TaxTMI 
TaxTMI 
2025 (3) TMI 1735
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....sessee preferred this appeal. 2. Assessee is a cooperative society which offers credit services and also sale of fertilizers and pesticides with its members. In its return of income for the assessment year 2018-19, the assessee declared total income at rupees nil by claiming exemption under section 80P to the tune of Rs. 1,52,62,616/- and while passing the order under section 143(3) of the Income Tax Act, 1961 (for short "the Act"), learned Assessing Officer accepted the same. 3. Subsequently, on a perusal of the assessment record, learned PCIT entertained an opinion that any interest income from investment with the state cooperative central bank is not attributable to the activities specified in section 80P(2)(a) of the Act and has t....
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....one through the record in the light of the submissions made on either side. It could be seen from the record that the assessee offers credit services and also sale of fertilizers and pesticides with its members. Coming to the objection of the learned PCIT that any interest accrued from investment with the state cooperative central bank not attributable to the activities specified in section 80P(2)(a) of the Act, and cannot be allowed as a deduction is concerned, this issue is no longer res integra. Hon'ble jurisdictional High Court considered the same in extenso in The Vavveru Co-operative Rural Bank Ltd. (supra). On a threadbare analysis of the provisions under section 80P of the Act in the light of various decisions including the decision....
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....ollows is that when a co-operative society engaged in any one of the activities stipulated in sub-clauses (i) to (vii) of clause (a) makes profits and gains out of business attributable to anyone of those activities, the case would fall under clause (a). The moment the income derived from one of those activities is invested in another co-operative society and an interest or dividend is derived therefrom, the case would be covered by clause (e). In case the profits and gains of business arising out of the activities listed in sub-clauses (i) to (vii) of clause (a) is invested in immovable properties, such as, godowns or warehouses and an income is derived therefrom, the case would be covered by clause (e) of section 80P(2). 31. The ....
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....king of the profits and gains of business in nationalised banks and the earning of interest income therefrom is only one of the methods of multiplying the same income. To accept the stand of the Department would mean that co-operative societies carrying on the activities listed in clauses (i) to (vii), which invest their profits and gains of business either in other co-operative societies or in the construction of godowns and warehouses, may benefit in terms of clause (d) or (e), but the very same societies will not be entitled to any benefit, if they invest the very same funds in banks. Such an understanding of section 80P(2) is impermissible for one simple reason. The benefits under clauses (d) and (e) are available in general to all co-o....
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....om the investments made by retaining the monies belonging to the members cannot certainly be termed as profits and gains of business. This is why Totgar's struck a different note. 35. But, as rightly contended by the learned senior counsel for the petitioners, the investment made by the petitioners in fixed deposits in nationalised banks, were of their own monies. If the petitioners had invested those amounts in fixed deposits in other co-operative societies or in the construction of godowns and warehouses, the respondents would have granted the benefit of deduction under clause (d) or (e), as the case may be. 36. The original source of the investments made by the petitioners in nationalised banks is admittedly the inc....