TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1791
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....ow the grounds of appeal as raised by the assessee in this ITA No.802/Coch/2024 are as follows: 1. The order of the Assessing Officer is against law and facts. 2. The Commissioner (Appeals) is not justified in treating the interest received from cooperative banks as income from other sources and disallowing the claim u/s 80P. The Commissioner (Appeals) should have appreciated that the appellant is a Primary Agricultural CreditSociety engaged in the business of accepting deposits from members and providing loans to members. The Commissioner (Appeals) was bound by the decision of the jurisdictional High Court which has held that the interest received by a society from another society including a Co-operative bank is exempt under section 80P as District Co-operative Banks are also Co-operative societies. The deduction u/s 80P would also be available even if the interest received is assessed as income from other sources. The Commissioner(Appeals) has hence erred in not following the binding precedent of the jurisdictional High court. 3. There is a delay of 136 days in filing these appeals before the Tribunal. The ld. AR of the assessee drew our attention on the application for con....
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....214/- as income from other sources and consequently denied deduction u/s 80P of the Act on this amount. The assessee filed an appeal before the CIT(A). The CIT(A)/NFAC, held that the assessee is eligible for deduction u/s 80P of the Act on the business income but the action of the AO in denial of section 80P of the Act deduction on interst received from Co-operative Banks by treating it as income from other sources was upheld. This appeal is filed against the order of the CIT(A) in denying deduction u/s 80P of the Act on the interest received from District Co-operative banks and denial of section 80P deduction on this amount. 6.1 The only issue that is raised in all these appeals is whether the CIT(A) is justified in treating the interest received from Kollam District Co-operative bank as income from other sources and disallowing the claim u/s 80P of the Act? 7. We have heard the rival submissions and perused the materials available on record. We are of the considered opinion that the issue in dispute is squarely covered in the case Pr. CIT v. Peroorkada Service Co-Operative Bank Ltd.(2022) 442 ITR 141 held by Hon'ble Kerala High Court wherein it was held as under: 8. We have n....
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....o which each one of the category of Societies is entitled to, would be benefiting in our narrative to excerpt the relevant portion as under :-- '28. We have carefully considered the above submissions. Before considering the effect of the various decisions cited on both sides, we think it would be ideal to look at the statutory prescription in pure and simple form. As we have indicated earlier, section 80P(2) is actually divided into six parts, categorised under clauses (a), (b), (c), (d), (e), and (f). Each one of these clauses deal with different types of co-operative societies engaged in different types of activities. The benefit made available to each one of them is also different from the other. Therefore, it may be useful to present a tabular form, the six categories of cooperative societies covered by clause (a) to (f) and the nature and extent of the benefit available to each one of them, as follows :-- Category of Co-Op. Societies covered by sub-clauses (a) to (f) Nature and Extent of benefit available (a) (1) Co-operative society carrying on the business of banking or providing credit facilities to its members; The whole of the amount of profits and gains of busi....
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....der clauses (a) to (c) are activity-based. The deduction available under clauses (d) and (e) are investment-based and the deduction under clause (f) is institution-based. To put it differently, -- (A) to be eligible for deduction under clause (a), the claim should relate to the profits and gains of business attributable to anyone or more of the activities listed in Clause (a), (B) to be eligible for deduction under clause (b), the society should be a primary society engaged in supplying milk, oilseeds, fruits, etc. to named institutions, such as, Government, Local Authority, Federal Co-operative Society, or Government Company, (C) to be eligible for deduction under clause (c), the institution must be engaged in activities other than those covered by Clauses (a) and (b) subject to the further condition that such profits and gains should not exceed a particular limit, (D) to be eligible for deduction under clause (d), the income should be derived from investments with another Co-operative Society, (E) to be eligible for deduction under clause (e), the income should be derived from letting of godowns or warehouses, etc.' 8.2 Clause (a) of sub-section (2) of section 80P....
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.... such society will stand on par with a Co-operative Society registered under the Kerala Co-operative Societies Act would come within the purview of clause (d) of section 80P(2). 9. The above discussion takes us to the next point for consideration namely, whether the interest income comes under section 28 or 56 of the Act. In other words, the fulcrum of assessee's case is that investment in Bank is business of assessee. Mr. Christopher Abraham relied on both the circumstances and the ratio finally laid by the Supreme Court in M/s. The Totgar's Co-operative Sale Society Limited. M/s. The Totgar's Co-operative Sale Society Limited 9.1 M/s. Totgar's Co-operative Sale Society had surplus funds with it and invested in short-term deposits with banks and in government securities. The assessee earned interest on such investments. The assessee provides credit facilities to its members and sells the agricultural produce of its members. The substantial question of law which was considered by the Supreme Court in M/s. The Totgars Co-operative Sale Society Limited is whether interest income earned from investments would qualify for deduction as business income under section....
