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TaxTMI 
TaxTMI 
TaxTMI 
2026 (5) TMI 37
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....assessee, accordingly the case of the assessee was reopened u/s 147 of the IT Act and statutory notices u/s 148, 142(1) of the IT Act and show cause notices respectively were issued to the assessee after following the procedure of section 148A of the IT Act. After considering the reply and submissions of the assessee, vide order dated 30.05.2023 the reassessment was completed u/s 147 r.w.s. 144 r.w.s. 144B of the IT Act by determining income at Rs. 3,78,12,419/- as against the Nil income returned by the assessee. The above assessed income includes addition of Rs. 3,06,54,818/- (Transactions with nonmembers) and addition of Rs. 71,57,601/- (Interest on investment with cooperative & other banks) on account of disallowance of deduction claimed u/s 80P(2)(a)(i) of the IT Act. 3. Being aggrieved with the above assessment order, the assessee preferred an appeal before Ld. CIT(A)/NFAC. After considering the reply and submissions of the assessee, Ld. CIT(A)/NFAC dismissed the appeal filed by the assessee. 4. It is the above order against which the assessee is in appeal before this Tribunal. 5. We have heard Ld. Counsels from both the sides and perused the material available on rec....
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....gard, we find that in Maharashtra State Cooperative Societies Act, there is no distinction between members & nominal members & the income, if any, derived from transactions with them qualifies for deduction u/s 80P(2)(a)((i) of the IT Act. In this regard, we find support from a coordinate bench decision passed in the case of Yuvashakti Nagari Sahkari Path Sanstha Maryadit in ITA No.476/PUN/2023 order dated 08-06-2023 wherein the Tribunal decided the identical issue of deduction u/s 80P(2) of the IT Act with regard to income from member & non-member/nominal member in favour of assessee by relying on various judgements including judgement of Hon'ble Jurisdictional High Court in Jalgaon District Central Cooperative Bank Ltd. vs. Union of India (2004) 134 Taxman 1 (Bom) by observing as under :- "3. Briefly stated, the facts of the case are that the assessee is a cooperative credit society engaged in the business of providing credits facilities to its members. During the year under consideration, the assessee received interest income of Rs. 36,20,022/- from its nominal members and claimed the same as deductible u/s. 80P. The AO did not allow the deduction on the net interest in....
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....(supra). That was a case in which Andhra Pradesh Mutually Aided Co-operative Society Act, 1995 was under consideration, which did not admit `Nominal Member' within the ambit of the term 'Member'. Recently, the Hon'ble Supreme Court in Mavilayi Service Co-Operative Bank Ltd. vs. CIT (2021) 123 taxmann.com 161 (SC) considered its earlier judgment in Citizen Cooperative Society Ltd. vs. ACIT (supra) vide para 46 of its order. Taking note of the fact that the Citizen Cooperative Society Ltd. vs. ACIT (supra) judgment dealt with the Andhra Act wherein the term 'Member' did not include Nominal Member, the Hon'ble Supreme Court in Mavilayi Service (supra) held that the interest on loans given to Nominal Members under the Kerala Act was eligible u/s 80P(2)(a)(i) of the Act as the term 'Member' under the Kerala Act included 'Nominal Members'. In view of the foregoing discussion, it is evident that when the loans are given to Nominal Members and the relevant State Act includes, 'Nominal Member' purview of 'Member', there can be no question of denial of benefit u/s 80P(2)(a)(i). 5. Adverting to the facts of the instant case, we find that the provisions of the Kerala Act and t....
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.... also on the ground that the assessee society has not furnished any details with regard to the fact that the interest income is received from cooperative societies. Ld. CIT(A)/NFAC also confirmed the above disallowance by placing reliance on the judgement passed in the case of Totagar's Cooperative Sales Society Ltd. 11. In this regard, we find that in a number of decisions passed by coordinate benches of this Tribunal, it has been held that interest income earned from its investments with other cooperative banks, who are also cooperative society, is eligible for deduction u/s 80P(2)(d) of the IT Act. Regarding this we find support from decision passed in the case of Marathwada Krishi Vidyapeeth Karmachari Sahkari Patsanstha Ltd. vs. PCIT-1, Aurangabad in ITA No.102/PUN/2020 and others order dated 21.12.2022 wherein the Tribunal on identical issue allowed the appeals filed by various assessee's in a common order by observing as under :- "4. Succinctly, the facts common in all these cases are that the assesses filed returns claiming deduction u/s. 80P in respect of interest income which was allowed by the respective AOs. The ld. PCIT(s) invoked the jurisdiction u/s 263 o....
