TMI Blog2016 (9) TMI 814X X X X Extracts X X X X X X X X Extracts X X X X ..... o the extent as indicated above. The appeal is allowed. The matter is, however, remanded to the Assessing Officer (a) to work out the interest earned under Sections 63 and 64 of the Multi State Cooperative Societies Act, 2002 and to allow benefit under Section 80P and (b) to ascertain the interest paid to the members for the purpose of earning the sums of ₹ 99 lakhs and 1.2 crores on account of interest from investments. Such interest shall be deducted from the expenses of eligible business. Consequent increased amount of profits of eligible business as discussed above shall be the amount of deduction available to the assessee under Section 80P. - ITA 484 OF 2007 - - - Dated:- 15-7-2016 - JUSTICE GIRISH CHANDRA GUPTA AND JUSTICE ARINDAM SINHA For Revenue : Mr.S.B.Saraf,Advocate For Respondent/ Assessee: Mr.J.P.Khaitan,Sr.Advocate Mr.P. Bag,Advocate Mr. Siddharth Das and Mr. C. S. Das, ADvocates JUDGEMENT The subject matter of challenge in the appeal is a judgement and order dated 29th December, 2006 passed by the learned Income Tax Appellate Tribunal B Bench, Kolkata in ITA 1758 and 1759/ Kol/2006 pertaining to the assessment years 2003-04 and 2004- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es; (2) the co-operative credit societies which provide financial assistance to the society; In the case before us, during the assessment year 2003-04, income arising out of credit facilities granted to its members was ₹ 2.50 crores approximately and income arising out of investments was ₹ 99 lakhs approximately. During the assessment year 2004-05, income arising out of providing loans to the members was a sum of ₹ 2.37 Crores approximately and income arising from investments was ₹ 1.12 Crores approximately. The Assessing Officer was of the opinion that the income arising from investments was not deductible under sub-section (2) of Section 80P of the Income Tax Act. The same view was taken by the CIT (A). The learned Tribunal was, however, of the opinion that the assessee is entitled to the deduction of interest income earned on the investment in banks and other financial institutions amonting to ₹ 98,73,512/- in assessment year 2003-04 and ₹ 1,11,53,228/- in assessment year 2004-05 u/s.80P(2)(a)(i) of the I.T.Act, 1961 and accordingly the common ground no.1 taken by the assessee is allowed. It is against this order of the learned Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he obligation on the part of the assessee, statutorily imposed, has to be performed by the assessee, in the absence of which it is not possible for the assessee to carry on its business. Therefore, any income arising out such investment is also attributable to the business of providing credit facilities to the members of the assessee. Mr. Saraf, learned advocate appearing for the revenue, submitted that the assessee has been contending before the statutory authorities below, that the assessee should be treated at par with the co-operative banks. He submitted that: [a] there is no provision in the Multi-State Co-operative Societies Act, 2002 that a Multi State Co-operative Society shall not be allowed to function or to carry on its business, if the reserve required to be maintained by Section 63 is not complied with; and [b] the amount transferred to reserve is about ₹ 1.22 crores whereas the investment made for the purpose of earning interest is to the tune of ₹ 25 crores. We have not been impressed by the first submission advanced by Mr. Saraf. If the Multi State Co-operative Societies Act, 2002 does not provide for the consequences of an omission to act in ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, as rightly held by the AO. In this connection, we may analyze s.80P of the Act. This section comes in Chapter VI-A, which, in turn, deals with Deductions in respect of certain income . The headnote to s. 80P indicates that the said section deals with deductions in respect of income of co-operative societies. Sec. 80P(1), inter alia, states that where the gross total income of a co-operative society includes any income from one or more specified activities, then such income shall be deducted from the gross total income in computing the total taxable income of the assessee-society. An income, which is attributable to any of the specified activities in s. 80P(2) of the Act, would be eligible for deduction. The word income has been defined under s.2(24)(i) of the Act to include profits and gains. This sub-section is an inclusive provision. The Parliament has included specifically business profits into the definition of the word income . Therefore, we are required to give a precise meaning to the words profits and gains of business mentioned in s.80P(2) of the Act. In the present case, as stated above, assessee-society regularly invests funds not immediately required for b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in (2001) 251 ITR 194. That was a case of a co-operative bank. A co-operative bank and a co-operative society do not stand on the same footing. The whole of the income of co-operative bank is deductible whereas in the case of a society the income attributable to any one or more of the activities laid down in Sub-section (2) is deductible. The Division Bench did not give any independent reasoning. The Division Bench proceeded on the basis that the view taken by them was supported by the Judgement in the case of Karnataka State Co-operative Apex Bank (supra) which, with respect, was not a correct impression. The other judgement cited by Mr. Khaitan in the case of Guttigedarara Credit Co-operative Society Ltd. (supra) is not applicable because the caution appearing in sub-section (1) of Section 80P, that only an income referred to in sub-section (2) was deductible, was not taken into account. The sub-section (2) provides for only the income attributable to the business of advancing credit facilities to its members. Income arising from any other source including investment of capital if not immediately required to be lent to the members was not contemplated. The assessee cannot cla ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
