TaxTMI 
TaxTMI 
2026 (6) TMI 46
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....i) and had offered NIL income to tax, which includes Income from Other Sources ie, interest income of Rs. 5,50,83,385/- received from the deposits made in bank accounts. The assessee's case was selected for limited scrutiny assessment under the E-assessment Scheme. 2019 for verification of two issues viz., Investments/Advances/Loans and Deduction from Total Income under Chapter VI-A. The assessment was completed by the NaFAC u/s 143(3) r.w.s 143(3A) & 143(3B) of the I.T Act on 18/02/2021 accepting the Returned Income. Subsequently. the assessment order u/s 143(3) of the I.T Act 1961 was rectified vide order u/s 154 dated 19-04-2021 rectifying the interest u/s 234C wrongly computed. 3. Later, further the assessing officer noted that during the year the assessee has declared gross total income of Rs. 3,88,52,753/ and has claimed deduction u/s. 80P(2)\(a)(i) of Rs. 3,88,52,753/-. As per the balance sheet and the P & L account, during the year, the assessee invested Rs. 51,16,01,397/- in term deposits/fixed deposits in various banks including Cooperative Banks and earned interest of Rs. 5,50,83,385/-. During assessment proceedings u/s 143(3) of the I.T Act 1961 dated 18.02.2021 ....
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....010)322 ITR 283(SC) and in the decision of Jurisdictional Court (Karnataka High Court) in the case of PCIT Hubli Vs. M/s Totgars Co-operative sale society Ltd in ITA No. 100066/2016 dated 16.06.2017 is subsequent to all the judicial pronouncements quoted by the assesses to substantiate the claim for deduction either u/s 80P(2)(a)(i) or u/s 80P(2)(d) of the I.T Act on interest earned from Co-operative banks. Therefore, the claim of the assessee for deduction either u/s 80P(2)(a)(i) or u/s 80P(2) (d) of the I.T Act on interest earned from Co-operative banks is not accepted. Accordingly, the order under section 154 of the act was passed denying the assessee deduction of interest income of Rs. 55,083,385. 7. Aggrieved with the rectification order passed by the learned assessing officer, the assessee preferred an appeal before the learned CIT - A. Assessee submitted that. The detailed breakup of the total interest income of Rs. 5,50,83,385/- is Interest from Cooperative Banks: Rs. 5,50,29,504/-which is eligible for deduction under Section 80P(2)(a)(i) as business income and further Interest from Nationalized/Scheduled Banks: Rs. 53,881/ Legal Treatment: Eligible for deduction under S....
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....ssee is deriving interest income. Whether such interest income is eligible for deduction under section 80P(2)(d) of the act or not is the short issue involved in this appeal. c. There is plethora of judicial precedents in favour of the assessee wherein it has been held that the definition of the cooperative society under section 2(19) of the income tax act provides that cooperative society means a cooperative society registered under the cooperative societies act, 1912 or under any other law for the time being in force in any State for the registration of cooperative societies. d. According to the provisions of section 80P(1) in case of an assessee being a cooperative society the gross total income includes any income referred to in subsection (2) such amount shall be allowed to be deducted from the total income. e. According to the provisions of subsection (2) of that section, clause (d) provides that if such cooperative societies earn income by way of interest or dividend derived by the cooperative society from its investment with any other cooperative societies the whole of such income is deductible. f. According to the provisions of section 8....
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....nvestments held with cooperative banks and the same is allowed. As regards interest earned by the assessee from commercial banks, the AO is directed to consider the same under the head 'income from other sources' and relief may be granted as available under section 57 of the Act in accordance with law." 9. The learned departmental representative vehemently stated that the learned CIT - A is incorrect in holding that assessee is entitled to deduction of the bank interest earned from the cooperative banks as deduction under section 80P(2)(d) of the act in view of the direct binding decision of the honourable Karnataka High Court. Therefore, the order of the learned assessing officer passed under section 154 of the act needs to be upheld. 10. The learned authorised representative vehemently stated that the learned CIT - A has stated that the provisions of section 154 of the income tax act cannot be exercised where the issue is debatable. He further submitted that in the present case the assessee is a members credit cooperative society and the interest income earned by the assessee is eligible for deduction under section 80P(2)(a)(i) of the act by the binding decisions of....