TaxTMI 
TaxTMI 
2024 (2) TMI 1169
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....after] arising out of respective order of assessment passed u/s 143(3) of the Act for assessment year 2018-19 & 2020-21 ['AY' hereinafter]. 2. During hybrid hearing, a common threadbare issue of disallowance u/s 80P(2) of the Act in these twin appeals brought to the attention of the bench. On rival parties' request, these are taken up together for the sake of brevity and for a common & consolidated order taking ITA No. 1045/PUN/2023 as lead case; resultantly adjudication laid in succeeding paragraphs shall mutatis-mutandis apply to ITA No 1046/PUN/2023. 3. Briefly stated common facts born out of case records are; 3.1 The assessee is a credit co-operative society registered under the provisions of Maharashtra State Co-op. Societies ....
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....(supra). 3.4 Aggrieved assessee came in appeal alleging that both the tax authorities erred in law and facts in denying the assessee society the valid claim of deduction made u/s 80P(2) of the Act in-spite of catena of binding judicial precedents including the order of co-ordinate bench in appellant's own case in ITA No. 404/PUN/2022 anent to AY 2017-18. 4. During the course of hybrid hearing, Ld. AR appearing for assessee reiterated appellant's version of submissions as were laid before tax authorities below. Adverting to impugned orders appellant's made twofold submission that (i) interest accrued/earned on fixed/term deposits investment is solely attributable to the principal business of the appellant. The theory of surplus fund do....
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....he rival parties and considered the facts in light of settled legal position which are forewarned to parties present. 7. The solitary issue in these appeals hinges around allowability of deduction u/s 80P(2) of the Act. We see strong force in the first contention of the appellant that, during the conduct of its principal business of providing credit facilities to its members deposits therefrom are accepted and to service interest liability thereon it in turn generated interest by placing them either into investment with other financial institutions or by lending them to other members. The net positive interest generated out of such activities without a smoke of doubt partakes the character of business income as it possess all attributes ....
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.... of the Act. For this purpose the chief determinant factor entitling a claim of deduction u/s 80P(2)(d) in the hands of assessee society is that, interest income should have been earned by it from an investment made with any other cooperative society registered under the provisions of law, irrespective of its nomenclature with which such paying society. 9. In the present case, the reasoning given by the tax authorities in denying the claim for deduction u/s 80P(2)(d) of the Act is that interest was received from banks, however this reasoning has no legs to stand as a cooperative bank is principally a cooperative society and holds a banking license to operate on a larger scale under the guidelines of RBI. This issue was came to consider b....
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....me by noticing that the Pune Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit Vs. ITO (ITA No.604/PN/2014, dated 19-8-2015) has allowed similar deduction. In the said case, the Tribunal discussed the contrary views expressed by the Hon'ble Karnataka High Court in Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (2015) 230 Taxman 309 (Kar.) allowing deduction u/s. 80P on interest income and that of the Hon'ble Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd. Vs. CIT (2014) 110 DTR 89 (Delhi) not allowing deduction u/s. 80P on interest income earned from banks. Both the Hon'ble High Courts took into consideration the ratio laid down in the case of Totgar's Cooperati....