TMI Blog2015 (8) TMI 1085X X X X Extracts X X X X X X X X Extracts X X X X ..... HRI VIKAS AWASTHY, JJ. For The Assessee : Shri Ajinkya A. Jagoje For The Department : Shri.B.C. Malakar ORDER PER R.K. PANDA, AM : This appeal filed by the assessee is directed against the order dated 19-12-2013 of the CIT(A), Kolhapur relating to Assessment Year 2010-11. 2. Facts of the case, in brief, are that the assessee is a credit cooperative society registered under the Maharashtra Cooperative Societies Act, 1960. It filed its return of income on 09-10-2010 declaring NIL income. During the course of assessment proceedings the AO observed that the society accepts deposits from its members and provides credit facilities to its members and earns interest thereon which is wholly exempt u/s.80P(2)(a) of the I. T. Act. From the scrutiny of the details furnished, he noted that the assessee also earns interest income on its deposits with various cooperative societies and from non-cooperative societies at ₹ 44,28,065/- which includes interest income of ₹ 19,14,971/- earned by the assessee society from the cooperative societies. According to the AO, as per the provisions of section 80P(2)(a)(i), the income earned by the credit cooperative socie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antial question of law which arises in this batch of civil appeals isWhether such interest income would qualify for deduction as business income under s. 80P(2)(a)(i) of the IT Act 1961 Thus as per this decision not only the interest earned from the investment of sale proceeds of marketing produce of members is ineligible for deduction u/s 80P(2)(a)(i) but also that the interest earned from Banks from surplus funds, even where the cooperative society is engaged in the activity of providing credit facilities to its members, is also ineligible for this deduction. Therefore the income from interest is income from other sources chargeable to tax under section 56 of the Act and assessing officer's action was justified. Grounds 1 and 2 are rejected. 4. Aggrieved with such order of the CIT(A) the assessee is in appeal before us with the following grounds : 1. The Ld.CIT (Appeals) Kolhapur by his order passed u/s.250 dated 19122013 received on 13022014 in case of your appellant Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit, Murgud, Kolhapur has erred in both on facts and in law. 2. Whether on fact and circumstances of case, CIT(A) was correct in arriving at con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 78 wherein it has been held that the assessee, a credit cooperative society engaged in providing credit facilities to its members, deposited surplus funds in fixed deposits and earned interest thereon, said interest would be assessable as income from other sources and thus not eligible for deduction u/s.80P(2)(a)(i). 8. The Ld. Counsel for the assessee in his rejoinder referring to the decision of the Hon ble Supreme Court in the case of CIT Vs. Vegetable Products Ltd. reported in 88 ITR 192 submitted that when two views are possible the view which is in favour of the assessee has to be followed. 9. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. The only dispute to be decided in the grounds raised by the assessee is that whether the interest amounting to ₹ 25,01,774/- earned by the assessee on short term deposits with banks has to be treated as income from other sources u/s.56 or the assessee is eligible for deduction u/s.80P(2)(a)(i). We find the AO following the decision of Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord '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. v. CIT [1978] 113 ITR 84 (SC) as under: 'As regards the aspect emerging from the expression attributable to occurring in the phrase profits and gains attributable to the business of the specified industry (here generation and distribution of electricity) on which the learned SolicitorGeneral relied, it will be pertinent to observe that the legislature, has deliberately used the expression attributable to and not the expression derived from . It cannot be disputed that the expression attributable to is certainly wider in import than the expression derived from . Had the expression derived from been used, 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 connect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osit/security. Such an amount which was retained by the assesseeSociety was a liability and it was shown in the balance sheet on the liability side. Therefore, to that extent, such interest income cannot be said to be attributable either to the activity mentioned in Section 80P(2)(a)(i) of the Act or under Section 80P(2)(a)(iii) of 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 shown as liability in their account. In fact this amount which is in the nature of profits and gains, was not immediately required by the assessee for lending money to the member's, as there were no takers. Therefore they had deposited the money in a bank so as to earn interest. The said interest income is attributable to carrying on the business of banking and ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
