2025 (1) TMI 1731

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....the Kerala Co-Operative Societies Act, 1969 The assessee filed the return of income of AY 2017-18 declaring Nil income by claiming deduction of Rs. 33,12,240/- u/s. 80P of the Income Tax Act, 1961 (the Act). Against the said return of income the Income Tax Officer, Ward-2, Kollam (hereinafter "the AO") completed the assessment at a total income of Rs. 4,91,56,768/- by making an addition of Rs. 2,41,56,768/- on account of interest received from District Cooperative Bank and Treasury. 3. Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO. 4. Being aggrieved, the assessee is in appeal before us in the present appeal. 5. We have heard the rival contentions of both the part....

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....o-operative Bank, in the facts and circumstances of the case, do come within Section 80P(2)(d). Therefore, the income constitutes income from other sources and the only eligible deduction is covered by Section 80P(2)(d) viz. Interest or dividend derived by the assessee from its investments with any other Co-operative Society. The source of interest income is from Bank and Treasury, interest income received from Treasury be included in the computation of total income of the assessee. In other words, interest earned from Treasury is inadmissible for deduction and interest income from Co-operative Societies registered under the Kerala Co-operative Societies Act are eligible for deduction. The contra consideration of Commissioner of Income Tax ....

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....or an investment or activity that was unrelated to its main business, and earned additional income by way of interest or gain through such activity. The assessee had only deposited the profit earned by it in the manner mandated under Section 63 of the Multi-State Co-operative Societies Act, or permitted by Section 64 of the said Act. In other words, it dealt with the surplus profit in a manner envisaged under the regulatory Statute that regulated, and thereby legitimized, its business of providing credit facilities to its members. Under those circumstances, if the assessee managed to earn some additional income by way of interest on the deposits made, it could only be seen as an enhancement of the profits and gains that it made from its pri....