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TMI Blog2016 (9) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.02.2015 was communicated to the applicant on 26-2-2015 and therefore the appeal was required to be filed on or before 28.04.2015. However, the same was filed 7-5- 2015 and thus there is a delay of about 10 days that is from 29-04-20l5 to 06-05- 2015 in preferring the said appeal. The small delay in filing the same has been caused due to the sufficient reasons as stated herein below : 1.3 The applicant states that the appeal memo for all these years was already prepared in the last week of April, 2015 as evident from the date mentioned on the SOF and grounds of appeal so that the same were sent for signature of the authorized person. However, Shri Anil Dawar, secretary of the applicant society also being post holder in the Bank Union, he was out of station to attend the meeting of the Committee. Therefore as soon as he returned, he signed the appeal papers and the same were filed with the Registry. The applicant most respectfully submits that the delay has been caused due to sufficient cause and it is neither intentional nor deliberate so that if the delay is not condoned, the applicant will suffer irreparable loss and injury. On the other hand, if the delay is condoned, the Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial on record and duly considered facts of the case in the light of applicable legal position. 6. I find that, as learned Representatives fairly agree - even as learned Departmental Representative dutifully relies upon the authorities below, the issue in appeal is squarely covered, in favour of the assessee, by a division bench order of this Tribunal in the case of State Bank of India Supervising Official's Co-operative Credit Society Limited vs. ITO (ITA Nos.905 to 908/Ahd/2015; order dated 10.06.2016). In the said order, the division bench has, inter alia, observed as follows :- "3. Out of remaining grounds, ld. Counsel for the assessee contends that the following ground is the effective ground:- That the learned CIT(A) has grievously erred in law and on facts, in disallowing the claim of deduction u/s 80P(2)(a)(i) of the Act of Rs. 21,87,277/- for Assessment Year 2007-08, Rs. 22,26,250/- for Assessment Year 2008-09, Rs. 36,54,690/- for Assessment Year 2009-10 & Rs. 41,85,500/- for Assessment Year 2011-12 in respect of interest income received from SBI. 4. Brief facts are - the assessee is a Co-operative Credit Society of Supervisory Officers of State Bank of India. A surv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction u/s 80P(2)(a)(i) by following observations:- "From the above it is clear that deduction u/s 80P is available to a cooperative society engaged in activities listed in (a)(i) to (vii) above on the whole of the amount of profits and gains of business attributable to one or more activities of the co-operative society. Thus it is clear that the deduction is available in respect of profit and gains of business attributable to one or more business activities of the society i.e. deduction is in respect of income wholly attributable to business activity of the society. In the present case the appellant is into business of providing credit to its members. SBI is not a member of the appellant society. Further, providing loans and advances to banks and earning interest on the same is not part of business activity of the appellant. Further, in respect of contention of the appellant that operational funds have been kept as FDs with bank is not borne by facts. During the year under consideration, the appellant had reserve funds to the tune of Rs. 3.06 crores. The FDs with the bank were for Rs. 3.15 crores which is roughly equal to the reserve fund This clearly shows that the FDs were no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd vs. ITO, reported in [2015] 55 taxmann.com 447 (Karnataka), wherein in similar set of facts, the Hon'ble Karnataka High Court held as under:- "A Cooperative Society which is carrying 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 not carrying on any separate business for earning such interest income. The income so derived is the amount of profits and gains of business attributable to the activity of carrying on the business of banking or providing credit facilities to its members by a co-operative society and is liable to be deducted from the gross total income under Section 80P of the Act. [Para 8] 10. In the instant case, the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other than the actual conduct of the business. A Cooperative Society which is carrying 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 not carrying on any separate business for earning such interest income. The income so derived is the amount of profits and gains of business attributable to the activity of carrying on the business of banking or providing credit facilities to its members by a co-operative society and is liable to be deducted from the gross total income under Section 80P of the Act. 9. In this context when we look at the judgment of the Apex Court in the case of M/s. Totgars Co-operative Sale Society Ltd., on which reliance is placed, the Supreme Court was dealing with a case where the assessee- Cooperative Society, apart f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment in the case of Totgars Co-operative Sale Society Ltd and distinguished it as it dealt with only issue of surplus amounts deposited in the bank which were held on account of being liabilities payable to members of agricultural marketing credit society. In clear contradiction, the funds in the instant case are the surplus funds and not the liability of the bank but its own surplus funds. Based on this distinction on facts and following the Hon'ble Andhra Pradesh High Court judgment (supra), it was held that the interest so earned is relatable to activities of Co-operative Credit Society; therefore, the deduction u/s 80P(2)(a)(i) is clearly allowable. 5.3 Ld. Counsel for the assessee further relied on the decision of this Tribunal in the case of Amalsad Vibhag Vividh Karyakari Sahkari Khedut Mandali Ltd vs. ITO in ITA Nos 1710 & 1711/Ahd/2011, wherein it has been held as under:- "8. We are of the view that the facts of the case are identical to that in the case of Tumkur Merchants Souharda Credit Co-operative Ltd. (supra) which has been decided by Hon'ble Karnataka High Court and therefore considering the facts of the present case in the light of the aforesaid decision of Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erused the material available on record. In our considered view, the decision of ITAT in assessee's own case for AY 2010-11 (supra) and in the case of State Bank of India Employees Co-op. Credit & Supply Society Ltd. (supra) is on the validity of 263 proceedings and is not a decision on merits. The decision on merits in this regard have been decided by Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd, by Andhra Pradesh High Court in the case of Andhra Pradesh State Cooperative Bank Ltd. and by ITAT in the cases of Amalsad Vibhag Vividh Karyakari Sahkari kHedut Mandali Ltd. and Maroli Bazar Vibhag Vividh Karyakari Sahkari Mandi Limited. Since these authorities unequivocally support the case of the assessee, respectfully following them, we hold that the assessee is eligible for deduction u/s 80P(2)(a)(i), which is allowed. Consequently, such income cannot be held as income from other sources. In view of the foregoing, we decide this ground in favour of the assessee for all assessment years under consideration. 7. In the result, assessee's appeals are partly allowed." 7. The views so expressed by the division bench bind this SMC bench. Res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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