TaxTMI 
TaxTMI 
2025 (12) TMI 808
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....A of the Income Tax Act, 1961, filed in respect of an impugned order dated 18th June, 2025, passed by the learned Income Tax Appellate Tribunal, Kolkata 'A' Bench, Kolkata in I.T.A. Nos.: 1582/KOL/2024 in respect of the Assessment Year: 2018-19. 2. By the impugned order, the learned Tribunal allowed the Revenue's appeal with inter alia the following observations:- " ....... 8. Therefore, considering the totality of facts and circumstances of the case and in view of the legal provisions enumerated in the preceding paras that the exemption provisions have to be strictly interpreted, the submissions of the Ld. DR and as has been elaborately discussed and brought out in the orders of the Hon'ble Karnataka High Court in the ....
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....erative banks? 2. Whether the learned Tribunal correctly applied the ratio in Totgars' Cooperative Sale Society Ltd. {322 ITR 283 (SC)}, which concerned section 80P(2)(a)(i) and retained members' funds shown as liability to deny deductions under section 80P(2)(d), when the facts and statutory provisions in the present case are materially different?" 5. We notice from the facts of the instant case that SIMFED is the apex co-operative society in Sikkim, registered under the Sikkim Cooperative Societies Act, 1978, with the Government of Sikkim holding 93% of its shares. SIMFED is the central body of the State of Sikkim's co-operative infrastructure, primarily focusing on wholesale supply of consumer goods, bulk marketing and procur....
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....red under the State Cooperative Societies Act, 1978. Thereafter, the Revenue preferred the appeal before the learned Income Tax Appellate Tribunal, wherefrom the impugned order emanates. 9. The primary reason for allowing the Revenue's appeal has been quoted hereinbefore. A plain reading of the quoted portion of the impugned order of the learned Tribunal dated 18th June, 2025, reveals that the learned Tribunal has relied substantially on a judgment of the Karnataka High Court in Principal Commissioner of Income-tax & Another vs. Totagars Cooperative Sale Society (and vice versa), reported in (2017) 395 ITR 611, as well as the judgment of the Hon'ble Supreme Court rendered in Totgars' Cooperative Sales Society Ltd. Vs. Income Tax Officer,....
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.... society, which SIMFED happens to be. 12. The explanation provided under section 80P(4), which has also been reproduced hereinabove, makes it further clear that a "co-operative bank" will have the same meaning, as assigned to it under Part V of the Banking Regulation Act, 1949. It is nobody's case that SIMFED is a cooperative bank, functioning within the meaning assigned to it under Part V of the Banking Regulation Act, 1949. Rather, it is clearly evident that it is a non-banking co-operative society and received interest only from some co-operative banks, that too, based on investments made from the surplus funds and statutory reserves of the federation, as required under the relevant provisions of Sikkim Co-operative Societies Act, 197....
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....ection 80P of the Income Tax Act, 1961. As such, the first substantial question of law is answered in favour of the assessee. 16. So far as the second substantial question of law as framed by us is concerned, we are of the view that the Hon'ble High Court of Gujarat in the case of PCIT vs. Ashwin Kumar Urban Co-operative Society Ltd. reported in (2024) 168 taxmann.com 314 (Gujarat), has squarely answered this question in favour of the assessee by observing inter alia that the Hon'ble Supreme Court's decision rendered in Totgars' Cooperative Sale Society Ltd. (supra) was not applicable in the facts of that case - which is identical to the instant case - as the eligibility of deduction of interest in the facts of the instant case has to be....