DAHADAYA SAMABAY KRISHI UNNAYAN SAMITY LTD. ,PURBA MEDINIPUR vs. ITO, WARD-27(1), HALDIA. , HALDIA

The only issue raised by the assessee is against the order of ld. CIT (A) confirming the denial of deduction u/s 80P of the Act in respect of interest of ₹5,22,601/- earned from nationalized banks, thereby holding that interest received from the schedule bank is not eligible for deduction u/s 80P of the Act.

In the appellate proceedings, the ld. CIT (A) dismissed the appeal of the assessee by holding that the assessee neither entitled to deduction u/s 80P(2)(d) nor u/s 80P(2)(a)(i) of the Act in respect of interest earned on investments with banks and from Government securities. The ld. CIT (A) held that in the present case, the interest was received by the assessee society from investments with the nationalized banks and not from the investments with the co-operative banks and therefore, deduction u/s 80P(2)(d) was not available. The ld. CIT (A) further observed that the interest earned from investments in nationalized banks was not an income from the business activities

After hearing the rival contentions and perusing the materials available on record, I find that the assessee is primarily agricultural credit co-operative society engaged in providing credit facility to its members and also engaged in purchase of seeds, fertilizers, pesticides for agricultural operations for its members. I observe from the balance sheet of the assessee, a copy of which is available at page no.3 of the Paper Book, which contain the information as to the various resources available with the society. I note that the assessee has paid up share capital of ₹49.49 lacs while reserve and other funds were 198.37 lacs, Grants , other funds ₹88.69 lacs and deposits were and 42.20 crores. I also note that the assessee is required to comply with the stipulations and conditions under the Co-operative Act and keep part of its funds with the banks and government securities. I note that the assessee’s total investments out of these funds were ₹20.22 crores. In our opinion, these are the investments as per section 64 read with section 63 of the Multi State Co-operative Society Act, 2022, out of the surplus funds and therefore has to be treated as income of the assessee from business activities. The case of the assessee find support from the decision of the co-ordinate Bench in the case of M/s Bishpur Rowtara Primary Agricultural Co-operative Credit Society Ltd. Vs. ITO in for A.Y. 2018-19, wherein the co- ordinate Bench has held as under:-

Accordingly, with above observations, we restore the issue to the file of the ld. AO with a direction to decide the same in terms of the above directions after affording reasonable opportunity of hearing to the assessee.

The issue raised in this appeal is similar to one as decided by us in A.Y. 2018-19. Accordingly, our decision would apply mutatis mutandis to this appeal of assessee in as well. Hence, the appeal of assessee in for A.Y. 2020-21 is allowed for statistical purpose.

In the result, both the appeals of the assessee are allowed for statistical purposes.