TaxTMI 
TaxTMI 
2026 (6) TMI 1447
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....1/ Del/2025 (A.Y.2017-18) being the lead case. 2. The assessee has raised the single ground in appeal as under:- 1. That under the facts and circumstances both the lower authorities grossly erred in law as well as on merits in rejecting the claim of deduction of Rs. 95,93,698/- u/s 80P(2) (d) for the following receipts:- Recd. from Nature Amt. Delhi State Cooperative Bank Ltd. Intt. On FDR 61,13,563 Saraswati Cooperative Bank Ltd. Intt. On FDR 34,26,515 Intt. Recd. From employee Intt. 53,620 Total 95,93,698 3. The brief facts of the case are that the assessee is a Cooperative credit society and filed it return of income on 28-10-2017 declaring total income of Rs. 15,710/-. The case of assessee was selected for complete scrutiny under CASS. A notice under section 143(2) dated 29-09-2018 was issued to the assessee. Further notices under section 142(1) of the act were issued to the assessee. It was noticed by the Assessing Officer that the assessee had claimed deduction of INR 95,93,698/- under section 80P of the Act. The Assessing Officer was of the view that such deduction is not allowable as the income is not from t....
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....s not erroneous allowing deduction of section 80P(2)(d) of the Act which is in consonance with the various decisions of the court as a twin condition invoking section 263 as to the assessment being erroneous and prejudicial to the interest of the revenue are not being fulfilled. 7. Reliance also placed on the following decisions: (i) Deoband Cooperative Cane Development Union Ltd. v. AO NFAC ITA No. 6638/Del/2025 dated 20-03-2026 (ii) The Janta Adarsh Cooperative Thrift & Credit Society Ltd. v. ITO Ward -52(1) ITA No.3692 & 3693/Del/2023 dated 28-06-2024 (iii) ITO vs. Shri Bhairavnath Multistate Cooperative Credit Society Ltd. [2024]164 taxmann.com 382(Pune- Trib) 8. The Ld. AR of the assessee also submitted that similar interest income was there for A.Y.2021-22 to 2024-25 deduction u/s 80P(2)(d) were allowed in intimation under section 143(1) of the Act. 9. On the other hand, Ld. Sr. DR for the Revenue opposed these submissions and supported the orders of the authorities below. He submitted that the issue of chargeability of interest has been decided by the Hon'ble Supreme Court in the case of Totgar's Co-operative Sale Society Ltd. v. ITO (188T....
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....) of the Act. The judgement of Hon'ble Supreme Court rendered in the case of Totgar's Co-operative Sale Society Ltd. vs ITO (supra), would not be applicable since the facts are clearly distinguishable wherein surplus of the funds was not deposited with any Co operative Society but were deposited to the Commercial banks. Therefore, authorities below mis-directed itself in applying the ratio of the Hon'ble Supreme Court in the case of Totgar's Co-operative Sale Society Ltd. vs ITO (supra). I therefore, hold that the assessee would be eligible for deduction u/s 80P(2)(d) of the Act. The grounds raised are allowed in terms indicated herein above. 11. We find no merit in the Revenue's arguments. The Coordinate bench in the case of Deoband Cooperative Cane Development Union Ltd. v. AO NFAC ITA No. 6638/Del/2025 dated 20-03-2026 allowing the appeal of the assessee and held as under: 5. We find no merit in the Revenue's instant vehement arguments in light of (2024) 164 taxmann.com 382 (Pune Tribu.) ITO Vs. Shri Bhairavnath Multistate Cooperative Credit Society Ltd. rejecting the very stand as under: "5. We heard the rival submissions and perused the material on record.....
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....High Court in the case of CIT v. Southern Eastern Employees Cooperative Credit Society Ltd. [2016] 73 taxmann.com 123/390 ITR 524 (Calcutta) took a view that the income arising on the surplus invested in short term deposits and securities cannot be attributed to the activities of the society and, therefore, not eligible for exemption u/s. 80P(2)(a)(i) of the Act. However, the Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. v. ITO (2015) 230 taxmann 309 (Kar.) and the Hon'ble Telangana and Hon'ble Andhra Pradesh High Court in the case of Vaveru Co-operative Rural Bank Ltd. v. CIT [(2017) 396 ITR took a view that such interest income is attributable to the activities of the society and, therefore, eligible for exemption u/s. 80P(2)(a)(i) of the Act. The Coordinate Bench of Pune Benches in the case of M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit v. ITO (ITA Nos.559/560/PUN/2018, dated 11-122018) has taken view in favour of the assessee following the judgment of Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). Respectfully following the decision of the Coor....