mumbai Bench in the case of Jaoli Taluka Sahakari Patpedhi Maryadit for A.Y. 2010-11 in ITA No 6627/Mum/2014 dated 10/08/2015 is revealing and covers the matter squarely in favor of the appellant. In that case, the issue was identical on facts. In that case, the CIT(A) held that the interest income earned by the society from its investments in various cooperative banks as well as scheduled banks is to be held as income from other sources as that interest could not be said to be generated from business activities. In the said order, the ITAT has followed the decision of the Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd (2015) 230 Taxman 309. The Hon'ble Karnataka High Court has considered the decision of the Hon'ble Supreme Court in Totgars case (cited by the AO in the present appeal), and held that the interest income, arising from investments of the society in both cooperative as well as scheduled banks, is "attributable" to the business activities of the assessee ....