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.... of the interest received from members. In this case, we are only concerned with interest which accrues on funds not required immediately by the assessee for its business purposes and which have been invested in specified securities as investment. Further, as stated above, the assessee markets the agricultural produce of its members. It retains the sales proceeds in many cases. It is this retained amount which was payable to its members from whom produce was brought which was invested in short-term deposits/securities. Such an amount, which was retained by the assessee/Society was a liability and it was shown in the balance sheet on the liability side. Therefore, to that extent such interest income cannot be said to be attributable either to the activity mentioned in section 80P(2)(a)(i) of the Act or section 80P(2)(a)(iii) of the Act. Therefore, looking to the facts and circumstances of this case, we are of the view that the assessing officer was right in taxing the interest income indicated above, under section 56 of the Act'. 10. The thrust of consideration in M/s. The Totgar's Cooperative Sale Society Limited is that the investment made by the assessee of surplus fund....
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....Legislature. According to him clause (d) of section 80P(2) is clear in its application, viz. that interest/dividend received from Co-operative Societies alone is entitled for deduction. Once interest is received from a Bank or Treasury, such interest income is out of the purview of the eligible deduction in the computation of assessee's income. 11.2 Mr. Jojo appearing for the respondent, in reply to the said argument, relies on the judgment of the Supreme Court in Nawanshahar Central Co-operative Bank Ltd. case and argues that irrespective of the source from which the income is earned, according to the principle laid down in Nawanshahar Central Cooperative Bank Ltd. case, the assessee is entitled for deduction under section 80P(2)(a)(i). 12. We have gone through the order of the Supreme Court in Nawanshahar Central Co-operative Bank Ltd. case, for immediate reference it is excerpted :-- 'This Court has consistently held that investments made by a banking concern are part of the business of banking. The income arising from such investments would, therefore, be attributable to the business of bank falling under the head 'profits and gains of business' and thus d....
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....t are eligible for deduction. The contra consideration of Commissioner (Appeals) and the Tribunal is incorrect and liable to be modified as stated above. Hence, it is held that the interest income earned by the assessee does not come within the ambit of section 80P(2)(a)(i) and permissible deduction of interest income is limited to Co-operative Societies/Banks registered under Kerala Cooperative Societies Act under clause (d) of the Act and effect order on the above lines is made by the assessing officer. The questions are accordingly answered. ITA No. 323/2019 [Assessment Year 2011-12] 13. The Principal Commissioner of Income Tax - Thiruvananthapuram/Revenue is the appellant. M/s. Peroorkada Service Co-operative Bank Limited, Thiruvananthapuram/assessee is the respondent. The appeal is at the instance of the Revenue under section 260A of the Act against the Order, dated 17-5-2019 of the Income Tax Appellate Tribunal (for short 'Tribunal'), Cochin Bench, Cochin in ITA No. 67/Coch/2019. The subject matter of the appeal relates to the issues arising from the return filed by the assessee for the assessment year 2011-12. 13.1 The details of the orders etc leading up to th....
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....chin Bench, Cochin in ITA No. 47/Coch/2019. The subject matter of the appeal relates to the issues arising from the return filed by the assessee for the assessment year 2013-14. 14.1 The details of the orders etc leading up to the filing of the appeal are tabulated hereunder :-- Assessment Year 2013-14 Assessing Officer Order No. AAAAP3974B/W-2(1)/TVM/2017-18 dated 19-12-2017 Commissioner (Appeals) ITA No. 293/EF/TVM/Commissioner (Appeals)/TVM/2017 -18 dated 7-11-2018 Income Tax Appellate Tribunal ITA No. 47/Coch/2019 dated 16-6-2019 Income under the head 'Other Sources': (i) Interest income on deposits: (a) Vide Order under section 263, Principal Commissioner of Income Tax has directed to ensure that interest income on deposits is accounted for in accordance with provisions of section 145. During the course of assessment proceedings, assessee has furnished break up of interest received during the period, on investments at various institutions, totaling to Rs. 14,18,62,743, details of which are as under :-- Name of Institution Amount District Treasury 36,00,000 Consumer Federation 53,23,353 Rubber Marketing Federation 9,67,350 Neyyattinkara Schoo....