Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

State Bank of India Supervising Official’s Co. operative Credit Society Ltd. Versus The ITO, Ward 3 (4) , Ahmedabad

Disallowance of deduction u/s 80P(2)(a)(i) - Held 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. See TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LIMITED Versus THE INCOME TAX OFFICER, WARD-1, TUMKUR [2015 (2) TMI 995 - KARNATAKA HIGH COURT ] - ITA Nos. 905 to 908/Ahd/2015 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

- 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 income received from SBI. 4. Brief facts are - the assessee is a Co-operative Credit Society of Supervisory Officers of State Bank of India. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

P(2)(a)(i) of the Act on ₹ 21,87,277/- (AY 2007-08) received as interest on FDs with SBI as the conditions laid down in the said section were not satisfied. Further, the FD amounts were equal to the reserve fund of the appellant and hence the assessee s contention that operational funds were deposited with SBI was not acceptable. The deposits were from surplus funds. The Assessing Officer relying on the judgment of the Hon ble Apex Court in Totgars Co-operative Sale Society Ltd, 322 ITR 28 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the obligations of giving interest and loan to its members without resorting to premature withdrawal of FDs. The overdraft was to maintain liquidity and optimum utilization of funds of society. Accepting deposits from members, granting loans to members and keeping operational funds with bank are integral part of its objective of providing credit facilities to members. The interest income including interest received from members and also on fixed deposits made with bank forms part of its busines .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 pres .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the bank were for ₹ 3.15 crores which is roughly equal to the reserve fund This clearly shows that the FDs were not from operational funds but were from the surplus funds available with the appellant. Thus what has been invested is society's own funds and therefore the income by way of interest arising on deposits is a source of income apart from business activity of the appellant. As said above also, earning interest from bank deposits is not a business activity of the appellant. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ught must constitute the operational income and not the other income which accrues to the Society. In this particulars case, the evidence shows that the assessee-Society earns interest on funds which are not required for business purpose at the given point of time. Therefore, on the facts and circumstances of this case, in our view, such interest income falls in the category of "Other Income which has been rightly taxed by the Department under section 56 of the Act. The ratio of the above j .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

21,87,277/- made on this account. This ground of appeal is dismissed. 4.3 Aggrieved, the assessee before us. 5. Ld Counsel for the assessee contends that the issue in question arose in assessee s own case in 263 proceedings for Assessment Year 2010-11 before the ITAT, which by order dated 31.03.2016 in ITA No.347/Ahd/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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ding money to the members, as there were no takers. Therefore they had deposited the money in a bank so as to earn interest. The said interest income is attributable to carrying on the business of banking and therefore it is liable to be deducted in terms of Section 80P(1) of the Act. (Para 10] In that view of the matter, the order passed by the appellate authorities denying the benefit of deduction on the aforesaid amount is unsustainable in law. [Para 10] 2.3 Nothing contrary was brought to ou .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

erest. The said interest income was attributable to carrying on the business of banking and therefore it was liable to be deducted in terms of Section 80P(1) of the Act. 2.4 In view of above legal discussion, we are not inclined to concur with the findings of the CIT. Therefore, respectfully following the decision of Hon ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd (supra), we set aside the order of the CIT and allow this appeal of the assessee. 5.1 Th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

port, 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 th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 from providing credit facilities to the members, was also in the business of marketing of agricultural produce grown by its members. The sale consideration received from marketing agricultural produ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 is clear, Supreme Court was not laying down any law. 10. In the instant case, the amount which was invested in banks to earn interest was not an amount due to any members. It was not the liability. It was not sh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in the case of Commissioner of Income-Tax III, Hyderabad vs. Andhra Pradesh State cooperative Bank Ltd., reported in (2011) 200 TAXMAN 220/12. In that view of the matter, the order passed by the appellate authorities denying the benefit of deduction of the aforesaid amount is unsustainable in law. Accordingly it is hereby set aside. The substantial question of law is answered in favour of the assessee and against the revenue. Hence, we pass the following order: Appeal is allowed. 5.2 Ld. Counse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nt 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 Khedu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

are of the view that the interest earned by the assessee is eligible for deduction u/s 80P. We therefore set aside the order of the AO. In the result the ground of the assessee is allowed. 5.4 The aforesaid ITAT judgment has been followed by the ITAT, Ahmedabad Bench in the case of Maroli Bazar Vibhag Vividh Karyakari Sahkari Mandi Limited vs. ITO in ITA Nos. 3130/Ahd/2014 & 1834/Ahd/2013, by allowing similar claim. The ld. Counsel thus contends that the assessee s case is supported by the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of 263 proceedings and not the decision on merits. In this regard, he relied upon the decision of this Tribunal in the case of State Bank of India Employees Co-op. Credit & Supply Society Ltd vs. CIT, reported in [2015] 57 taxmann.com 367 (Ahd Trib.), wherein the 263 action of the Commissioner has been upheld. 5.6 Ld. Counsel for the assessee in rejoinder contends that there are two different views on the issue of 263 and not on the merits. In assessee s own case, 263 has been quashed by sub .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     Latest Happenings     ↓  

Forum: Excise duty credit on finished stock at additional place of business.

