TMI Blog2012 (7) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... apart from stating of it to be an income from other sources - against revenue. Income from `No Dues Certificates’- Held that:- As the assessee charges a nominal fee from the borrower to issue `no dues certificate’ who wishes to transfer his borrowing or switch to another bank or cooperative society consequently that same cannot be assessed as income from other sources, being only integral to the assessee's principal business of lending - against revenue. - I.T.A No. 812/JP/2011 - - - Dated:- 31-5-2012 - S/SHRI R.K. GUPTA, SANJAY ARORA, JJ. Revenue by Shri D.K. Meena, Jr. DR Assessee by Shri Mahendra Gargieya, Advocate-AR O R D E R Per Sanjay Arora, AM: This is an Appeal by the Revenue directed against the Order by the Commissioner of Income-tax (Appeals), Kota ( CIT(A) for short) dated 28-07-2011, allowing the assessee's appeal contesting its assessment u/s. 143(3) of the Income Tax Act, 1961 ( the Act hereinafter) dated 26-10-2007 for the assessment year (A.Y.) 2005-06, as modified vide order u/s. 154 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome, 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 of that case, the assessee, again, a cooperative society, invested its surplus funds arising out of the amounts retained against the dues to its members, in short term deposits and securities. It was explained by it that the said investment/s was only in specified securities and an activity incidental to its business and, further, in compliance with the statutory mandate. The hon'ble apex court held that even so, it is only an income from other sources, and rightly assessed by the Revenue u/s. 56 of the Act. The action by the Revenue in denying deduction u/s. 80P(2)(a)(i) thereon was accordingly confirmed by the hon'ble apex court. In the instant case, the question that arises is: How could the said interest income be considered as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cogent one, in denying the assessee s claim, apart from stating of it to be an income from other sources. We decide accordingly. 5. The third item of income is from `No Dues Certificates , at Rs. 43,990/-. When the borrower, it stands explained, wishes to transfer his borrowing or otherwise switch to another bank or cooperative society, he has to be issued a `no dues certificate from the existing lender. The assessee charges a nominal fee for the same. We are again in full agreement with the assessee, i.e., that the same cannot be assessed as income from other sources, being only integral to the 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 deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ussed vide para 3 of this order, the same in our view would stand to be answered in favour of it being a business income. This is as the assessee-society is engaged primarily in providing credit facilities to its members, so that the same represents its principal or core business activity. Its employees, under the circumstances, can only be considered as non-members, to whom to whom the monies have been similarly lent, making it a collateral activity, incidental to its business. Rather, if the assessee is actively engaged funding non-members as well, i.e., other than its members, the employees would stand to fall under the said category, rendering their separate categorization in accounts as of little moment. Again, the employees being an intrinsic part of the business set-up of any organization, making the firm s resources available to them, i.e., from which it generates business income, could only be considered as integral part to its business. Accordingly, all the three incomes under reference, irrespective of whether exigible to deduction u/s. 80P(2)(a)(i) or not, are liable to be assessed as business income, i.e., as returned by the assessee. No disturbance to its returned inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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