TaxTMI 
TaxTMI 
2025 (12) TMI 653
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....e Income Tax Act, 1961 [hereinafter referred to as 'the Act'] whereby appeal against the Assessment Order, dated 26/03/2021, for the Assessment Year 2018-2019 was disposed off as partly allowed. 2. The Assessee has raised the following grounds of appeal: 1. The Order of the learned Commissioner passed under section 250 of the Act is opposed to law, equity, weight of evidence, probabilities and the facts and circumstances in the Appellant's case. 2. The Appellant denies to be assessed to tax on total income as determined by the learned AO of Rs. 54,05,866/- as against the total income reported by the Appellant of Rs. NIL on the facts and circumstances of the case. 3. The learned Commissioner of Income-tax (A....
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....of the Act as "IFOS". 8. Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the appellant denies himself liable to be charged to interest u/s. 234B of the Act, which under the facts and in the circumstances of the appellant's case deserves to be cancelled. 9. The penalty proceedings initiated u/s. 270A(2) of the Act are contrary to law on the facts and circumstances of the case 3. The relevant facts in brief are that Assessee is a society registered under Karnataka State Co-operative Societies Act, 1959. The main object of the society is providing credit facilities to the members of the society. For the Assessment Year 2018-2019, the Assessee filed return of Income declaring 'Nil' income aft....
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....rest income received out of such investment would qualify as 'business income' incidental to the main objects/business of the Assessee. Therefore, it was contended that the same is eligible for deduction under Section 80P(2)(a)(i) of the Act. 6.1. We find that the decision of Bangalore Bench of the Tribunal in the case of Primary Agricultural Credit Co-operative Society Ltd. Vs. ITO, Ward-1, Puttur (ITA No.1006/Bang/2023, dated 06/02/2024) supports the aforesaid contention of the Assessee. In that case the Tribunal held as under: "7. We have heard the rival submissions and perused the material on record. The claim of deduction under section 80P of the Act was denied by the AO primarily for the reason that assessee was dealing wi....
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....s. Therefore, the interest income is entitled to deduction under section 80P(2)(a)(i) of the Act. On identical facts, the Bangalore Bench of the Tribunal in the case of Canara Bank Staff Credit Co-operative Societies Ltd., in ITA No.517/Bang/2023 (order dated 03.10.2023) had restored the matter to the AO to examine whether the amounts invested with the Cooperative Banks are out of compulsion under the Karnataka Co-operative Societies Act and the relevant Rules. It was further held by the Tribunal that if the investments are out of compulsion under the Act and the relevant Rules, the interest income received out of the investment made under such compulsion would be liable to be taxed as 'income from business' which would entail the benefit o....
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....gards, interest income received from the co-operative banks in concerned, it was contended on behalf of the Assessee that interest income earned by a co-operative society from fixed deposits or savings accounts with cooperative banks is eligible for deduction under Section 80P(2)(d) of the Act. Reliance in this regard was placed in judicial precedents listed in Ground No.5 & 6 above. 7.1. In the case of Mavilayi Services Co-operative Bank Limited Vs. CIT, Calicut: [2021] 431 ITR 1 (SC) [12/01/2021], the Hon'ble Supreme Court has held that for purposes of eligibility for deduction, the assessee must be a "co-operative society". A co- operative society is defined in Section 2(19) of the Act, as being a co-operative society registered eithe....
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....y what is relevant is that interest/dividend should have been derived by a co-operative society from investment in another co-operative society (which may be functioning as a co- operative bank). Unlike Section 80P(2)(a) of the Act wherein expression 'profits and gains of business' has been used, Section 80P(2)(d) of the Act uses the expression 'any income by way of interest or dividend'. Given the clear language of Section 80P(2)(d) of the Act, for the purpose of granting benefit of deduction under Section 80P(2)(d) of the Act that fact that interest/dividend income is in the nature of 'profits and gains' or 'income from other sources' is not relevant. [Refer to State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj) at Para 18, Pr. CIT Vs. T....