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TMI Blog2012 (7) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 of the Act dated 29-05-2009 (copy on record). 2. The only issue arising in the instant appeal, as raised by the Revenue per its Ground No. (i), is the exclusion of three items in computing the deduction exigible to the assessee, a cooperative society, u/s. 80P (2)(a)(i) of the Act. We shall examine the case of both the opposite parties qua each to the three incomes. 3.1 The first exclusion is qua interest from employees, at Rs. 2,91,626/-. While the Revenue's claim is that the same is income from other sources, the assessee's stand is that the same is an integral to its principal business, i.e., provision of credit facilities to its members. Further, even incidental income qualifies for deduction u/s. 80P(2)(a)(i) of the Act, as the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 80P(2)(a)(i) could thus arise only with reference to the activity of providing credit facilities to its members. The hon'ble apex court has per its recent decision in the case of Totgar's Cooperative Sale Society Ltd. vs. ITO (2010) 322 ITR 283 (SC), clarified that it is not business income, but only the operational income from the specified activity/s that would be eligible for deduction u/s 80P(2)(a)(i). It was explained that the Legislature had specifically used the words 'profits and gains of business' in section 80P(2) of the Act, implying profits as assessable u/s. 28 of the Act. As such, only interest income from lending or otherwise providing credit facilities to its members, would qualify for exemption there-under. In the facts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration is the income under reference flows from or is by way of providing credit facilities by the assessee-society to its members, the answer to which is clearly in the negative. The decisions relied upon by the assessee, being even otherwise prior to the decision by the apex court, would be of no consequence in view of the clear pronouncement by it in the said case, being relied upon by us, to which reference was made in the open court (also refer para 7 of this order). 4. The second item of income is `jeep charges', at Rs. 8,53,392/-. The assessee explained that the same is not the source of income, but represents only the recovery of jeep expenses incurred on trips made by the staff to recover the dues from the defaulting borro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's principal business of lending. We decide accordingly. 6.1 So, however, it would be necessary to place the issue/s raised in this appeal and adjudicated by us per the preceding paras of this order in proper perspective. The actual issue, as discerned from the undisputed facts on record per the assessment order, and contrary to what one may have gathered from the reading of this order - which is based principally on the ground raised and the respective arguments of the parties before us - so that the same had to be addressed, is not the eligibility of certain incomes to deduction u/s. 80P(2)(a)(i) of the Act, but whether the same would fall to be assessed as income from other sources u/s. 56, or as profits and gains of business u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he tribunal, it is trite, is to discern the issue/s involved, and adjudicate the same on the basis of its factual findings, applying the law as declared by the higher courts of law, and for which we may refer to the decisions, inter alia, in the cases of Hukumchand Mills Ltd. v. CIT (1966) 62 ITR 232 (SC) and Kapurchand Shrimal v. CIT (1981) 131 ITR 451 (SC). 6.2 With regard to the primary issue arising in the instant case, the income from `jeep charges' and `no dues certificates', as would be apparent from the foregoing (refer paras 4 & 5), is clearly business income. The Revenue's stand of the same being assessable u/s. 56 is inconsistent with the facts of the case. As regards the income by way of `interest from employees', discussed vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly allowed, there is no case for disturbing the assessee's return in respect of these three incomes, being liable to be assessed as business income, which would stand to be set off against the brought forward loss u/s. 72 of the Act. The afore-referred decision by the apex court, wherein the interest on investment in securities was held as rightly assessable u/s. 56, would not in our view impact the determination of the correct head of income, being essentially a matter of fact, with our decision in the present case resting on the factual finding of the assessee being actively engaged in financing business. The income under reference in that case was found to have been earned out of surplus funds available with the assessee-society for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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