TaxTMI 
TaxTMI 
TaxTMI 
2024 (10) TMI 1198
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....ved in all three appeals are identical, they were heard together and are being disposed of vide this common order. 2. We will take ITA No.525/Ahd/2024 for A.Y. 2017-18 as the lead case. The grounds taken by the assessee in this appeal are as under: "(1) That on facts, in law, and on evidence on record, the learned National Faceless Appeal Centre (NFAC) has grievously confirming the disallowance made u/s 80P(2)(a)(i) of the Act. erred in of Rs.1,95,850/ (2) That on facts, in law, and on evidence on record, the learned National Faceless Appeal Centre (NFAC) has grievously erred in confirming the disallowance of Rs.29,01,898/ made u/s 80P(2)(d) of the Act. (3) That on facts, in law, and on evidence on record, it ought to have been held ....
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....idered the rival submissions. The provision of Section 80P(2)(a)(i) of the Act stipulates that the income derived by a cooperative society engaged in carrying business of banking or providing credit facilities to its members shall be allowed as deduction. The assessee is not engaged in banking business. Further, the interest earned by the assessee on the FDRs made with Bank of Baroda cannot be held as income derived from providing credit facilities to its members. Therefore, the AO had rightly treated this interest income as ineligible for deduction u/s. 80P(2)(a)(i) of the Act. The Hon'ble Gujarat High Court in the case of State Bank of India vs. CIT (72 taxmann.com 64) had categorically held that investing the surplus funds with State Ban....
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....nces, we do not find any merit in the claim of the assessee to allow proportionate expense. 7. In view of the above facts, the Ground No.1 as taken by the assessee is dismissed. 8. Ground No.2 pertains to disallowance of Rs.29,01,898/- u/s. 80P(2)(d) of the Act. The assessee had earned interest income of Rs.29,01,898/- from The Mehsana District Central Co-operative Bank Ltd. The AO held that the interest earned on the deposit with Cooperative Bank was not allowable as deduction u/s. 80P(2)(d) of the Act, following the decision of Hon'ble Karnataka High Court in the case of PCIT vs. Totagars Cooperative Sale Society (2017) 83 taxmann.com 140 (Kar). The AO held that the assessee had earned interest income from investment with cooperative ba....
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....rder dated 26.04.2024 modified that order and clarified that interest on FDRs with "other Banks" only will be ineligible for deduction u/s. 80P(2)(i) & 80P(2)(d) of the Act. The Ld. AR, therefore, submitted that as per amended order of Hon'ble Gujarat High Court, the interest derived from investment with other cooperative banks shall be eligible for deduction u/s. 80P(2)(d) of the Act. Accordingly, the assessee was eligible for deduction u/s. 80P(2)(d) of the Act in respect of interest derived on FDR with The Mehsana District Central Co-operative Bank Ltd. 10. Per contra, Shri N. J. Vyas, Ld. Sr. DR submitted that the The Mehsana District Central Co-operative Bank Ltd. which was commercially run bank cannot be considered as a cooperative s....
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....ion Act, while non-banking cooperative societies are regulated only by the cooperative laws. Thus, the cooperative banks are essentially cooperative societies. 12. The moot question to be decided here is whether the investment made by the assessee, which is a cooperative society, with a cooperative bank, shall be considered as investment with other cooperative society in order to avail the deduction u/s 80P(2)(d) of the Act. This issue was examined by the Hon'ble Gujarat High Court in the case of Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd. (supra). Though this decision was in the context of reopening u/s 147 of the Act, the Hon'ble Court had also examined the provision of section 80P of the Act. The finding of Hon'ble High Court ....
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....hat by typographical error the word 'Other Cooperative Banks' has been incorporated in paragraph no.19 by mistake, which is required to be corrected. (2) Having heard learned advocate Mr. S.N. Divatia for the petitioner and having perused the order and a note placed on record, in para no.19, words "other Cooperative Banks" after the words "other than the Cooperative Societies i.e." is modified and be read as "other Banks". (3) The speaking to minutes is accordingly disposed of." 14. Thus, it is clear from the amended order of the Hon'ble jurisdictional High Court in the case of Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd. (supra), that the interest derived on FDRs with other cooperative banks will now be eligible for d....