TaxTMI 
TaxTMI 
2026 (6) TMI 210
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....assessee has raised the following grounds of appeal: 1. Disallowance of Proportionate Expenses under Section 57-Interest Income: The learned Commissioner of Income Tax (Appeals) [CIT(A)) has erred, both in law and on facts, in upholding the disallowance of 13,23,825 under Section 57, by erroneously restricting the deduction only to administrative expenses against interest income assessable as "Income from Other Sources" and by disregarding the appellant's method of Proportionate expense allocation that has been consistently accepted in earlier years. The learned CIT(A) failed to appreciate the binding ITAT decision in the appellant's own case for AY 2014-15, and other relevant tribunal orders, which held t....
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.... of the Act. This issue stands settled by the order of the jurisdictional High Court in the case of PCIT Vs. Ashwinkumar Arban Co-Operative Society Ltd, [2024] 168 taxmann.com 314 (Gujarat). For the sake of ready reference, snippets of the said order is reproduced below:- "Section 80P, read with section 263 of the Income-tax Act, 1961 Deductions Income of co-operative societies (Interest from co- operative bank) Assessment year 2018-19- Principal Commissioner invoked revisional powers under section 263 on ground that Assessing Officer had allowed deduction on interest earned by assessee, a cooperative society, from investment made with a cooperative bank under section 80P(2)(d) which was erroneous and prejudicial to Interest of rev....
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....erest on the investment made with the cooperative bank which in turn, is a cooperative society itself. [Para 28] * Reliance placed by the revenue on decisions of the Karnataka High Court in Totgars' Cooperative Sale Society (2017) 395 ITR 611 and Supreme Court in case of Totgars Cooperative Sale Society Ltd v. Income Tax Officer 322 ITR 283 (S.C), the Karnataka High Court appears to have taken into consideration the amendment in section 194A(3)(v) wherein the cooperative bank is excluded from the applicability of tax to be deducted at source. However, it appears that the interpretation made by the Karnataka High Court to the effect that the cooperative banks have been excluded from the definition of the cooperative societies by Fin....
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....erative Agricultural & Rural Development Bank Ltd. v. Assessing Officer in 458 ITR 184 while considering various provisions of the Banking Regulation Act read with provisions of the Income Tax Act has held that the provision of section 80P(4) would not be applicable to a cooperative bank which is not a bank as per the provisions of the Banking Regulation Act, 1949.[Para 31] * In view of the above the provisions of section 80P(2)(d) would be applicable in the facts of the case and the Principal Commissioner was not justified in invoking revisional powers under section 263 which is rightly reversed by the Tribunal holding that the cooperative bank is a cooperative society registered under the Gujarat State Cooperative Societies Act a....