TMI Blog2016 (9) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... FDRs with SBI. 1.2 The applicant states that the impugned order of the AO dated 24.02.2015 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned CIT(A). Aggrieved by which assessee is in appeal before me. 5. I have heard the rival contentions, perused the material 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 ₹ 21,87,277/- for Assessment Year 2007-08, ₹ 22,26,250/- for Assessment Year 2008-09, ₹ 36,54,690/- for Assessment Year 2009-10 ₹ 41,85,500/- for Assessment Year 2011-12 in respect of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from SBI. The assessee cited various case laws in support of its various contentions. 4.2 Ld. CIT(A) confirmed the action of the Assessing Officer in denying deduction 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 reser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014 allowed the appeal of the assessee by following observations:- 2.2 Before us, the ld. Authorized Representative for the assessee submitted that this issue is squarely covered in favour of the assessee by 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 whenever they intended to gather receipts from sources 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pass the following order: Appeal is allowed. 5.2 Ld. Counsel for the assessee further contends that in the case of Tumkur Merchants Souharda Credit Cooperative Ltd (supra), the Hon ble Karnataka High Court has duly considered the Hon ble Supreme Court judgment 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has been cited by the Revenue. It is a settled law that Hon ble High Court judgments are binding on all lower authorities. Since two High Court judgments are in favour of the assessee, the deduction u/s 80P(2)(a)(i) deserves to be allowed. 6. We have heard the rival contentions and perused 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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