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....ot eligible for deduction pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of the Act of a co-operative society on interest income on investments/deposits parked with a co-operative bank, which is a registered co-operative society as per section 2(19) of the Act, defining co-operative society to mean a cooperative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. The assessee's are also Co-operative society registered under the Act and hence qualify for the grant of the deduction. Similar view has been taken by the Pune Tribunal in several cases including The Sesa Goa Employees Coop. Credit Society Ltd. Vs. ACIT (ITA No.203/PUN/2019) vide order dated 16- 11-2022). 7. In view of the foregoing, we hold that the impugned orders questioning the deduction u/s. 80P(2)(a)(i)/80P(2)(d) in respect of interest income, cannot be sustained. 8. In the result, all the appeals are allowed." 12. Respectfully following above decision passed in the case of Marathwada Krishi Vidyapeeth Karmachari Sahkari Patsanstha Ltd. (supra), we are of the ....
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....v. ITO [2010] 188 Taxman 282/322 ITR 283. ........................ 34. The case before the Supreme Court in Totgar's Cooperative Sale Society Ltd.'s case (supra) was in respect of a co-operative credit society, which was also marketing the agricultural produce of its members. As seen from the facts disclosed in the decision of the Karnataka High Court in Totgars, from out of which the decision of the Supreme Court arose, the assessee was carrying on the business of marketing agricultural produce of the members of the society. It is also found from paragraph-3 of the decision of the Karnataka High Court in Totgar's Co-operative Sale Society Ltd.'s case (supra) that the business activity other than marketing of the agricultural produce actually resulted in net loss to the society. Therefore, it appears that the assessee in Totgars was carrying on some of the activities listed in clause (a) along with other activities. This is perhaps the reason that the assessee did not pay to its members the proceeds of the sale of their produce, but invested the same in banks. As a consequence, the investments were shown as liabilities, as they represented the mone....
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....80P(2) of the I.T. Act for a Co-operative Society that is assessed to tax under the head of 'Profits and Gains of Business or Profession' is of the whole of the amount of profits and gains of business attributable to any one or more of its activities. Thus, all amounts as can be attributable to the conduct of the specified businesses by a Co-operative Society will be eligible for the deduction envisaged under the statutory provision. The question that arises therefore is whether, merely because the assessee chooses to deposit its surplus profit in a permitted bank or financial institution, and earns interest on such deposits, such interest would cease to form part of its profits and gains attributable to its business of providing credit facilities to its members? In our view that question must be answered in the negative, since we cannot accept the contention of the Revenue that the interest earned on those deposits loses its character as profits/gains attributable to the main business of the assessee. It is not as though the assessee in the instant case had used the surplus amount [the profit earned by it] for an investment or activity that was unrelated to its main busine....
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....as already allowed the deduction claimed u/s 80P(2)(a)(i) of the IT Act with regard to interest income earned on its investments from cooperative banks, nationalised banks and private banks by observing as under :- 2. Briefly, the facts of the case are that the appellant is a cooperative credit society registered under Maharashtra Co-operative Societies Act, 1960. The Return of Income for the assessment year 2018-19 was filed on 08.09.2018 disclosing total income of Rs. Nil after claiming deduction u/s 80P(2)(a)(i) of the Income Tax Act, 1961 ('the Act') of Rs. 78,15,971/-. Against the said return of income, the assessment was completed by the Assessing Officer vide order dated 15.02.2021 passed u/s 143(3) r.w.s. 143(3A) & 143(3B) of the Act at a total income of Rs. 42,09,784/-. While doing so, the Assessing Officer denied the exemption u/s 80P(2)(a)(i) in respect of interest income on deposits made out of the surplus funds in cooperative banks and scheduled banks on the ground that the said income does not qualify for deduction u/s 80P(2)(a)(i) or 80P(2)(d) of the Act. 3. Being aggrieved, an appeal was filed before the NFAC, who vide impugned order confirmed the ....