TaxTMI 
TaxTMI 
2026 (7) TMI 497
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....P(2)(a)(i) of the Act made by the assessing officer in respect of interest income from scheduled banks. 2. Since the issues involved in these appeals are common, identical and similar and for the sake of convenience, shall take up ITA 610/PUN /2 026 for the Assessment Year 2018 19 as a lead case and facts narrated. 3. The brief facts of the case are that, assessee is a co-operative credit society engaged in providing credit facilities to its members. The assessee has filed the return of income for A.Y.2018-19 on 13.09.2018 disclosing a total of income of Rs. NIL after claiming deduction under section 80P of the Act. During the assessment proceedings, notices under Section 142(1) of the Act along with letters and show-cause notices, we....
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....at the CIT(A) has erred in confirming the action of the A.O. The CIT(A) erred in treating the interest income received from scheduled bank is not eligible for deduction u/sec 80P of the Act. The Ld.AR made alternative claim that the interest income from other banks on the concept of attributable to activities of the society be allowed as deduction u/sec 80P(2)(a)(i) of the Act. The Ld.AR supported the submissions with paper book and judicial decisions. Per Contra, the Ld.DR relied on the order of the CIT(A). 6. Heard the rival submissions and perused the material on record. The Ld.AR submitted that the CIT(A) has erred in sustaining the disallowance overlooking the submissions and the judicial decisions and the Assessing Officer has igno....
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....ety, and held as under : Quote,"8. Therefore, the real controversy arising in these writ petitions is as to whether the income derived by the petitioners by way of interest on the fixed deposits made by them with the banks, is to be treated as profits and gains of business attributable to any one of the activities indicated in sub-clauses (i) to (vii) of clause (a) of sub-section (2) of section 80P or not. 9. While the petitioners place strong reliance upon a decision of the Division Bench of this court in CIT v. Andhra Pradesh State Cooperative Bank Ltd. [2011] 12 taxmann.com 66/200 Taxman 200/336 ITR 516, the Revenue places strong reliance upon the decision of the Supreme Court in Totgar's Co-operative Sale Society L....
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....r 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 income that the petitioners derived from the activities listed in sub-clauses (i) to (vii) of clause (a). The character of such income may not be lost, especially when the statute uses the expression "attributable to" and not any one of the two expressions, ....
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....e 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 ....
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....ncome does not change. The Hon'ble Kerala High Court held that interest earned from deposits in permitted banks will be eligible for deduction u/s. 80P of the Act. The Hon'ble Kerala High Court's decision is dated 04.09.2024 means, after the decision of Hon'ble Supreme Court in the case of Totagar's Co-operative Sales Society Ltd. 9.2 Accordingly, we hold that assessee is eligible for deduction u/s. 80P of the Act, on the interest income earned by the assessee from Co-operative Banks and Nationalized Banks. 9.3 Respectfully following the judicial precedent, we direct the Assessing Officer to allow deduction u/sec. 80P of the Act on the interest earned. Accordingly, Ground No.1 of the Assessee is allowed. " 7. Therefore,....