THE INCOME TAX OFFICER WARD-6(3)(2), BANGALORE vs. M/S MINISTRY OF COMMUNICATION EMPLOYEE CO-OPERATIVE HOUSING SOCIETY, BANGALORE

Date of Hearing : 02-12-2020 Date of Pronouncement : 11-12-2020 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal has been filed by revenue against order dated 06/07/2018 passed by Ld. CIT (A)-11, Bangalore for assessment year 2007-08 on following grounds of appeal: “1.The order of the CIT (Appeals) is opposed to law and the facts and circumstances of the case. 2.On the facts and circumstances of the case, whether the Ld CIT(A) is justified in holding that the assessee is eligible to claim deduction u/s 80P (2)(d) of the Act wherein the assessee is not in the business of banking or not providing credit facilities to its members?

3. On the facts and circumstances of the case, whether the Ld CIT(A) is justified in holding that the assessee is eligible to claim deduction u/s 80P of the Act wherein the assessee has derived interest income from the investment in different co-operative banks and not from cooperative societies? 4. For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the CIT(A), in so far as it relates to the above grounds may be reversed and that of the Assessing Officer be restored. 5. The appellant craves leave to add, to alter, to amend or delete any of the grounds that may be urged at the time of hearing of the appeal.” Brief facts of the case are as under: 2. Assessee is a co-operative society and filed its return of income on 31/03/2008 declaring gross total income of Rs.2,36,22,915/-. The total income of rupees in ‘nil’ was declared after claiming deduction under section 80 P of the Act. 3. Ld.AO disallowed Rs.2,52,46,536/- being interest earned from other cooperative societies.Ld.AO disallowed the claim u/s.80 P(2) (a)(i) of the Act, as against the claim of assessee u/s.80P(2)(d) of the Act.

4. Aggrieved by order of Ld.AO, assessee preferred appeal before Ld.CIT(A). 5. Ld.CIT(A) held as under: “On going through the appellants claim, the Ld.AO has erred and allowed the deduction claimed by the appellant saying that the appellant is not eligible to claim deduction u/s.80P(2)(a)(i) when the appellant has claimed deduction u/s.80P(2)(d). Also, the Ld.AO has quoted case of Totgars' Co-operative Sale Society Ltd. v. ITO where the claim is u/s 8OP(2)(a)(i) does not hold good for the present case as the appellant has claimed deduction u/s.80P(2)(d). On considering the submissions made by the AR of the appellant that the deduction has been claimed u/s.80P(2)(d) which in my view is eligible.”

6. Aggrieved by order of Ld.CIT(A) revenue is in appeal before us now.

7. Ld.Sr.DR submitted that Ld.CIT(A) without verifying the claim in light of various decisions of this Tribunal as well as Hon’ble Karnataka High Court granted deduction to assessee. He submitted that the issue may be remanded to Ld.AO for considering the claim in accordance with the view taken by this Tribunal on this issue. 8. Ld.AR on the contrary relied on order passed by Ld.CIT(A). We have perused the submissions of both sides in light of records placed before us. 9. Admittedly, assessee is eligible for deduction u/s.80 P(2) (d) of the Act. However the quantum that is allowable is to be computed in accordance with the ratio laid down by following decisions. We therefore remand this issue to Ld.AO for computing the deduction as directed herein. 10. Ld.AO is directed to examine the facts in the light of decision of Hon’ble Karnataka High Court in case of Tumkur Merchants Souharda Credit Co-operative Ltd vs ITO, reported in 230 Taxmann 309, wherein decision by Hon’ble Supreme Court in case of Totgars Co-Cooperative Sale Society Ltd., reported in 322 ITR 283 has been duly considered. We note that Hon’ble Karnataka High Court in case of Pr.CIT vs Totgars co-operative Sale Society reported in 392 ITR 74 confirmed the order of this Tribunal allowing deduction under section 80P(2)(d) of the Act on interest received on investments made in co-operative bank. This decision was however not followed in the subsequent judgment in case of Pr.CIT vs Totgars Co-operative Sale society reported in 395 ITR 611. 11. We therefore restore the issue back to Ld.AO for fresh consideration in the light of above decisions after providing order quit opportunity of being heard to assessee in accordance with law. Accordingly grounds raised

by assessee stands allowed for statistical purposes. In the result appeal filed by assessee is allowed for statistical purposes. Order pronounced in the open court on 11th Dec, 2020 Sd/- Sd/- (CHANDRA POOJARI) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 11th Dec, 2020. /Vms/ Copy to: