TMI Blog2016 (7) TMI 565X X X X Extracts X X X X X X X X Extracts X X X X ..... S. GODARA, JUDICIAL MEMBER For The Assessee : Shri Tushar Hemani, A.R. For The Revenue : Shri D. V. Singh, Sr. D.R. ORDER PER S. S. GODARA, JUDICIAL MEMBER This assessee s appeal for assessment year 2012-13, arises from order of the CIT(A), Valsad, dated 04.12.2015 passed in proceedings u/s.143(3) of the Income Tax Act, 1961, hereinafter the Act . 2. The assessee s first substantive ground raised in the instant appeal challenges action of both the lower authorities denying it Section 80P deduction on interest income of ₹ 2,70,168/- derived from its investment made with nationalized banks. There is no dispute about the assessee being a co-operative society. It is mainly engaged in marketing of agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd carefully. We find that an identical issue was considered by the Hon ble Karnataka High Court in the case of Guttigedarara Credit Co-operative Society Ltd. vs. ITO reported in [2015] 60 taxmann.com 215 (Karnataka). The Hon ble Karnataka High Court has reversed the order of the Tribunal and held that interest income earned by a Credit Co-operative Society on deposits of surplus funds with scheduled bank would qualify for deduction u/s.80P(2)(a)(i) of the Income Tax Act. The questions framed by Hon ble Karnataka High Court read as under: (i) Whether the Tribunal failed in law to appreciate that the interest earned on short-term deposits in banks were only investment in the course of activity of providing credit facilities to members ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is attributable to the business of providing credit facilities to its members, is the question. 8. In this regard, it is necessary to notice the relevant provision of law i.e., Section 80P(2)(a)(i):- 80P Deduction in respect of income of co- operative societies:- (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in subsection (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) carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature 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 business of generation and distribution of electricity.' 10. Therefore, the word attributable to is certainly wider in import than the expression derived from . Whenever the legislature wanted to give a restricted meaning, they have used the expression derived from . The expression attributable to being of wider import, the said expression is used by the legislature w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. 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-Sociery 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 taxing the interest income indicated above under Section 56 of the Act. Further they made it clear that they are confining the said judgment to the facts of that case. Therefore it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est income earned by the assessee from deposits with scheduled banks. Such interest income has been reported by the assessee at ₹ 3,93,533/-. This amount will be eligible for grant of deduction u/s.80P(2)(a)(i) of the Income Tax Act. 4. We follow the same reasoning in absence of any distinction being pointed out on facts on law at Revenue behest. The assessee s first substantive ground stands accepted. It is held entitled for Section 80P deduction qua interest income of ₹ 2,70,168/-. 5. The assessee s second substantive ground challenges the CIT(A) s order in not adjudicating its ground qua addition of ₹ 1,28,012/- made in respect of profits earned out of trading activity. Learned Departmental Representative fails ..... X X X X Extracts X X X X X X X X Extracts X X X X
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