TaxTMI 
TaxTMI 
2025 (2) TMI 1372
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....eals), National Faceless Appeal Centre (NFAC) has wrongly relied on the Hon'ble Apex Court decision in the case of Totgars Co- operative Sale Society Ltd. vs. Income Tax Officer, Karnataka (2010) 188 Taxman 282 (SC) while disallowing the claim of deduction u/s 80P(2)(a)(i) of the Act. The said decision is with regard to interest on fixed deposits made out of surplus funds however, in Appellant's case, the Assessing Officer has disallowed the claim of deduction in respect of income received by providing credit facilities to the members. 3. On the facts and in the circumstances of the case and in law, the Ld. Assessing Officer and CIT(A) has wrongly disallowed the depreciation assuming the rate of depreciation on Plant and Machinery (Computer) at 40%, however, the actual depreciation rate for AY 2017-18 on computer was 60%. 4. On the facts and in the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) has failed to consider the bonafide submission made by the Appellant Society and summarily rejected the appeal. 5. The appellant craves leave to add, amend, alter, modify, substitute....
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....y assessee on money invested in fixed deposits of bank could not possess same character of mutuality as surplus fund derived by assessee from contribution of the members. The ld. CIT(A) thus held that same could be eligible to tax as income from other sources. 3.1. The Ld.CIT(A) also confirmed the depreciation disallowed by the Ld.AO. Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before this Tribunal. 4. Ground No.1-2 raised by the assessee is on disallowance of deduction claimed under section 80P(2)(a)(i) of the Act. The Ld.AR submitted that assessee received total interest of Rs. 18,50,636/- for the year under consideration from investments in Fixed Deposits in Co-operative Banks. It was submitted that, as per the provisions of section 66 the Maharashtra Co-operative Societies Act, 1960, the Society is required appropriate 25% of the net profit to Reserve fund. In addition to this, as per section 144-10A of the MCS Act, 1960, Co-operative Credit Societies are required to maintain the Statutory Liquidity Ratio (SLR) of not less than 25% of the deposits accepted from members. 4.1. In view of this, he submitted that in order to comply with the pro....
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....-16. Income Tax Appellate Tribunal 3. ΙΤΟ 20(2)(1), Mumbai vs. Mumbai Sales Tax Co-operative Credit Society Ltd. Income Tax Appellate Tribunal 4. Indraprastha Nagari Sahakari Patsanstha vs ITO Sangli (ITA No. 184/PUN/2022 Income Tax Appellate Tribunal 4.5. He submitted that the authorities below wrongly relied on the decision of Hon'ble Supreme Court in case of Totgar's Co- operative Sales Society Ltd reported in 322 ITR 283 and held that the interest received on fixed deposits is not eligible for deduction u/s 80P of the Income Tax Act, 1961. 4.6. On the contrary, the Ld.DR relied on orders passed by authorities below. We have perused submissions advanced by both sides in light of records placed before this Tribunal. 5. The assessee is a co-operative society and claimed deduction u/s 80P(2)(a)(i) of the Act on a sum of Rs. 18,50,636/- during the year under consideration. The sum on which deduction was claimed was interest income earned on deposits by the assessee with other cooperative banks. The deduction claimed by the assessee was not allowed by the revenue for the reason that interest income was earned by the assessee o....
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....the actual conduct of the business. A Cooperative Society which is carrying on the business of providing credit facilities to its members, earns profits and gains of business by providing credit facilities to its members. The interest income so derived or the capital, if not immediately required to be lent to the members, they cannot keep the said amount idle. If they deposit this amount in bank so as to earn interest, the said interest income is attributable to the profits and gains of the business of providing credit facilities to its members only. The society is not carrying on any separate business for earning such interest income. The income so derived is the amount of profits and gains of business attributable to the activity of carrying on the business of banking or providing credit facilities to its members by a co-operative society and is liable to be deducted from the gross total income under Section 80P of the Act. 9. In this context when we look at the judgment of the Apex Court in the case of M/s. Totgars Cooperative Sale Society Ltd., on which reliance is placed, the Supreme Court was dealing with a case where the assessee-Cooperative Society, apart from prov....
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....king and, therefore, liable to be deducted under Section 80P(2)(a)(i) of the Act. At the cost of repetition, we have not considered whether the assessee carries on the business of banking. If it is established upon remand that the assessee carries on the business of banking the result may be different. In any event assuming that the judgment is not distinguishable on this ground, we would with respect disagree with the same in view of the judgments that we have already referred to and on the basis of our interpretation of Totgar's case. In any event, we are with respect unable to agree with the observations that the Supreme Court in Totgar's case (supra) did not lay down any law. (emphasis supplied) We therefore do not find any support to the assessee in regards to its claim of deduction under 80P(2)(a)(i) of the Act. 5.1.2. It is noted from the submissions of the assessee that, it has invested its fund in commercial bank earned interest thereon. Section 80P(2)(d) describes that if the assessee has received interest from the co-operative society, then the assessee is eligible for claim of deduction on such interest received. In the judgment of Hon'ble Supreme Court....