Forum: Input tax credit

Forum: Cess paid instead of SGST

Forum: Manpower Service provider

Forum: Construction of single unit bungalow

Forum: Duty Drawback & Input Credit - under GST

Forum: Credit on Repair of Company Car & Its Insurance

Article: SIMPLIFIED E-WAY BILL UNDER GST

Article: SERVICES UNDER REVERSE CHARGE UNDER GST REGIME

Highlight: Rate of exchange of conversion of the foreign currency with effect from 22th September, 2017 - Notification

Highlight: Companies (Acceptance of Deposits) Second Amendment Rules, 2017 - Notification

Highlight: Implementing Electronic Sealing for containers by exporters under self-sealing procedure prescribed by Circular 26/2017-Cus dated 1st July, 2017 and Circular 36/2017 dated 28 th August, 2017. — reg. - Circular

Highlight: Amendment to Paragraph 2.72 (b) of the Handbook of Procedures of the Foreign Trade Policy (FTP) 2015-20 - Public Notice

Notification: Amendment in Appendix 3 (SCOMET items) to Schedule- 2 of ITC (HS) Classification of Export and Import Items 2012

Circular: Amendment to Paragraph 2.72 (b) of the Handbook of Procedures of the Foreign Trade Policy (FTP) 2015-20

Notification: Companies (Acceptance of Deposits) Second Amendment Rules, 2017

Notification: Rate of exchange of conversion of the foreign currency with effect from 22th September, 2017

News: Exchange Rate of Foreign Currency Relating To Imported and Export Goods Notified

Circular: Promote the officers of the Indian Revenue Service (Customs and Central Excise) to the grade of Principal commissioner of customs, GST & CX

Circular: Allocate the charges amongst the Members of the Central Board of Excise and Customs

Circular: Strategy for audits in 2017-18 consequent to GST - Audit by Central Excise and service Department to continue for the accounting year 2016-17 and for the past period

Circular: Appoint the IRS (C&CE) officers as Principal Commissioner (Revision Application) and ex-officio Additional Secretary

Circular: Time limit for filing intimation for composition levy under Rule 3(1) of the CGST Rules, 2017 extended to 16-8-2017

Circular: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017

Circular: C.B.E. & C. Advisory on Customs related matters on introduction of Goods and Services Tax regime

Circular: List of Reduced Tax Liabilities under GST regime in comparison to present combined Indirect Tax rates

Circular: Works Contract for construction of Flats, Complex — Builders to pass on GST benefit to buyer otherwise anti-profiteering provisions of Section 171 of GST Act to apply

Circular: Clarification regarding applicability of section 16 of the IGST Act, 2017, relating to zero rated supply for the purpose of Compensation Cess on exports – Regarding.

Circular: Clarification on Inter-state movement of various modes of conveyance, carrying goods or passengers or for repairs and maintenance- regarding

News: RBI Reference Rate for US $

Highlight: Addition u/s 23(1)(a) - deemed rent - once the property is let out and at any point of time this remained vacant during the same cannot be brought to tax under the head House properties income.

News: Haryana constitutes screening committee on anti-profiteering

Highlight: Valuation of imported goods - it is necessary to re-examine the matter of both license agreement as well as supply contract simultaneously, to see if the enhanced royalty was in the guise of adjustment of the price of components.

Notification: Levy of anti dumping duty on New/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having normal rim dia code above 16 originating in, or exported from China PR

Highlight: Cenvat credit availed on Club Membership for the Director is not admissible as it cannot be said to be remotely connected with the activity of manufacture

Circular: Amendments in Hand Book of Procedures 2015-20 –reg.

News: Jaitley asks biz not to wait till last day to file GST returns

Circular: Implementing Electronic Sealing for containers by exporters under self-sealing procedure prescribed by Circular 26/2017-Cus dated 1st July, 2017 and Circular 36/2017 dated 28 th August, 2017. — reg.

Article: 20 Things You must know about E Way Bills in GST Law

Article: ‘DUTY DRAWBACK’ CANNOT BE EQUATED WITH ‘REBATE OF DUTY’

Highlight: Notification regarding GST rate for branded cereal, pulses and flour

News: Notification regarding GST rate for branded cereal, pulses and flour

Highlight: Anti-dumping duty on import of bus/truck tyres from China

Highlight: Cabinet approves Extension of time period of the Scheme "Special Industry Initiative for J&K" (Sll J&K) - Udaan

Highlight: Non-payment of service tax - maintenance and repair charges - appellants had knowingly and deliberately shown the repair charges as job work charges to mislead about their taxability - demand confirmed.

Highlight: BAS - execution of the project of smart card for vehicle registration – implementing the SOC-VRC project - The fact that the Government has outsourced some part of the work and paid certain consideration for such outsourced work, does not make the activity subject to service tax.

News: Cabinet approves Extension of time period of the Scheme "Special Industry Initiative for J&K" (Sll J&K) - Udaan

Highlight: Constitution of National Anti-profiteering Authority (NAA) under GST-reg. - Trade Notice

Highlight: Amendments in Hand Book of Procedures 2015-20 –reg. - Various amendments are made in Chapter-4 of Hand Book of Procedures 2015-2020.

Circular: Constitution of National Anti-profiteering Authority (NAA) under GST-reg.



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version