TaxTMI 
TaxTMI 
TaxTMI 
2024 (5) TMI 1601
X X X X Extracts X X X X
X X X X Extracts X X X X
....or assessment year 2016-17 will apply mutatis mutandis to the assessment years 2017-18, 2018-19 and 2020-21. ITA No. 223/Bang/2024 is taken as the lead case for assessment year 2016-17 3. The only interconnected issue raised by the assessee is that the ld. CIT(A) erred in confirming the disallowance made by the AO for Rs. 76,17,450/- under the provisions of section 80P(2)(d) of the Act. 4. The assessee in the year under consideration has claimed a deduction of Rs. 76,17,450/- under the provisions of sec. 80P(2)(d) of the Act. However, the AO found that the provisions of sub sec. (4) of sec. 80P of the Act are applicable to the assessee, which denies the benefit of deduction u/s 80P(2)(a)(i)/(d) of the Act. Therefore, the AO disallowed the same and added to the total income of the assessee. 5. Aggrieved, the assessee preferred an appeal before the ld. CIT(A), who confirmed the addition made by the AO. 6. Being aggrieved by the order of ld. CIT(A), the assessee is in appeal before us. 7. The ld. AR before us contented that the issue in dispute is covered by the order of this Tribunal in the case of Bee Co-op Credit Society Ltd., Vs. ITO in ITA No. 366/Bang/2023 for the AY 2017....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Court in the case of Kerala State Co-operative Agricultural and Rural Bank Ltd., Vs. ACIT reported in 154 taxmann.com 305, wherein it was observed that the assessee was a state-level agricultural and rural development bank and governed under the Kerala Co-operative Societies Act, 1969 as a co-operative society. The activity of the assessee was to provide credit facilities to its members. Accordingly, the assessee claimed a deduction under Section 80P(2)(a)(i) of the Act in the return of income. But the AO disallowed the same on the reasoning that the assessee was a cooperative bank and, therefore, it was hit by the provisions of section 80P(4) of the Act and thus would not be eligible for claiming deduction under section 80P(2) of the Act. Finally, the issue reached the Hon'ble Apex Court where it was held that banking is defined under section 5(b) of the Banking Regulation Act, 1949 to mean accepting, for the purpose of lending or investment, deposits of money from the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or otherwise. Therefore, a banking company must transact banking business with the public. If a co-operative society would not trans....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of Agricultural Employees House Building CO-op Society Ltd., in ITA No.319/Bang/2023 for the assessment year 2016-17 vide order dated 18/05/2023 observed and held as under:- 4.1 the claim of deduction u/s 80P(2)(d) of the Act, the has been considered by the coordinate bench of this Tribunal in the case of M/s.The Jayanagar Cooperative Society Ltd. v. ITO in ITA No.3254/Bang/2018 by order dated 23.07.2019, on similar facts, had restored the matter to the files of the Ld.AO for de novo consideration. The Ld.AR submitted that, identical issue was considered by the ITAT in ITA No.490/Bang/2021 in the case of M/s. Kakkabe VSSN Bank Ltd.vs. Pr.CIT by order dated 28.02.2022for assessment A 2015-16. The Ld.AR submitted that, this Tribunal in above cited case, directed the Ld.AO to consider the dictum laid down by the Hon'ble Supreme Court in case of Mavilayi Service Co- operative Bank Ltd. v. CIT reported in 431 ITR 1. 5. This Tribunal in case of M/s. Bhavasar Kshtriya Co-operative Credit Society Ltd. vs. ITO/ADIT in ITA Nos. 581 to 583/Bang/2022 by order dated 19.10.2022 wherein it was held as under: 2.6. We have heard both sides in light of records placed before us. The Ld.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pulation or prerequisite as to the nature of the funds. We also find that Section 80P(2)(d) of the Act, allows whole deduction of an income by way of interest or dividends derived by the co-operative society from its investment with any other co-operative society. Section 80P(2)(d) provides additional benefit of deduction under section 80P for those co-operative societies, which has surplus funds even unrelated to its main business activity, which are invested with other co-operative societies. Thus, Clause (d) of section 80P applies to all cooperative societies, whether or not, their main businesses banking and credit facilities to the members. Therefore, in our view, the section envisages deduction in respect of any income derived by the co-operative society from any investment with a co-operative society. 2.10. We have also considered the case of Totgars Cooperative Sale Society Ltd., reported in 322 ITR 283 relied upon by the Ld.DR, and find that, the Hon'ble Supreme Court has deliberated 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 Totgars Co-operative Sale Society Ltd. itself the Hon'ble High Court of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sion of the Hon'ble Karnataka High Court in the case of Tumukur Merchants Souharda Credit Co-operative Ltd., 230 taxman 309 (Karn), the DR relied on a subsequent decision of the Hon'ble Karnataka High Page Court in the case of PCIT Vs. Totgars Co-operative Sale Society Ltd., 395 ITR 611 (Karn.). We have carefully gone through the said judgment. The facts of the case before the Hon'ble Karnataka High Court was that the Hon'ble Court was considering a case relating to Assessment Years 2007-08 to 2011-12. In case decided by the Hon'ble Supreme Court in the case of the very same assessee, the Assessment Years involved was Assessment Years 1991-92 to 1999-2000. The nature of interest income for all the Assessment Years was identical. The bone of contention of the Assessee in AY 2007-08 to 2011-12 was that M/s.Thannirupantha Primary Agri.Cr.Coop.So.Ltd. the deduction under Section 80P(2) of the Act is claimed by the respondent assessee under Section 80P(2)(d) of the Act and not under Section 80P(2)(a) of the Act which was the claim in AY 1991-92 to 1999- 2000. The reason given by the Assessee was that in AY 2007-08 to 2011-12 investments and deposits after the Supreme....
X X X X Extracts X X X X
X X X X Extracts X X X X
....)(d) of the Act, to the files of the Ld.AO to allow the claim as indicated herein above, by granting proper opportunity of being heard to the assessee. 2.13. The Ld.AR also took the plea that, the expenditure incurred in earning of interest from the commercial banks be allowed while computing the taxable income. The provision of Section 57 reads as under: "Section 57: The income chargeable under the head "Income from other sources" shall be computed after making the following deductions, namely:- (i) in the case of [dividends, 94[other than dividends referred to in section 115-O,]] [or interest on securities], any reasonable sum paid by way of commission or remuneration to a banker or any other person for the purpose of realising such dividend [or interest] on behalf of the assessee; [(ia) in the case of income of the nature referred to in sub-clause (x) of clause (24) of section 2 which is chargeable to income-tax under the head "Income from other sources", deductions, so far as may be, in accordance with the provisions of clause (va) of subsection (1) of section 36 ;] (ii) in the case of income of the nature referred to in clauses (ii) and (iii) of sub-section (2) of ....