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TMI Blog2016 (12) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... se. Facts of the case, in brief, are that the assessee is a Cooperative Society engaged in the supply of labourers. It filed its return of income on 24-10-2007 declaring Nil income. During the course of assessment proceedings the Assessing Officer noted that the assessee has shown net profit of Rs. 62,819/- from the activity of the society. On verification of the profit and loss account submitted along with return of income the Assessing Officer observed that assessee has included interest income of Rs. 11,99,189/- while arriving at the net profit of Rs. 62,819/-. From the various details furnished by the assessee during the course of assessment proceedings he observed that the said interest income is from interest on FDs made with banks. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled any appeal against such order. In view of the above, the Assessing Officer brought to tax the amount of Rs. 11,99,189/- as "income from other sources" and held that the assessee is not entitled to deduction u/s.80P(2)(a)(vi) of the I.T. Act. 4. Similarly, the Assessing Officer brought to tax the interest income of Rs. 16,15,083/- for A.Y. 2008-09, Rs. 19,80,722/- for A.Y. 2009-10, Rs. 26,30,351/- for A.Y. 2010-11 and Rs. 31,07,231/- for A.Y. 2011-12. 5. In appeal the Ld.CIT(A) dismissed the appeal filed by the assessee by observing as under : "6. In view of the facts of the case, the contention of the AO and arguments of the appellant, there are two issues which needs to be adjudicated : 1) Whether the interest income earned on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary evidence. 9. Earning interest on FD has nothing to do with the collective disposal of labour which is the core business activity of the society. When appellant emphasizes that interest income is related to a business activities, it is the appellant who has to discharge its onus of proving the relation between FDs kept and corresponding benefit from the bank. However the appellant has not discharged this onus and tried to prove his claim on the basis of case-laws which are mostly applicable to co-operative banks only. 10. The appellant society in a vague manner is arguing that fixed deposits are kept for obtaining solvency certificates & bank guarantees. It has not brought on record either at the time of assessment proceedings or now d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lified for exemption under section 80P(2)(vi) of the Act. The Ld. CIT(A) was not justified in denying the benefit of exemption confirming the order of the A. O. The order of Ld. CIT(A) be set-aside and quashed. 4. The appellant craves to leave, add/amend or alter any of the above grounds of appeal." 7. I have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. I have also considered the various decisions cited before me. I find identical issue had come up before the Tribunal in assessee's own case in ITA No.212/PN/2009 and 171/PN/2011 for A.Y. 2005-06. The Tribunal vide order dated 31-05-2013 has elaborately discussed the issue and restored the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee as 'business income'. The Revenue resisted the claim of the assessee but Hon'ble Karnataka High Court upheld the stand of the assessee and ruled that such income should be treated as business income only. A similar question was raised before the Hon'ble Patna High Court in the case of Shyam Bihari vs. CIT (supra) wherein also it was held that the interest earned on security deposits to the extent used for the purposes of securing contract work would be assessable as business income. 9. In the face of the aforesaid legal position laid down by the Hon'ble Karnataka High Court as well as the Hon'ble Patna High Court, the proposition canvassed by the assessee is well-founded and is liable to be accepted. So, however, in so f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t-aside the matter to the Assessing Officer for passing an order afresh in the aforesaid manner as per law 10. Resultantly, the appeal of the assessee in ITA No. 212/PN/2009 is treated as allowed for the statistical purposes." 8. Since the Assessing Officer while passing the order has basically relied on the order of his predecessor for A.Y. 2005-06 and since the Ld.CIT(A) while adjudicating the issue has given an observation that the assessee has not discharged the onus cast on it by proving that the interest income is related to the business activity and the relation between FDs kept and corresponding benefit from the bank, therefore, considering the totality of the facts of the case and in the interest of justice of justice, I deem it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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