SARDAR CO. OP. CREDIT SOCIETY LTD.,,ANAND vs. THE INCOME TAX OFFICER, WARD-1(3)(1),, PETLAD

None appeared on behalf of the assessee. Therefore, we proceed to decide the appeal after hearing ld.DR and considering the material available on record.

At the outset, the ld.DR submitted that issue raised in the appeal of the assessee is covered in favour of the Revenue by the judgment of the Hon’ble jurisdictional High Court in the case of State Bank of India Co-operative Society Vs. CIT, 72 taxmann.com 64 (Guj) wherein it has been held that cooperative society engaged in the business of providing credit facilities to its members which earns interest income on the surplus funds parked with the nationalised banks, is not eligible for deduction under section 80P of the Act. Since impugned orders of Revenue authorities are in terms of judgment of the Hon’ble High Court cited supra, no interference thereof is required and the appeals of the assessee may be dismissed.

Having heard the ld.DR and on perusal of the record, we find merit in the submissions of the ld.DR. that Assessee is a cooperative society registered under Gujarat Co-operative Societies Act, 1961 and engaged in providing credit facilities to its members. In the return of income, the assessee has shown interest income earned on investment in the form of short term deposits with banks and claimed the same as deduction under section 80P(2)(a)(i) of the Income Tax Act. This claim was denied by the AO on the ground that since income was not derived by the assessee from its activity of providing credit facilities to the assessee, provisions of section 80P(2) does not cover assessee-society. The ld.CIT(A) concurred with the order of the AO by relying upon the judgment of Hon’ble jurisdictional High Court in the case of State Bank of India Co-operative Society (supra). We find that Hon’ble jurisdictional High Court has held that interest earned from investment made in nationalized bank by a cooperative society engaged in providing credit facilities to its members, is not eligible for deduction

In the result, appeal of the assessee is partly allowed for statistical purpose. Pronounced in the Open Court on 17th July, 2018.