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2016 (4) TMI 1091 - ITAT KOLKATA

2016 (4) TMI 1091 - ITAT KOLKATA - TMI - Deduction u/s. 80P(2)(a)(i) - Held that:- Assessee is entitled to deduction u/s. 80P(2)(a)(i) of the Act in respect of the interest income. - ITA No.1164-1165/Kol /2012 - Dated:- 18-3-2016 - Shri N.V. Vasusdevan, Judicial Member and Shri Waseem Ahmed, Accountant Member For The Assessee : Shri B.K.Ghosh, FCA and Shri Pijush Dey, FCA For The Revenue : Shri Niloy Baran Som, JCIT, SR-DR ORDER PER Waseem Ahmed, Accountant Member:- Both appeal by Revenue are ag .....

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for AY 2008-09. 3. Revenue has raised revised grounds which are reproduced below:- That on the facts and in he circumstances of the case the Ld. CIT(A)- XXXVI, Kolkata, erred in allowing he interest income of ₹ 1,14,93,068/- claimed by the assessee as exemption u/s. 80P(2)(a)(i) of the IT Act. That on the facts and in the circumstances the recent judgment of the Apex Court in the case of M/s Bangalore Club Vs Commissioner of Income Tax, CIVIL APPEAL NOS. 124 & 125 OF 2007 AND 272 TO 2 .....

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s earned income from investment and term deposits out of its surplus funds. During the course of assessment proceedings, Assessing Officer observed the provision of Sec. 80P(2)(a)(i) of the Act provides that the income derived from carrying on business of banking for providing credit facilities to its Member is eligible for deduction under the Act. However, in the present case the assessee has generated the income from investment made in different securities and term deposits out of its surplus .....

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aim of assessee relying in the judgment of Hon'ble Supreme Court in the case of Tatgars cooperative sales society Ltd. 188 taxmann 282 (SC) and further relied in the case of Agar Apex Marketing Society v. CIT 201 ITR 332 (SC). The AO further observed that the question of expense against the interest income does not arise as this investment were made out the surplus fund and all expenses of activity of the assessee-society has been duly recognized in its books of account. 5. Aggrieved, assess .....

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of business utilizing the circulating cap Whereas, I find that the issues in this case are squarely covered as decided by my predecessor in identical issues for A.Y 2004-05, by the ratio of judgement of the Hon'ble Apex Court in the case of CIT vs. Karnataka State Co-operative Apex Bank, reported in 251 ITR (SC). Following the said judgement, many other judgments have been passed subsequently holding that income arrived out of non-SLR fund also shall qualify for exemption 80P(2)(a)(i) of th .....

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found correct. In view of the such, the interest income earned by the appellant from non-complusory investment would also qualify for exemption u/s. 80P(2)(a)(i) of the Act. The Assessing Officer is directed accordingly. This ground of appeal is therefore allowed. The appellant gets relief of ₹ 1,14,93,068/-. Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us. 6. We have heard the rival parties and perused the materials available on record. At the time of hearing of .....

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deposits from its members and utilized the same towards providing loans and credit facilities to its members. However excess funds were utilized in making deposits in banks and investments. The Tribunal relying upon the decision rendered by the Hon ble Calcutta High Court in the case of CIT vs South Eastern Railway Employees Co-operative Credit Society in GA No. 1838 of 2010 dated 22.07.2010 came to the conclusion that interest income has to be regarded as income from business of banking and is .....

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ts 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 .....

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to 2002-2003 by order dated 10.11.2006 in ITA Nos 840 to 844/Kol/2006 and again by order dated 29.12.2006 in relation to assessment years 2003-04 and 2004-05 has deleted the disallowance made in those assessment years and it was held that the interest earned by the assessee cooperative society from its short term and fixed deposits with the bans and other institutions were disallowed on the ground that this income was not business profit of the assessee society but was income from other sources. .....

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o change in the facts and circumstances of this case and it was held that the assessee was eligible for deduction under Section 80P(2)(a)(i) on interest on investment amounting to ₹ 1,18,07,645/- in this assessment year also. Since the Tribunal found that this decision of the Tribunal was followed by CIT(A) there is no reason to take a different view. Under these circumstances, we feel that when the Commissioner of Income Tax (A) as well as the Tribunal has followed the earlier unchallenge .....

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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 ha accepted the subsequent view of the Tri .....

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convincing reason has been pointed to take a different view, any deviation is not permitted. 7.3 Now we come to the case laws relied upon by the Ld. CIT(A). As regards the decision of the Hon ble Apex Court in the case of Totgars Co-operative Sale Society Ltd. (supra) we find that the said decision is not applicable in the facts of the case. We find that the Hon ble Apex Court in the said decision in para 11 has itself mentioned that we are confining the judgment to the facts of the present cas .....

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income from other sources taxable u/s. 56 of the Act and would not qualify for deduction as business income u/s. 80P(2)(a)(i). From the above it is amply evident in the present case the assessee has not retained any amount due to its members and instead of paying the same had invested the same and earned interest. Thus this case law is not applicable on the facts of the present case. 7.4 As regards the decision of Hon ble Patna High Court in the case of Bihar Rajya Sahkari Bhoomi Bikash Co-op. .....

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