TMI Blog2014 (10) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... the interest paid by the assessee to its members amounting to ₹ 1,21,31,880/-. Only the resultant income from bank deposits amounting to ₹ 2,84,445/- was brought to tax. We do not find any reason as to why this principle should not be adopted in the current year. In our considered opinion the ld. CIT(A) has erred in not entertaining this plea of the assessee. We further find that the issue involved is covered in favour of the assesee by catena of decisions of the Tribunal in assessee's own case to held income from investment in banks and other financial institutions is the business income of the assessee society and it is eligible to get deduction under Section 80P(2)(a)(i) - Decided in favour of assessee - ITA No.1693/Kol/2012 - - - Dated:- 30-10-2014 - Sri Mahavir Singh, JM And Sri Shamim Yahya, JJ. For the Appellant : Shri Subash Agarwal For the Respondent : Shri Dilip Kr. Rakshit ORDER Per Shri Shamim Yahya, AM This appeal by the assessee is directed against the order of ld. C.I.T.(A)- XIV, Kolkata dt. 06.09.2012 and pertains to Assessment year 2008-09. 2. The grounds of appeal raised by the assessee read as under :- 1. For tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was further submitted that the funds are invested for a short term, in Banks and other Financial Institutions, only in case when there is no demand for any loan or credit. Such investment is being made by the society so that its unutilized funds do not remain idle. That such investments are made as a policy of financial management. It was also contended by the A/R that when there is heavy demand for loan and credit such short term investment are liquidated prematurely and loan and credit facilities are provided to the members. In case of non-availability of fund the society borrows from the banks and disburses loan and credit to the members, when it is being felt, that premature encashment of investment would not be a financially prudent decision. Thereby the society attains its primary objective of providing loan and credit facility to its members. Thus earning of interest from short term investments in banks and financial institutions is its ancillary objective so that maximum utilization of fund is possible and the unutilized fund does not remain as a non-performing asset. That it is also in the interest of the society to make such short term investments, as a result of which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... short term deposits with the banks and government security. On such investment interest accrued to the assessee. Substantial question of law which arose in the aforesaid case is whether such interest income would qualify for deduction as business income u/s 80P(2)(a)(i) of the I.T.Act, 1961 . The Hon'ble Supreme Court decided the question against the assessee and in favour of the revenue. In the present case, the facts are identical. The appellant has earned interest income by making investment with banks and financial institutions. In accordance with the ratio laid down by the Hon'ble Supreme in the case cited supra, such interest is not eligible for deduction under section 80P(2)(a)(i) of the I.T.Act, 1961. Respectfully following the aforesaid judgement of the Hon'ble Supreme Court I hold that the Assessing Officer was right in law on the facts of the case in denying the deduction u/s 80P(2)(a)(i) of the I.T.Act on the interest income of ₹ 87,25,339/-. Against the above order the assessee is in appeal before us. 5. We have heard both the counsel and perused the records. The ld. Counsel of the assessee submitted that the assessee has been continuously g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O has allowed the interest paid by the assessee to its members amounting to ₹ 1,21,31,880/-. Only the resultant income from bank deposits amounting to ₹ 2,84,445/- was brought to tax. We do not find any reason as to why this principle should not be adopted in the current year. In our considered opinion the ld. CIT(A) has erred in not entertaining this plea of the assessee. 7.1 We further find that the issue involved is covered in favour of the assesee by catena of decisions of the Tribunal in assessee's own case. These decisions are also affirmed by the Hon'ble Jurisdictional High Court in its order for A.Yr.2005-06. In this order the Hon'ble Jurisdictional High Court has considered all the relevant orders and has decided the issue in favour of the assessee. We may gainfully reproduce the operative order of the Jurisdictional High Court which is as under :- We have gone through the impugned judgment and order of the Learned Tribunal. It appears that the point involved .is whether interest earned out of the investment earned by the assessee cooperative can be treated to be the income arising out of business activity or from other sources in order to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lenge of the assessee has now become redundant as the earlier view taken in both the assessment years have been reversed by the Tribunal by its subsequent decision. Hence, the pendency of that earlier matter is of no consequence in this matter. Had there been a challenge of the decision of the Tribunal in relation to the assessment years 1998-99 to 2002-03 and also 2003-04 to 2004-05 the matter would have been different. The revenue did not take any step whatsoever. Therefore, we presume the revenue has accepted the subsequent view of the Tribunal and the same now hold the field right now. 7.2. Considering the above we find that this issue is squarely covered in favour of the assessee by the decision of the Hon'ble Jurisdictional High Court in assessee's own case. In this regard we would like to place reliance upon the decision of the Hon'ble Apex Court in the case of CIT vs Excel Industries 358 ITR 295 wherein the principle of consistency has been reiterated. Hence when the issue has been decided by the Jurisdictional High Court no convincing reason has been pointed to take a different view, any deviation is not permitted. 7.3. Now we come to the case laws reli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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