TaxTMI 
TaxTMI 
2025 (4) TMI 2192
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....018-19 2. The relevant facts are that the assessee, a credit society, is engaged in accepting deposit from and providing credit facilities to members. The assessee for the year under consideration declared total income at Rs. NIL after claiming deduction of Rs. 43,87,523/- under section 80P of the Act. The case of the assessee was selected for scrutiny assessment by issuing notice under section 143(2) of the Act. 3. The AO during the assessment proceedings found that the assessee has earned interest income of Rs. 1,87,46,364/- from the loan or credit facilities provided to the member. Likewise, the assessee earned interest income of Rs. 20,39,365/- from investments made with South Canara District Central Cooperative Bank and others. T....
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....r, the same was claimed as deduction under section 80P(2)(c) and (2)(d) of the Act. The learned CIT(A) noted that the questioned whether the incomes earned from deposit or investment of surplus funds with banks or cooperative banks are eligible for deduction under section 80P of the Act or not has been examined by Hon'ble Jurisdictional High Court in the case of PCIT vs. Totagars Cooperative Sales Society Ltd reported in 83 taxmann.com 140 and it was held that such income is not eligible for deduction. Hence, the learned CIT(A) following the ratio of Hon'ble High Court in the case of PCIT vs. Totagars Cooperative Sales Society Ltd (supra) confirmed the disallowances made by the AO. 8. Being aggrieved by the order of the learned CIT(A), t....
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....n under section 80P(2)(a)(i), 80P(2)(c) and 80P(2)(d) of the Act. 11.1 The revenue authorities disallowed the assessee's claim of deduction with respect to interest income of Rs. 20,39,365/- by holding that income earned from deposit of idle funds, not immediately required for business i.e. providing credit facilities to the members is not eligible for deduction under section 80P(2)(a)(i) of the Act. In holding so, the revenue authorities followed the ratio laid by the Hon'ble Karnataka High Court in the case of PCIT vs. Totagars Cooperative Sales Society Ltd (supra) which intern followed the view taken by the Hon'ble Supreme Court in case of Totagars Cooperative Sales Society Ltd vs. ITO reported in 322 ITR 283. From the order of the au....
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....ciety qualifies for deduction under section 80P(2)(d). 11.3 The Revenue's reliance on the decision in Totagars Cooperative Sales Society Ltd. case is misplaced to this extent, as the Hon'ble Courts have consistently held that interest income derived from investments with another cooperative society falls within the purview of section 80P(2)(d), and is eligible for deduction. Accordingly, I hold that the assessee is entitled to deduction of Rs. 16,35,612/- under section 80P(2)(d) of the Act. 11.4 Now coming to the balance interest income of Rs. 4,03,753/- which were earned from fixed deposits and savings bank accounts with SCDCC Bank, a cooperative bank and with IDBI Bank and Corporation Bank, which are cooperative and scheduled commer....