M/S. HARICHANDRANPUR LAMPS,KEONJHAR vs. ITO, KEONJHAR, KEONJHAR

In both the appeals, although assessee has raised multiple Grounds n both the appeals, although assessee has raised multiple Grounds n both the appeals, although assessee has raised multiple Grounds of Appeal but all the grounds essentially relates to one issue i.e. of Appeal but all the grounds essentially relates to one issue i.e. of Appeal but all the grounds essentially relates to one issue i.e. allowance of claim of deduction u/s. 80P(2)(a)(i)/80P(2)(d) of the Act. allowance of claim of deduction u/s. 80P(2)(a)(i)/80P(2)(d) of the Act. allowance of claim of deduction u/s. 80P(2)(a)(i)/80P(2)(d) of the Act.

The facts of the case, as emanating from the o The facts of the case, as emanating from the order of the CIT(A) are rder of the CIT(A) are that the assessee is a Co that the assessee is a Co-operative Society registered under the Co operative Society registered under the Co- operative Societies Act.. It is engaged in the activity of carrying on the operative Societies Act.. It is engaged in the activity of carrying on the operative Societies Act.. It is engaged in the activity of carrying on the business of providing credit facilities to its members governed under the business of providing credit facilities to its members governed under the business of providing credit facilities to its members governed under the

On appeal, although the CIT(A) held that the assessee society’s activity is not in the nature of banking and consequently, it is entitled to deduction u/s.80P(2)(a)(i) of the Act but so far as the interest is concerned, it is liable to be taxable u/s.80P(2)(a) of the Act.

Still aggrieved, the assessee is in appeals before us.

At the time of hearing reiterated the submissions made in the grounds of appeal and further submitted that the amount which was invested in the bank to earn was not an amount due to any members and not shown the liability of any members in their account. The amount is in the nature of profit and gain was not required by the assessee immediately for lending money to its members. Therefore, the said interest income is attributable to carrying on the business of the assessee which is liable to be deducted in terms of section 8pp(2)(d) of the Act.

Ld A.R. of the assessee produced a decision of ITAT Mumbai in the case of ITO vs. Presidency Co.op. Hsg. Society ltd., (2018) Taxpub (DT) 1870 (Mum-Trib) and submitted that the issue is covered in favour of

On the other hand, ld D.R. supported the order of the CIT(A).

We have heard the rival contentions and perused the record of the case as well as the decision of Mumbai Tribunal in the case of Presidency Co-op Hsg. Society Ltd (supra). In that case, the only requirements for claiming deduction under section 80P(2) was that the income should be received from the investments made in co-operative society and co- operative banks, which was complied by the assessee. Hence, the Tribunal held that the assessee is entitled to deduction in respect of interest received or derived by it on fixed deposits with co-operative banks.

In the case at hand, the facts are that the interest income was arising out of surplus funds, not required immediately for lending the money to its members by the assessee society and the interest earned out of that money. Hence, the decision of Mumbai Tribunal is covered in favour of the present assessee. We, therefore, set aside the order of the CIT(A) and allow the assessee the benefit of deduction u/s.80P(2)(a) of the Act .

In the result, both the appeals of the assessee are allowed.