TaxTMI 
TaxTMI 
2023 (9) TMI 1436
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....edly the assessee's earlier appeal for AY 2007-08, on the same issue was still pending in first appeal. 3. That in any case, the interest earned from investment with cooperative bank, intrinsically being a cooperative society, was eligible for deduction u/s.80P(2)(d). 4. That the disallowance, at the most, should have been restricted to the extent of income claimed exempt in the return filed i.e. Rs. 58,49,466/-. Making further disallowance of Rs. 36,13,739/- by the Id.AO and its confirmation in appeal, is misconstrued, unjust, arbitrary and illegal." 3. The issue of disallowing deduction claimed u/s 80P(2)(a)(i) of the I.T. Act, in facts and circumstances similar to those attending this appeal, has been discussed by the Division Bench of the ITAT Amritsar, while disposing of ITA No. 86/Asr/2021, in the case of The Kot Ram Dass Coop. Thrift & Credit Society Ltd. Jalandhar vs. ITO-Ward 2(4), Jalandhar for A.Y. 2017-18, order dated 13.06.2023. 4. Therein, it has been observed, inter alia, as follows: "2. Brief fact is that all the cooperative societies invested their surplus funds in Cooperative Bank and accordingly the interest was earned. The assessee claimed the intere....
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....e Income-tax Act, 1961. Vide Notice under section 142(1) of the Income-tax Act, 1961 issued on 07.12.2019, the assessee was show caused to explain which subsection of section 80P is applicable in its case under which it has claimed deduction under chapter VI-A and also to explain as to why interest earned on FDRs should not be treated as income from other sources instead of business income and taxed accordingly." 5. The ld. AR further argued that the assessee is registered under Punjab Cooperative Society Act, 1961. The assessee is eligible for deduction of the interest or dividend derives by its investment which other Co-operative Society & also from co-operative bank. It was argued that the assessee has earned interest from Cooperative Bank which are primarily Cooperative society. Respectfully reliance was placed in the case of PCIT vs Totgars Coop Sale Society (2017) 392 ITR 74 (Kar). So, the assessee is rightly eligible for deduction u/s 80P(2)(d). 6. The ld. AR respectfully relied in the case of Commissioner of Income-tax v. Doaba 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 d....
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....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 cooperative Bank Ltd., [2011] 200 Taxman 220/12 taxmann.com 66. In that view of the matter, the order passed by the appellate authorities denying the benefit of deduction of the aforesaid amount is unsustainable in law. Accordingly, it is hereby set aside. The substantial question of law is answered in favour of the assessee and against the revenue. Hence, we pass the following order" b) In the case of The Commissioner of Income tax vs Gulshan Mercantile Urban Co-Operative Bank Ltd [2013] 29 taxmann.com 8 (All.) "10. The question as to whether the business is derived from or attributable to SLR or non-SLR funds would not make any difference for the purposes of qualifying the interest earned by the cooperative bank under Section 80P(2)(a)(i) as the deposits of surplus idle money availa....
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....t the interest earned on investments held with the Co-operative Banks would be eligible for deduction u/s 80P(2)(d) of the Act." 7.2. Thus, we also find that section 80P(2)(d) of the Act allows whole deduction of income by way of interest or dividend derived by Cooperative Society from its investments with any other co-operative society. This provision does not make any distinction with regard to the source of investment because this section envisages deduction in respect of any income derived by co-operative society from in his investment with a cooperative society. So, the Revenue is not required to look another of investment whether it was formed as required within time or otherwise. 7.3. We have heard and respectfully considered of the case of Totagars Co-operative Sales Society Ltd. Supra which was relied by the ld. DR and find that the Hon'ble Apex Court has dilapidated on the issue of deduction u/s 80P(2)(a)(i) but not on section 80P(2)(d). We also observed that in the case of Totagars Cooperative Sales Society Ltd, [2017] 78 taxmann.com 169 (Karnataka) itself the Hon'ble High Court of Karnataka has allowed the claim of deduction u/s 80P(2)(d) vide order dated 05.01.2017....