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2015 (9) TMI 546 - ITAT BANGALORE

2015 (9) TMI 546 - ITAT BANGALORE - TMI - Denial of deduction u/s.80P(2)(d) - assessee is a cooperative society - interest received by it on deposits placed with cooperative banks - Held that:- Deposits placed with banks could be considered only as investments irrespective of the classification done by an assessee. All deposits will be investments, unless the context otherwise suggest, whereas all investments may not be deposits. Therefore assessee was eligible for claiming deduction u/s.80P(2)( .....

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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 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/B .....

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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 business and hence not eligible for claim of deduction u/s.80P(2)(a)(i) of the Act. Vis-a-vis claim of deduction u/s.80P(2)(d) of the Act, AO was of the opinion that interest earned by assessee from deposits placed with cooperative banks would not fall .....

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urplus funds parked with commercial banks could not be given deduction. Reliance was placed on the decision of Hon ble Supreme Court in the case of M/s. Totgars Cooperative Sale Society Ltd v. ITO [(2010) 322 ITR 0283]. 04. Now before us, Ld. AR strongly assailing the order of CIT (A) submitted that similar issue had come up before this Tribunal in the case of Menasi Seemeya Group Gramagala Seva Sahakari Sangha Niyamitha V. CIT [ITA Nos.609 & 610/Bang/2014, dt.06.02.2015]. As per the Ld. AR .....

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6. Now coming to the question as to whether the interest on deposits earned by a Co-operative Society, where such deposits were with a Co-operative Bank, we are of the opinion that restrictive interpretation given by the learned CIT(A) to section 8OP(2)(d) was not warranted by it wordings. Section 80P(2)(d) is reproduced hereunder: in respect of any income by way of interest or dividends derived by the Co-operative Society from its investments with any other Co-operative society, the whole of su .....

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redit 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 .....

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eduction u/s.80P(2)(d) of the Act. As to whether interest income earned on surplus kept as deposit, was eligible for deduction u/s.80P(2)(a)(i) of the Act, issue has been settled in favour of the assessee by the judgment of Hon ble jurisdictional High Court in the case of Tumkur Merchants Souharda Credit Cooperative Society v. ITO [ITA No.307/Bang/2014, dt.28.10.2014]. Their lordships held as under : 4. The learned counsel for the assessee assailing the impugned order contended, the interest acc .....

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n support of his contentions, he relied on several judgments and pointed out that the Apex Court in the aforesaid judgment has not laid down any law. 5. Per contra, learned counsel for the Revenue strongly relied on the said judgment of the Supreme Court and submitted, the case is covered by that judgment of the Apex Court and no case for interference is made out. 6. From the aforesaid facts and rival contentions, the undisputed facts which emerges is, the sum of ₹ 1,77,305/- represents th .....

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gard, it is necessary to notice the relevant provision of law ie., 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 (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 .....

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ributable 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 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 Solicitor-Genera .....

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nduct 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 our view, since the expression of wider import, namely, attributable to , has been used, the legislature intended to cover receipts from sources other than the actual conduct of the busi .....

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ying 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 said amount idle. If they deposit this amount in bank so as to earn interest, the said interest income is attributable to the profits and gains of the business of providing credit facilities to its members only. The society is .....

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ich 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 retai .....

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