TaxTMI 
TaxTMI 
2025 (2) TMI 1527
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....in respect of interest of Rs. 10,14,028 earned on bank FDR without appreciating that, the funds invested were operational funds/ working capital and assessee was required to maintain liquid funds to meet its time and demand deposits repayment responsibility, as per applicable statutory regulatory guidelines. 4. Without prejudice, the assessee was also eligible for claim of deduction in respect of interest of Rs. 10,14,028 under section 80P(2)(d) of the Act. 5. The assessee craves leave to add, alter or withdraw any of the grounds of appeal." 3. Facts in Brief:- The assessee is co-operative society registered under Maharashtra Co-Operative Society Act and mainly engaged in business of providing credit facilities to its members. The activities are totally controlled and monitor by registrar of co-operative society. The objects of the society is to accept deposits from its members and give advances the same in the form of loans to its members or to invest the amount of deposits accepted from its members, as required. According to the assessee, the income of assessee Co- Operative society is eligible for exemption under section 80P(2)(a)(i) of the Income Tax Act, 1....
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....,028/- is not earned by applying privity of mutuality, it is outside the purview of deduction u/s. 80P of the IT Act, from both 80P(2)(a)(i) as well as 80P(2)(d). This amount cannot be permitted as deduction. The Action of AO is upheld and the grounds of appeal1 to 4 of appellant are hereby dismissed. 6. The ground no. 5 of the appellant is with respected levy of interest u/s. 234A, 234B, & 234C which is mandatory as per the provisions of the IT Act. However, AO is directed to verify the same once again and mandatory levy may be made. Hence, this ground of appeal of the appellant is Dismissed. 7. As a result appeal of the appellant is Dismissed." Being aggrieved the assessee is in further appeal before the Tribunal. 5. During the course of hearing, both the parties agree before me that the issue in hand is covered by the decision of the Co-ordinate Bench of the Tribunal (the very same Bench was a party to that order), rendered in The Ismailia Urban Co-operative Society v/s ITO, ITA no.122/Nag./2023, order dated 18/06/2024, wherein the Tribunal has considered this issue in detail and held that interest income earned by the assessee trust is eligible for deduc....
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....ssessee by the decision of this ITA, referred by the Ld. CIT(A) in his appellate order. The distinction mentioned in the grounds of appeal is not at all sustainable. We further find that this Tribunal again in the case of Chattisgarh Urban Sahakari Sanstha Maryadit Vs. ITO in ITA No. 371/Nag/2012 vide order dated 27.05.2015 has adjudicated similar issue as under:- "11. Upon careful consideration, we not that identical issue was the subject matter of consideration by ITAT, Ahmedabad Bench decision in the case of Dhanlaxmi Credit Cooperative Society Ltd (supra), in which one of us, learned Judicial Member, was a party. The concluding portion of the Tribunal's decision is as under: "4. With this brief background, we have heard both the sides. It was explained that the Co-operative Society is maintaining "operations funds" and to meet any eventuality towards repayment of deposit, the Co-operative society is maintaining some liquidated funds as a short term deposit with the banks. This issue was thoroughly discussed by the ITAT "B" Bench Ahmedabad in the case of The Income Tax Officer vs. M/s. Jafari Momin Vikas Co-op Credit Society Ltd., bearing ITA No. 1491/Ahd/2012 ....
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....required for the purpose of its business, in short term deposits; (b) that the surplus funds arose out of the amount retained from marketing the agricultural produce of the members; (c) that assessee carried on two activities, namely, (i) acceptance of deposit and lending by way of deposits to the members; and (ii)marketing the agricultural produce; and (d) that the surplus had arisen emphatically from marketing of agricultural produces. 19.3 In the present case under consideration, the entire funds were utilized for the purposes of business and there were no surplus funds. 19.4 While comparing the state of affairs of the present assessee with that assessee (before the Supreme Court), the following clinching dissimilarities emerge, namely: (1) in the case of assessee, the entire funds were utilized for the purposes of business and that there were no surplus funds:- - in the case of Totgars, it had surplus funds, as admitted before the AO, out of retained amounts on marketing of agricultural produce of its members; (2) in the case of present assessee, it had not carry out any activity except in providing credit ....