GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
What's New Case Laws Highlights Articles News Forum Short Notes Statutory TMI SMS More ...
Extracts
Home List
← Previous Next →

2015 (7) TMI 523 - ITAT BANGALORE

2015 (7) TMI 523 - ITAT BANGALORE - [2015] 41 ITR (Trib) 476 (ITAT [Bang]) - Denial of deduction under Section 80P(2)(a)(i) - CIT upholding the action of the Assessing Officer in assessing the interest received by the appellant on short term deposits with Syndicate Bank amounting under the head ‘Income from other sources’ - Held that:- Respectfully following the decision of in the case of Tumkur Merchants Souharda Credit Co-operative Society Ltd. (2014 (2) TMI 1184 - ITAT BANGALORE), we hold tha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

find that the facts of the case on hand are similar to the facts of the aforesaid case decided by the Hon'ble High Court of Karnataka, since in both cases the assessee was a credit co-operative society and invested in fixed deposits out of the surplus funds of business. Applying the ratio of the judgment of the Hon'ble High Court of Karnataka in the case of Tumkur Merchants Souharda Credit Co-operative Society Ltd. (2015 (2) TMI 995 - KARNATAKA HIGH COURT ), we hold that the assessee is entitle .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ds from business, is allowed. - Decided in favour of assessee.

Interest under Section 234B and 234C of the Act - Held that:- The charging of interest is consequential and mandatory and the Assessing Officer has no discretion in the matter. This proposition has been upheld by the Hon'ble Apex Court in the case of Anjum H Ghaswala (2001 (10) TMI 4 - SUPREME Court) and we, therefore, uphold the action of the Assessing Officer in charging the said interest - I.T. A. No.21/Bang/2015 - Date .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

1959 and is engaged in the business of providing credit facilities to its members, facilitating the purchase and supply of agricultural implements, seeds, live-stock and marketing of agricultural products grown by its members. For Assessment Year 2010-11, the assessee filed its return of income on 28.9.2010 declaring income of ₹ 88,170 after claiming deduction under Section 80P(2) of the Income Tax Act, 1961 (herein after referred to as 'the Act'). The case was selected for scrutin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

his regard, the Assessing Officer placed reliance on the decision of the Hon'ble Apex Court in Totagars Co-op Sales Society 322 ITR 283 (SC). The Assessing Officer allowed NIL deduction under Section 80P(2) of the Act as the assessee's business income assessed by him was a loss. In this manner, the total income of the assessee was determined at ₹ 18,48,200 after setting of losses under the head Business . 2.2 Aggrieved by the order of assessment for Assessment Year 2010-11 dt.5.3.2 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that the assessee had interest income of ₹ 26,16,800 on fixed deposits kept with banks and not from members to whom loans were advanced. The learned CIT(A) held that the assessee cannot be allowed deduction in respect of the interest income earned from the banks as the same has to be assessed under the head Other Sources and since the assessee s case was covered by the judgement of the Hon'ble Apex Court in the case of Totagars Co-operative Sales Society Ltd. (supra). The learned CIT(A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

6,800 under the head Income from other sources and denying the deduction under Section 80P(2)(a)(i) thereon. 2. The learned CIT (Appeals) erred in holding that the issue of taxability of interest received on deposits with scheduled banks under the head Interest from other sources and non-availability of deduction thereon under Section 80P(2)(a)(i) is covered by the decision of the Supreme Court in Totagar s Co-operative Sale Society Ltd. V ITO 188 Taxman 282; 322 ITR 283 which was followed by th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the Supreme Court in Totagar s Co-operative Sale Society Ltd. (supra) and held that interest earned on short term deposits in banks made out of amounts not immediately required for lending to members constituted income attributable to the activity of providing credit facilities to its members by a co-operative society and, therefore, was eligible for deduction under Section 80P(2)(a)(i). 4. Without prejudice to the above, the learned CIT (Appeals) ought to have taken note of rule 28 of the Kar .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nstituted its income from the business of providing credit facilities to the members. 5. The learned Commissioner (Appeals) ought to have taken cognizance of Rule 23 of the Karnataka Co-operative Societies Rules, 1960 which requires co-operative societies to invest the Reserve Fund in any scheduled bank or financial institution controlled by the Reserve Bank of India and accordingly, ought to have held that the interest received by the appellant on short term deposits with Syndicate Bank made ou .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y provisions constituted its income form the business of providing credit facilities to the members. 7. Without prejudice to the above, the learned Commissioner (Appeals) erred in not considering and adjudicating upon Ground Nos.6 to 11 raised by the appellant before him. 8. Without prejudice to the above, the learned Commissioner (Appeals) erred in not considering and adjudicating upon Ground No.12 raised by the appellant before him. 9. The learned Commissioner (Appeals) ought to have adjudicat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ounting to ₹ 9,444. 11. The learned Commissioner (Appeals) ought to have adjudicated upon Ground No.16 raised by the appellant before him and accordingly, ought to have cancelled the interest levied by the Assessing Officer under Section 234B amounting to ₹ 1,69,992. 12. The learned Commissioner (Appeals) ought to have adjudicated upon Ground Nos.17 & 18 raised by the appellant before him and accordingly, ought to have cancelled the interest levied by the Assessing Officer under .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er of the learned Commissioner (Appeals), in so far as it is against the appellant, is opposed to law and facts of the case. 17. The learned Commissioner (Appeals) erred in passing the order in the manner he did. 18. For these and other grounds that may be urged at the time of hearing, the appellant prays that the appeal may be allowed. 4. The Grounds at S.Nos.13 to 18 being general in nature and not being urged before us, are dismissed as infructuous. 5. In the Grounds at S.Nos.10 to 12, the as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

