2023 (9) TMI 1704

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..... Facts of the case are that the assessee is a registered Cooperative Society under Karnataka Co-operative Societies Act, 1959. In the assessment year under consideration, assessee has earned interest from its investment as follows:- Interest from Co-operative Societies Rs.31,56,192/- Interest from Co-operative Bank i.e. SCDCC Bank Rs.13,58,198/- Total Rs.45,14,390/- 3.1 The ld. A.O. has not granted deduction u/s 80P(2)(d) of the Act on Rs.13,58,198/- on the reason that deduction u/s 80P(2)(d) of the Act to be allowed only on the interest earned from investment with Co-operative Society is eligible for the same and this income of Rs.13,58,198/- earned by assessee is on investment of idle funds, which are immediately not....

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....was also in the business of marketing of agricultural produce grown by its members. The sale consideration received from marketing agricultural produce of its members was retained in many cases. The said retained amount payable to its members from whom produce was bought, was invested in a short-term deposit/security. Such amount retained by the assessee therein 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 under Section 80P(2)(a)(iii) of the Act. On these facts Hon'ble Supreme Court held the assessing officer was right in taxing the interest income indicated ....

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....he investments/deposits parked with a cooperative bank. 9.3 At this juncture, we refer to subsequent decision of Hon'ble Karnataka High Court in the case of PCIT Vs. Totagars cooperative Sale Society reported in (2017) 395 ITR 611, wherein Hon'ble Court held that, a co-operative society would not be entitled to claim of deduction under Sec. 80P(2)(d). At the same time, we find, that the Hon'ble Karnataka High Court in the case of PCIT & Anr. vs. Totagars Cooperative Sale Society reported in (2017) 392 ITR 74 and Hon'ble Gujarat High Court in the case of State Bank Of India Vs. CIT reported in (2016) 389 ITR 578, held, that the interest income earned by a co-operative society on its investments held with a cooperative bank w....

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....Act to be allowed as per para 9.1 of the order cited (supra) in the case of Totagars Co-operative Sale Society. This ground of appeal of the assessee is allowed for statistical purposes. 5. Next ground is with regard to non-granting of deduction towards provision made on interest payable on deposit at Rs.36,56,860/-. 5.1 Facts of the issue are that th assessee in the assessment year under consideration made provisions for interest of Rs.1,77,20,374/- and out of this, assessee deducted the earlier year provision as on 31.3.2016 at Rs.1,40,63,514/-. Thus, the assessee debited an amount of Rs.36,56,860/- under the head provisions and claimed it as a deduction. However, the ld. AO while framing the assessment order made additions of Rs.36....