TaxTMI 
TaxTMI 
2023 (6) TMI 871
X X X X Extracts X X X X
X X X X Extracts X X X X
....er was emanated from the order of the ld. Income Tax Officer, Wd-2(4), Jalandhar [in brevity 'the AO'] order passed u/s 143(3) of the Act. The assessee has taken the following ground: "1. That having regard to the facts of the case, the NFAC has grossly erred in confirming the addition of Rs.21,05,192/- as wrongly made by the ld. ITO by disallowing deduction claimed u/s 80P(2)(a)(i) in respect net interest earned from two Cooperative Banks. 2. That while making the above disallowance, the authorities below failed to appreciate that the interest earned was an operational income from operational' funds and hence entitled to deduction u/s.80P(2)(a)(i). 3. That the impugned order, being de hors the facts and the l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sted in Cooperative Bank and the interest earned from the Cooperative Bank is not eligible u/s 80P(4). Section 80P(4) only restricted investment in the Cooperative Society not in bank. So, the order of the Ld. CIT(A) is maintainable. The ld DR invited our attention in assessment order page 2 para 3.1 is reproduced as below: "3.1 From the assessment records, it was noticed that assessee had earned interest income from its members and as interest on savings account and FDRs made with other banks as under: Particulars Interest on FDRs Saving Interest Interest from members The Jalandhar Central Coop. Bank, Patara, Jalandhar. 10,33,074 The Jalandhar Central Coop. Bank, Rama Mandi, Jalandhar 24....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Co-op. Sugar Mills Ltd, [1998] 96 Taxman 509 (PUNJ. & HAR.). "6. Section 80P(2)(d) allows whole deduction of an income by way of interest or dividends derived by the co-operative society from its investment with any other co-operative society. This provision does not make any distinction in regard to the 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 investment whether it was from its surplus funds or otherwise. The Act does....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) "10. In the instant case, the amount which was invested in banks to earn interest was not an amount due to any members. It was not the liability. It was not shown as liability in their account. In fact, this amount which is in the nature of profits and gains, was not immediately required by the assessee for lending money to the members, as there were no takers. Therefore, they had deposited the money in a bank so as to earn interest. The said interest income is attributable to carrying on the business of banking and therefore it is liable to be deducted in terms of Section 80P(1) of the Act. In fact, similar view is taken by the Andhra Pradesh High Court in the case of CIT v. Andhra Pradesh State co-operative Bank Ltd., [2011] 20....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "9. We thus in the backdrop of our aforesaid observations are unable to persuade ourselves to be in agreement with the view taken by the lower authorities that the assessee would not be entitled for claim of deduction under Sec. 80P(2)(d), in respect of the interest income on the investments made with the co-operative bank. We thus set aside the order of the lower authorities and conclude that the interest income of Rs.27,48,553/- earned by the assessee on the investments held with the co-operative bank would be entitled for claim of deduction under Sec. 80P(2)(d)." d) In the case of Tirupati Campus PH. II CO-OP HOUSING SOCIETY MARYADIT VERSUS THE NCOME TAX OFFICER WARD -7 (4), PUNE (ITAT_Pune)ITA No.1429/PUN/2018, AY-2015-16, Dat....