234C of the Act, if any, while giving effect to this order. 6.1 The Grounds at S.Nos.1 to 9 pertain to the sole effective issue in this appeal that arises for our consideration. The learned Authorised Representative submitted that the assessee had placed the surplus funds raised from members for carrying on the business of providing credit facilities to its members in fixed deposits and had earned interest income of ₹ 26,16,800. He submitted that the said interest arose to the assessee as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

duction in respect of the interest income in the light of the judgment of the Hon'ble Apex Court in the case of Totagars Co-operative Sale Society Ltd. (supra), as the said income has to be taxed under the head Other Sources. However, he submitted that the Hon'ble High Court of Karnataka in the case of Tumkur Merchants Souharda Credit Co-operative Society Ltd. in ITA No.307 of 2014 dt.28.10.2014, wherein their Lordships after considering the judgment of the Hon'ble Apex Court in the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d judgement was not applicable to the facts of the case on hand as the interest income covered by the judgment of the Hon'ble High Court was the interest income earned from short term deposits. It was submitted that the interest income earned by the assessee was not from short term deposits and hence the ratio of the said judgment is not applicable to the facts of the assessee's case. 6.3.1 We have heard the rival submissions on the issue before us and perused and carefully considered th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tion 80P(2)(a)(i) of the Act. However, the Hon'ble High Court of Karnataka in the case of Tumkur Merchants Souharda Credit Co-operative Society Ltd. (supra), has observed that the judgment of the Hon'ble Apex Court in the case of Totagars Co-operative Sale Society Ltd. (supra) was confined to the facts of that case and that there was no law laid down by the Hon'ble Apex Court that interest income has to be assessed under the head Other Sources . The relevant observations of the Hon&# .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

osited in the banks for a short duration which has earned interest. Therefore, whether this interest is attributable to the business of providing credit facilities to its members, is the question. In this regard, it is necessary to notice the relevant provision of law i.e., Section 80P(2)(a)(i) : Deduction in respect of income of co-operative societies : 80P (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section ( .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

business attributable to any one or more of such activities. 7. The word attributable used in the said section is of great importance. The Apex Court had an occasion to consider the meaning of the word attributable as supposed to derive from its use in various other provisions of the statute in the case of Cambay Electric Supply Industrial Co. Ltd. Vs. CIT, Gujarat-II reported in ITR Vol. 113 (1978) Page 842 at page 93 as under : As regards the aspect emerging from the expression attributable t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sed, it could have with some force been contended that a balancing charge arising from the sale of old machinery and buildings cannot be regarded as profits and gains derived from the conduct of the business of generation and distribution of electricity. In this connection, it may be pointed out that whenever the legislature wanted to give a restricted meaning in the manner suggested by the learned Solicitor General, it has used the expression derived from , as, for instance, in section 80J. In .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, the said expression issued by the legislature whenever they intended to gather receipts from sources other than the actual conduct of the business. A co-operative society which is carrying on the business of providing credit facilities to its members, earns profits and gains of business by providing credit facilities to its members. The interest income so derived or the capital, if not immediately required to be lent to the members, they cannot keep the aid amount idle. If they deposit this am .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the gross total income under Section 80P of the Act. 9. In this context when we look at the judgment of the Apex Court in the case of M/s. Totagars Co-operative Sale Society Ltd., on which reliance is placed, the Supreme Court was dealing with a case where the assessee-Co-operative Society, apart from providing credit facilities to the members, was also in the business of marketing of agricultural produce grown by its members. The sale consideration received from marketing agricultural produce .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the Act. Therefore in the facts of the said case, the Apex Court held the Assessing Officer was right in taxing the interest income indicated above under Section 56 of the Act. Further they made it clear that they are confining the said judgment to the facts of that case. Therefore it is clear, Supreme Court was not laying down any law. 10. In the instant case, the amount which was invested in banks to earn interest was not an amount due to any members. It was not the liability. It was not sho .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t in the case of CIT III, Hyderabad Vs. Andhra Pradesh State Co-operative Bank Ltd., reported in (2011) 200 Taxman 220/12. In that view of the matter, the order passed by the appellate authorities denying the benefit of deduction of the aforesaid amount is unsustainable in law. Accordingly it is hereby set aside. The substantial question of law is answered in favour of the assessee and against the revenue. Hence, we pass the following order. Appeal is allowed. 6.3.2 Respectfully following the de .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Latest Notifications:

    Dated      Category

20-7-2017 Cus (NT)

18-7-2017 IT

18-7-2017 CE (NT)

18-7-2017 CE

18-7-2017 GST CESS Rate

15-7-2017 Kerala SGST

14-7-2017 Andhra Pradesh SGST

14-7-2017 Cus (NT)

14-7-2017 Cus

13-7-2017 Co. Law

13-7-2017 Co. Law

13-7-2017 ADD

13-7-2017 ADD

12-7-2017 Jammu & Kashmir SGST

12-7-2017 Gujarat SGST

12-7-2017 Gujarat SGST

12-7-2017 CGST Rate

12-7-2017 UTGST Rate

12-7-2017 UTGST Rate

12-7-2017 IGST Rate

More Notifications


Latest Circulars:

19-7-2017 Income Tax

18-7-2017 Customs

17-7-2017 Customs

14-7-2017 Income Tax

13-7-2017 Central Excise

13-7-2017 Customs

13-7-2017 Central Excise

13-7-2017 Customs

7-7-2017 Income Tax

7-7-2017 Goods and Services Tax

More Circulars



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version