TMI Blog2016 (10) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... ing no takers, if deposited in banks for earning interest, such interest income would be attributable to the business of banking carried out by the assessee. Thus as the facts of the case here fit perfectly well with the facts in the judgment mentioned above, therefore, hold that assessee was eligible for claiming deduction u/s.80P(2)(a)(i) of the Act. - Decided in favour of assessee - I.T.A No.435/Bang/2016 - - - Dated:- 26-8-2016 - SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER For The Assessee : Shri. G. Venkatesh, Advocate For The Revenue : Shri. Bipin C. N, JCIT ORDER PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : In this appeal filed by Revenue, its grievance is that CIT (A) allowed the assessee deduction claimed by it u/s.80P(2)(a)(i) of the Income-tax Act, 1961 ( the Act in short), taking a view that assessee was a cooperative society carrying on banking business. 02. Facts apropos are that assessee, a cooperative society had filed its return of income for relevant assessment year in which it had claimed deduction of ₹ 34,69,117/-, u/s.80P(2)(a)(i) of the Act. The Assessing Officer was of the opinion that the assessee fell within the definitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very small amount was lent by it to its members. It was not similar to a society which was carrying on credit business. Therefore according to him, claim for deduction u/s.80P(2)(a)(i) of the Act, on such interest was unjustified. 06. Per contra, Ld. AR supported the order of lower authorities. 07. I have perused the orders and heard the rival contentions. There is no dispute that one of the main object of assessee society was providing credit facility to its members. AO himself has mentioned that this was the primary object for which assessee was incorporated. Nodoubt, out of substantial sum received as deposits from the members, only small portion were given by assessee as loans to its members. Major part of the funds were parked in FDs. However, it is an admitted position that assessee was bound to give interest to its members on the deposits received by it from them. Therefore, when there were no takers for the money, which assessee as a part of its objects wanted to lend, the only available choice for assessee, in order not to keep the funds idle, was to place it in banks for earning interest. Hon ble jurisdictional High Court in the case of CIT v. Tumkur Merchants Souh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) shall be the following, namely: (a) in the case of co-operative society engaged in - (i) )carrying on the business of banking or providing credit facilities to its members, or (ii) xxx (iii) xxx (iv) xxx (v) xxx (vi) xxx (vii) xxx the whole of the amount of profits and gains of business attributable to any one or more of such activities. 7. The word attributable used in the said section is of great importance. The Apex Court had an occasion to consider the meaning of the word attributable as supposed to derive from its use in various other provisions of the statute in the case of CAMBAY ELECTRIC SUPPLY INDUSTRIAL CO. LTD. VS. COMMISSIONER OF INCOME-TAX, GUJARAT-ll reported in ITR VOL. 113 (1978) PAGE 842 at page 93 as under: As regards the aspect emerging from the expression attributable to occurring in the phrase profits and gains attributable to the business of the specified industry here generation and distribution of electricity on which the learned Solicitor-General relied, it will be pertinent to observe that the legislature has deliberately used the expression attributable to and not the expression derived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, the Supreme Court was dealing with a case where the 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 produce of its members was retained in many cases. 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 - Society 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 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 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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