TMI Blog2017 (5) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... romotion and development of its members. In view of the above facts and the detailed findings provided by the ld. CIT(A) in his findings as supra we considered that the assessee is not a co-operative bank u/s. 80P(4) of the act. No merit in the contentions of the ld. counsel for considering the interest income as fixed deposit as business income. We find that it is to be considered as income from other sources as held in the case of Totgors Co-operative society Ltd. Vs. ITO Karnataka [2010 (2) TMI 3 - SUPREME COURT] wherein it was held that investing surplus funds in short term deposits would fall under the head income from “other sources” taxable u/s. 56 of the Act and it cannot be attributable to the activities of the society, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s submitted that on facts and circumstances of the case that such income is not taxable U/S.56P and so the appellant society is entitled to have the deduction U/s.80P(2)of the Income-tax Act. It is submitted that the same be allowed now. [2] Without prejudice to the above, it is submitted that even if such interest income of ₹ 13,88,824/- is taxable U/s.56, then, expenditure incurred for earning such income must be allowed and gross interest income received only can be taxed. It is submitted that the same be allowed now. 3. In this case, return of income declaring income of Rs. Nil was filed on 15/10/2009. Subsequently, the case was selected for scrutiny by issuing of notice u/s. 143(2) of the act on 26/08/2011 4. Durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or otherwise. The definition is basic law to be considered to decide whether a credit society is a co-operative bank or not. Only, those credit societies which are allowed to take deposits of money from the public and do other banking activities as defined in the sec 5(b) of Banking Regulation Act would qualify to be a cooperative bank. I agree that taking deposits from public cannot be equivalent to taking deposits from members of the society only which has got a much restricted meaning and the relationship between a society and a public has to be understood in a much larger sense. In this connection, it would be useful to refer to the decision of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as whether interest income on the short term bank deposits and securities would be qualified as business income u/s. s 80P(2)(a)(i) of the IT Act, 1961. The Hon'ble Supreme Court had decided the issue as under: At the outset an important circumstance needs to be highlighted. In the present case, the interest held not eligible for deduction u/s. 80P(2)(a)(i) of the Income tax Act is not the interest received from the members for providing the credit facilities to them. What is sought to be taxed u/s. s 36 of the Act is the interest income arising on the surplus invested in short term deposits and securities which surplus was not required for business purpose. Assessee markets the produce of its members whose sale proceeds at times ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of deduction u/s 80P(2)(a)(i) of the IT Act as it does not fall under the exceptions as provided u/s 80P(4). The Hon'ble Jurisdictional IT AT, Ahmedabad XB' Bench in ITA No.l491/ahd/2012 A.Y. 2009-10 in the case of M/s. Jafari Momin Vikas Co- Op Credit Society Ltd vs. ITO, Patan -2, relied upon by the appellant has on identical facts has held that the provisions of section 80P(4) of the I. T. Act, 1961 are not applicable to Co- Operative Credit Society and Co-Operative Society is entitled deduction u/s 80P(2)(a)(i) of the Act if it is not allowed to do business of banking. Following the decision, I do not find any reason to deviate from the decision rendered by the Hon'ble jurisdictional ITAT and it is held that the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l pronouncement of the Hon ble Supreme Court in the cases of Totgors Co-operative society Ltd. Vs. ITO Karnataka (2010) 188 Taxman 282 in which it was held that interest income earned on investing in short term deposits would fall in the category of other income to be taxed u/s. 56 of the I.T. act. This judicial pronouncement has already been elaborated by the ld. CIT(A) in his findings as supra in this order. Therefore, we find no merit in the contentions of the ld. counsel for considering the interest income as fixed deposit as business income. We find that it is to be considered as income from other sources as held by the Hon ble Supreme Court in the case of above referred judicial pronouncement wherein it was held that investing surpl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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