TMI Blog2015 (9) TMI 546X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of profits and gains, was not immediately required by the assessee for lending money to the members, 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 therefore it is liable to be deducted in terms of Section 80P(1) of the Act - Decided in favour of assessee. - I.T.A No.920/Bang/2014 - - - Dated:- 26-8-2015 - SHRI. N. V. VASUDEVAN AND SHRI. ABRAHAM P. GEORGE, JJ. For The Assessee : Shri. S. Ranganath, CA For The Revenue : Shri. Sunil Kumar Agarwala, JCIT ORDER PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : In this appeal filed by assessee which is a cooperative society it is aggrieved that interest received by it on deposits placed with cooperative banks was denied deduction u/s.80P(2)(d) of the Income-tax Act, 1961 ( the Act in short). 02. Facts apropos are that assessee, a cooperative society providing credit facilities to its members had filed its return declaring nil income. Assessee had claimed deduction u/s.80P(a)(2)(i) of the Act and 80P(2)(d) of the Act. AO was of the opinion that assessee was doing banking busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also a cooperative society cannot be excluded from the purview of benefits available to a cooperative society, unless the provisions of the Act so stipulate. No doubt in the said decision the Tribunal was considering the application of Section 194A(3)(v) of the Act, wherein it was mandated that a cooperative society was not required to deduct tax at source if the interest credit were paid to any cooperative society. It had unequivocally held that the said provision applied to all cooperative society including a cooperative society engaged in the business of the bank or in other words, a cooperative bank. Therefore, the view taken by the AO that income by way of interest or dividends earned by the assessee society from the cooperative bank namely Kanara Dist. Central Co-operative bank which was also a cooperative society was eligible for deduction cannot be faulted. We cannot say that the order of the AO was erroneous and prejudicial to the interest of the revenue. Order of the learned CIT, therefore, stand quashed and appeals of the assessee are allowed. 07. In our opinion deposits placed with banks could be considered only as investments irrespective of the classification don ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub- section (2), in computing the total income of the assessee. (2) The sums referred to in sub-section (1) shall be the following, namely: (a) in the case of co-operative society engaged in - (i) )carrying on the business of banking or providing credit facilities to its members, or (ii) xxx (iii) xxx (iv) xxx (v) xxx (vi) xxx (vii) xxx the whole of the amount of profits and gains of 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. COMMISSIONER OF INCOME-TAX, GUJARAT-ll reported in ITR VOL. 113 (1978) PAGE 842 at page 93 as under: As regards the aspect emerging from the expression attributable to occurri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... banking or providing credit facilities to its members by a co-operative society and is liable to be deducted from 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. Totgars Co-operative Sale Society Ltd., on which reliance is placed, the Supreme Court was dealing with a case where the 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 of its members was retained in many cases. The said retained amount which was payable to its members from whom produce was bought, was invested in a short-term deposit/security. Such an amount which was retained by the assessee - Society 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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