TMI Blog2016 (7) TMI 1405X X X X Extracts X X X X X X X X Extracts X X X X ..... 20-7-2016 - S/SHRI B P JAIN, AM GEORGE GEORGE K, JM Assessee By Shri Prahanth Srinivas Revenue By Sh A Dhnaraj, SR DR ORDER PER GEORGE GEORGE K, JM; This appeal, at the instance of the assessee, is directed against the CIT(A) s order dated 26.9.2014. The relevant assessment year is 2009-10. 2 The grounds raised read as follows: 1. The order in appeal is wrong in law and on facts so far as it is prejudicial to the interests of the appellant; 2 The learned CIT(A) should have treated the appellant's income from investments amounting ₹ 8A2,219 as income from the business of banking eligible for deduction u/s 80P(2}{a}{i) instead of treating it as income from other sources. The CIT(A) should have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from investment amounting to ₹ 8,42,219/- as income from other sources. The assessee had claimed the said income as income from business of banking and was eligible for deduction u/s 80P(2)(a)(i) of the I T Act. The AO placed reliance on the judgment of the Hon ble Apex Court in the case of Totgar Cooperative Sale Society Ltd vs ITO reported in 322 ITR 283 in taking the above stand. The relevant findings of the AO in treating the interest income amounting to ₹ 8,42,219/- as income from other sources read as follows: It is also observed that apart from interest on loan it is getting interest from deposits with other banks. These cannot be categorized as providing credit facility as envisaged in 80P(4)(a) and (b) of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it in any of the above organizations it at all there is an obligation it is to deposit in the District Cooperative societies. I therefore hold that the income from deposits in these societies is assessable under Other source. However only the net interest from deposits and investments amounting to ₹ 3,55,01,304/~ is taxed under the head Income from other sources . This is determined at ₹ 827510/- worked out in the following manner (3550130 x 100 or 19.69% of the total income of ₹ 42,02,695/- of ₹ 82,7510/- 180317783 Other income of ₹ 6,25,736/-included in miscellaneous income is also assessed under other source. However, only the net income of only 14,709/- is assessed. Total income from other s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing credit facility to its members or marketing of agricultural produce to its members. In the instant case although the appellant has tried to explain that the investment made by the assessee's cooperative society was statutorily required but no such breakup of investment or the exigencies by which it was required statutorily to put the surplus money in investments with the entities mentioned by the Assessing Officer in his assessment order has been established. Rather, the facts suggests that it is nothing but the surplus idle money which have been put for investment and interest income have been earned therefrom. In such a situation the Assessing Officer has correctly applied the ratio of the Apex Court pronounced in the case of Tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Interest from Treasury and banks Sub treasury Meenachil 2,58,708/- The South Indian Bank Ltd 6,54,446/- State Bank of Travancore 0 Sub Total(2) 9,13,154/- Interest received Grand total (1) + (2)Rs. (A) 3,55,01,304 Total receipts as shown in the assessment order Rs. - (B) 18,03,17,783/- Gross total income as per Assessment order Rs. ( C) 42,02,695/- Percentage of interest received to total receipts (A)/(B)x100 (D) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty Ltd vs ITO (supra), the Apex court found that the deposit of surplus funds by the co-operative society is not eligible for deduction u/s 80P(2). In the case before the Apex Court in Totgar s Co-operative Sale Society Ltd vs ITO (supra), the assessee co-operative society was to provide credit facility to its members and market the agricultural produce. The assessee is not in the business of banking. Therefore, this Tribunal is of the opinion that the judgment of the Apex court in Totgar s Co-operative Sale Society Ltd (supra) is not applicable in respect of the co-operative society whose business is banking. Admittedly, the assessee has invested funds in state promoted treasury small savings fixed deposit scheme. Since Government of India ..... X X X X Extracts X X X X X X X X Extracts X X X X
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