TaxTMI 
TaxTMI 
2026 (9) TMI 1976
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....findings of the Assessing Officer that the interest income earned by the assessee was from investment in co-operative banks and Section 80P(2)(d) of the Act allows deduction 'in respect of any income by way of interest or dividends by the co-operative society from its investment with any other cooperative society" 3. Brief facts of the case are as under: 3.1 The respondent-assessee filed return of income for the Assessment Year 2017-18 on 19.08.2017 declaring total income of Rs. Nil after claiming the deduction of Rs. 10,78,90,829/-under Chapter VI-A. 3.2 The Assessing Officer, after considering the reply of the assessee, passed the Assessment Order dated 28.12.2019 and disallowed the deduction under section 80P(2)(d) of the Act claimed by the assessee on the ground that the same would not be applicable in relation to any Co-operative Bank, Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank as per section 80P(4) of the Act. 3.3 Being aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the CIT(Appeals) who, by order dated 26.09.2023, allowed the appeal of the assessee. 3.4 Being ag....
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....igh Court appears to have taken into consideration the amendment in section 194A(3)(v) of the Act 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 Hon'ble Karnataka High Court to the effect that the cooperative banks have been excluded from the definition of the cooperative societies by Finance Act, 2015 by amending section 194A(3)(v) of the Act is concerned, on perusal of section 194A(3) of the Act, it appears that it provides for exemption from deducting Tax Deducted at Source ['TDS' for short] from the income on interest other than interest on securities as the cooperative societies other than cooperative banks meaning thereby that the cooperative banks are liable to deduct TDS from the interest other than interest on securities. Therefore it cannot be said that cooperative banks are excluded from the definition of cooperative societies by such an amendment. 30. Moreover, as reliance placed on the aforesaid decision for applicability of section 80P(4) of the Act in the facts of the case is also not possible to accept as section 80P(4) of the Act would be applicable to....
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....h (ccvii) read with the provisions of the NABARD Act, 1981. Thus, it is only these three banks which are co-operative banks which require a licence under the BR Act, 1949 to engage in banking business. If any bank does not fall within the nomenclature of the aforesaid three banks as defined under the NABARD Act, 1981, it would not be a co-operative bank within the meaning of Section 56 of BR Act, 1949 irrespective of whatever nomenclature it may have or structure it may possess or incorporated under any Act. It was further stated that if a bank has to be a state co- operative bank, there has to be a declaration made by the State Government in terms of Section 2(u) of NABARD Act, 1981. Hence, it is necessary to go into the question as to, whether, the appellant herein has been so declared as a state cooperative bank. This question would need not detain us for long as the Kerala High Court in A.P. Varghese had categorically stated that the "Kerala State Co-operative Bank" is a "state co-operative bank" as defined under the NABARD Act, 1981. Therefore, the appellant bank has not been declared as a state cooperative bank under the provisions of NABARD Act, 1981. Further, in the case of....
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....lities to its members. v) Fifthly, the burden is on the assessee to show, by adducing facts, that it is entitled to claim the deduction under Section 80P. vi) Sixthly, the expression "providing credit facilities to its members" does not necessarily mean agricultural credit alone. It was highlighted that the distinction between eligibility for deduction and attributability of amount of profits and gains to an activity is a real one. Since profits and gains from credit facilities given to non-members cannot be said to be attributable to the activity of providing credit facilities to its members, such amount cannot be deducted. vii) Seventhly, under Section 80P(1)(c), the co-operative societies must be registered either under Co- operative Societies Act, 1912, or a State Act and may be engaged in activities which may be termed as residuary activities i.e. activities not covered by subclauses (a) and (b), either independently of or in addition to those activities, then profits and gains attributable to such activity are also liable to be deducted, but subject to the cap specified in sub-clause (c). viii) Eighthly, sub-clause (d) states that where int....