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2015 (4) TMI 1116 - ITAT CHANDIGARH

2015 (4) TMI 1116 - ITAT CHANDIGARH - TMI - Entitlement to deduction u/s 80P(2)(a)(i) - interest earned from employees - Held that:- Hon'ble Supreme Court in The Totgars Cooperative Sale Society Ltd vs ITO [2010 (2) TMI 3 - SUPREME COURT ] holding that interest on bank deposits of Government Securities derived by a Cooperative Society could not be attributed to the activities of the Society of providing various facilities to its members and was taxable under Section 56 being income from other so .....

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efore, in our opinion, interest earned from employees is not eligible for deduction u/s 80P(2)(a)(i), therefore, we set aside the order of Ld. CIT(A) and restore that of Assessing Officer. - Decided against assessee - ITA No. 847/Chd/2013 & ITA No. 810/Chd/2013 - Dated:- 28-4-2015 - SHRI. BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER For the Petitioner : Dr. Amarveer Singh For the Respondent : Shri N.R. Sharma ORDER PER T.R.SOOD, A.M. Both the appeals by the assessee and .....

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f interest received from commercial banks as income from other sources and that too setting off/allowing expenses attributable to the earning of the said income @ 1% more particularly when the loans raised have been deposited in the banks and have earned interest under consideration as per the provision of the law in the facts and circumstances of the case is bad in law and needs to be set-aside. 3. That the order of the Assessing Officer as upheld by the Commissioner of Income Tax (Appeals) Cha .....

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herefore, Assessing Officer should be directed to keep this issue pending and decide the same as per outcome of the decision of Hon'ble Supreme Court. 4. The Revenue on earlier date of hearing was directed to file objections, if any, to this application. Today, the Revenue has filed a letter dated 8.4.2015 written by Dy. CIT Circle 4(1) raising objections to the application filed by the assessee. The objections read as under:- In this regard it is to intimate that the grounds of appeal taken .....

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cation. 6. Through these grounds the only issue which has been raised i.e. whether assessee is entitled to deduction u/s 80P(2)(a)(i). During the assessment proceedings it was noticed that assessee has received interest from various banks amounting to ₹ 10,65,376/-. According to Assessing Officer this interest could not be assessed as business income because earning of interest on other banks on surpluses funds was not the activity of the assessee eligible for deduction u/s 80P(2)(a)(i) an .....

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urt in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd v CIT 227 ITR 172 (SC). Therefore, following the order of the Hon'ble High Court, he decided the issue against the assessee. 8. Before us Ld. Counsel for the assessee fairly admitted that issue has been decided against the assessee by the Hon'ble High Court. 9. On the other hand Ld. DR strongly supported the order of CIT(A). 10. After considering the rival submissions we find that this issue has been decided by the Hon' .....

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me Court in The Totgars Cooperative Sale Society Ltd vs ITO 2010 (35) DTR 25 holding that interest on bank deposits of Government Securities derived by a Cooperative Society could not be attributed to the activities of the Society of providing various facilities to its members and was taxable under Section 56 being income from other sources. It appears that since the judgment of the Tribunal is prior to the judgement of the Hon'ble Supreme Court relied upon on behalf of the Revenue. The Trib .....

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without appreciating the facts of the case. 2. On the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of ₹ 27,19,241 are made by disallowance of deduction u/s 80P(2)(a)(i) on account of interest received from employees who are not the member of the assessee s society. 13. After hearing both the parties we find that during assessment proceedings the Assessing Officer noticed that assessee has earned interest from employees amounting to ͅ .....

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Officer did not find force in these submissions and observed that Tribunal has made very general observation. He further observed that employees of the Society could not be termed as members of the society and, therefore, income earned from loans given to the employees could not be said to be attributable to the activities of the Society. 14. On appeal, Ld. CIT(A) decided this issue in favour of the assessee by following the decision of the Tribunal in the case of Punjab State Cooperative Agricu .....

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assessee submitted that loans were given for purchase of vehicles and construction of houses to the employees as per terms of employment and the loans were not given out of surplus funds, therefore, the decision of Hon'ble Supreme Court in the case of Totgar s Co operative Sale Society Ltd vs ITO cannot be applied. 17. After considering the rival submissions we find that the Hon'ble Supreme Court has clearly held that deduction u/s 80P(2)(a)(i) of the Act is available only in respect of .....

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