TaxTMI 
TaxTMI 
2024 (8) TMI 544
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....24. 2. The only ground of appeal raised by the assessee is the Ld.CIT(A) has erred in confirming the AO's order in disallowing the claim of deduction u/s. 80P for the A.Y. 2017-18 in respect of interest of Rs. 10,14,372/- received from State bank of India (Rs. 3,42,190/-) and Tamilnadu Industrial Co-Op.Bank (Rs. 6,72,182/-). 3. The brief facts are that, the assessee is a co-operative society formed and managed by the Govt. of Tamilnadu through the department of Social welfare. The main object of the cooperative society is to provide livelihood as well as development of poor women. All the members of the society are women who are below poverty line (BPL). The Society is executing only Government of India Scheme of providing nutritious food....
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.... the order u/s 263. Accordingly, the Assessing Officer, has revised the orders u/s. 143(3) r.w.s 263 and disallowed the interest income of Rs. 10,14,372/- received from State Bank of India (Rs. 3,42,190/-) and TAICO Bank (Rs. 6,72,182/-) being not eligible under section 8OP for the reason that the State Bank of India is a Commercial bank and TAICO Bank is not a cooperative society but only a bank. Further the learned Assessing Officer had come to the conclusion that the Cooperative Banks are not Cooperative Societies and hence the interest received from Cooperative Banks are not eligible for direct deduction u/s. 80P(2)(a) (i)/80P(2)(d) of the Income Tax Act, 1961 and raised the demand, by disallowing the interest incomes as not being attri....
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.... their families) should not work for the society. In other words, the co-operative society should not engage outside hired labour; (e) a member of co-operative society means a shareholder of the society; (f) the place of work could be an artisan shareholder's residence or it could be a common place provided by the co-operative society; (g) the cottage industry must carry on activity of manufacture, production or processing; it should not be engaged merely in trade, i.e., purchase and sale of the same commodity." 5.1 Further, stated that both the AO and Ld.CIT(A) have appreciated the fact that the assessee is a cottage industry but still have disallowed the interest earned from the banks as not eligible for deduction u/s. 80P(2)(d....
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....es to its members only. The society is not carrying on any separate business for earning such interest income. The income so derived is the amount of profits and gains of business attributable to the activity of carrying on the business of banking or providing credit facilities to its members by a co-operative society and is liable to be deducted from the gross total income under Section 80P of the Act." 5.3 Therefore, the lower authorities have grossly erred in disallowing the said deduction u/s. 80P(2)(d), without appreciating the fact that, the claim of the assessee was u/s. 80P(2)(a)(ii). Further, the Ld.AR brought to our notice that, the AO has accepted the claim of the assessee in the earlier year assessment proceedings for the A.Y. ....
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....- 2022 setting aside the assessment orders passed earlier u/s. 143(3) and directed the Assessing Officer to examine the issues discussed in the order u/s 263. Accordingly, the Assessing Officer, has revised the orders u/s. 143(3) r.w.s 263 and disallowed the interest income of Rs. 10,14,372/- received from State Bank of India (Rs.3,42,190/-) and TAICO Bank (Rs.6,72,182/-) being not eligible under section 8OP for the reason that the State Bank of India is a Commercial bank and TAICO Bank is not a cooperative society but only a bank. 8. We note that the assessee is a co-operative society formed by the Government of Tamilnadu through social welfare department. The Ld.AR filed a paper book before us consisting of 1 to 47 pages and drew our att....