2022 (10) TMI 607

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.... from Nationalized bank as income from other sources u/s 56 of IT Act by wrongly applying SC judgment of Totgar co-op sale society (188 Taxman 282 SC) without considering the facts of different nature or business of appellant and different nature or business of appellant and different nature of credit society. 2. CIT(A) has erred in law and facts in confirming the addition of Rs. 2,09,123/- without computing the proportionate deduction u/s 57 from gross interest income as considered income u/s 56 of IT Act." 3. The assessee is a Credit Society, registered under the Gujarat Cooperative Societies Act, 1961 engaged in the business of providing credit facilities to members of the society as per the bye-laws of the Society. The assessee socie....

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....est free funds as well as interest bearing funds. The Ld. AR further submitted that since the assessee did not fall within the provisions of Section 80P(2)(a)(i) of the Act then deduction claim be reduced proportionately in the ratio of nationalized bank interest to total income and thus assessee agree for proportionate disallowance as under: Sr. No Particular Amount 1 Interest earned from nationalized bank 2,09,123 2 Total interest earned by the Society 21,09,199 3 Proportion of (1) and (2) 9.91% 4 Deduction claimed u/s 80P 13,85,077 5 Proportionate deduction to be disallowed (13,85,077*9.91%) 1,37,261 The Ld. AR submitted that the decision of the Hon'ble Karnataka High Court in case of M/s The Totgars Co-operative Sale ....

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..... 1551/AHD/2019 order dated 08.12.2021) is apt in assessee's case. The Tribunal held as under: "7. In the present case, the assessee has earned income from the investment made with nationalized bank. Therefore, such income will not qualify for grant of deduction under Section 80P(2)(a)(i) as well as under section 80P(2)(d) because it is not from cooperative society, in view of the above judgment of Hon'ble Gujarat High Court. However, we find merit in the contention of the assessee that expenditure should be allowed in respect of interest income earned from the investments. If the component of income does not qualify for grant of deduction under Section 80P(2)(a)(i), then such income should be computed on net basis; any expenditure relata....