AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (5) TMI 371
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....ing grounds of appeal: "1. The learned AO has erred in disallowing the interest of Rs. 24,81,224.00 on FD with The SK Dist Co. Op Bank and other nationalized Banks under Section SOP (2)(a)(i) and under section 80P (2)(d) in as much as the assessee is a Co-Operative Society and has received the interest from the SK Dist. Co. Op. Bank and other Nationalised Banks carrying on business in banking and therefore the interest is deductible under Section 80P (2)(a)(i) as per following cases: i. Pr. CIT Vs Ekta Co-operative Credit Society Ltd. 91 taxmann.com 42-402 ITR 85 (Guj.) ii. CIT Vs Jafari Momin Vikas Co-operative Credit Society Ltd 2014, 49 taxmann.com 571 362 ITR 331 [Guj.) iii. ACIT Vs. Peoples Co.op. Cr....
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....: "4.3 I have carefully gone through the assessment order as well as material on record. The provisions of section 80P(2)(d) regarding deduction in respect to interest earned by co-operative society reads as underpin 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". From a plain reading of the above section, it is clear that the section refers to interest and dividends from its investments in another co-operative society only. Thus, this deduction cannot be extended to the interest income earned from the investment in any bank whether it is co-operative or scheduled bank. 4.4 The Hon'ble Supreme ....
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....t is out of its operational funds and not out of surplus funds. Secondly , in the case of Totgars Co-op sale Society Ltd., in appeal for subsequent Assessment years the Honb'le Karnataka High court in its judgement given in 2017 [83 taxmann.com 140] has stated "The sheet anchor of the contention of the learned counsel for the assessee misses two essential points required for claiming the exemption or 100% deduction from gross total income for a co-operative society: (i) that the character or nature of income, namely interest on investments or deposits, does not change irrespective of the fact whether it is earned or received from a Schedule Bank or Co-operative Bank, (ii) that What the Hon'ble Supreme Court held in the case....
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....e relied upon the observations made by Ld. CIT(A) in the order. 6. We have heard the Ld. Departmental Representative and perused the material on record. We note that the issue on allowability of deduction u/s 80P of the Act on interest from nationalised banks is directly covered in favour of the Revenue by the jurisdictional Gujarat High Court in the case of SBI Employees Cooperative Credit and Supply Society v CIT 389 ITR 578 (Gujarat), where the Gujarat High Court held that in case of a society engaged in providing credit facilities to its members, income from investments made in banks is not eligible for deduction under section 80P of the Act. Therefore, so far as the interest earned from nationalised banks is concerned, respectfully ....
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....uch interest would be chargeable to tax after deducting therefrom administrative and other expenses incurred for earning the same that is only the net interest would be chargeable to tax in the hands of the assessee. 6.1 Now, so far as the interest earned by the assessee on deposits kept with Co-Operative bank is concerned, the Hon'ble High Court in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Hon'ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), have held that the interest income earned by a co-operative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d)....