TMI Blog2016 (12) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer with a direction to adjudicate the issue afresh in the light of the decision of the Tribunal in assessee s own case for A.Y. 2005-06. - ITA Nos.2273 to 2277/PN/2016 - - - Dated:- 9-11-2016 - SHRI R.K. PANDA, AM For The Appellant : Shri M.K. Kulkarni For The Respondent : Shri P.L. Kureel ORDER PER R.K.PANDA, AM : The above batch of appeals filed by the assessee are directed against the separate orders of the CIT(A)-2, Kolhapur relating to Assessment Years 2007-08 to 2011-12 respectively. Since identical grounds have been taken by the assessee in all these appeals, therefore, these were heard together and are being disposed of by this common order. 2. First I take up ITA No.2273/PN/2016 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r number of years after the so called genuine business exigencies has been satisfied, i.e. the contract has been secured and in some cases even completed. According to him, once the contract has been secured, there is no apparent necessity to keep the FDs alive. According to him when it is made with the intention of investment of idle funds lying unutilized, it cannot be said to be for satisfying urgent business needs. He observed that similar issue had also come up during A.Y. 2005-06 wherein it was held that assessee is not entitled to deduction u/s.80P(2)(a) in respect of the said interest income. Further, in the A.Y. 2004-05 where the regular assessment was completed u/s.143(3) such interest was considered as income from other sources ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tees and also FDs are kept out of funds not required for business purpose. 8. Though it is true that the society is required to keep deposits for obtaining solvency certificates bank guarantees, but nothing is brought on record to show that the solvency certificates bank guarantees obtained are qua deposits. Therefore, the fixed deposits stand not correlated with the obtaining of solvency certificates bank guarantees obtained. I agree with the view taken by the Hon. ITAT Bench, Pune that the fixed deposits have nexus with the business needs of the society. However, when it comes to allowance of the deduction u/s 80P of the Act, the exact mathematical relation between the fixed deposits kept with the bank and solvency certificates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed deposits as not covered by the Provisions of S. 80P(2)(vi) of the Act. The mutual society is in the business of collective disposal of the labour and provisions of S. 80P(vi) are applicable. The addition be deleted holding that the income was covered by S. 80P(2)(vi) of the Act. 2. On the facts and circumstances of the case and in law it is not disputed that the assessee-society was governed by the provisions of S. 80P(2)(vi) of the Act. Under the circumstances any addition made to such income such addition will only go to enhance the profits derived by the assessee-society from the activities covered by S. 80P(2)(vi) of the Act and exempt. It be held accordingly. 3. On the facts and circumstances of the case and in law and conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ency certificates and in order to obtain the same from the banks, assessee placed certain FDs which have yielded interest income of ₹ 7,59,984/- during the year under consideration, which was sought to be offered for income as business income . 8. In this connection, the learned counsel for the assessee has referred to the judgment of the Hon ble Karnataka High Court in the case of CIT vs. Chinna Nachimuthu Constructions (supra). In the case before the Hon ble High Court, assessee was a contractor and in order to secure contract work, he was required to offer bank guarantee to the contractee. The assessee placed certain amount in fixed-deposit with the bank in order to obtain requisite bank guarantee and furnished the same to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t assessee s interest income from FDs with the bank is to be assessed as business income or as income from other sources. For the said purpose, we therefore deem it fit and proper to set-aside the order of the CIT(A) and direct the Assessing Officer to allow the assessee an opportunity to demonstrate that the FDs with the bank were used for the purpose of securing contract work and if it is so found then the interest income would be assessable as business income. If the Assessing officer is not so satisfied then he shall be free to proceed as per law. Needless to mention here, the Assessing Officer shall carry out the aforesaid exercise after allowing the assessee a reasonable opportunity of being heard and he shall pass an order afresh tak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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