TMI Blog2018 (1) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... ney in a bank so as to earn interest. The said interest income is attributable to carrying on the business of banking and therefore it is liable to be deducted in terms of Section 80P (1) of the Act. As the facts in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. are tallying with the present case we decide the issue in favour of the assessee in both years. - Decided in favour of assessee - ITA Nos.2698 And 2699/Bang/2017 - - - Dated:- 24-1-2018 - SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER For The Appellant : Shri M.R. Uppin, Advocate For The Respondent : Shri Vimal Anand, Addl. CIT (DR) ORDER Per Shri A.K. Garodia, Accountant Member Both these appeals are filed by the assessee which are d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore Vs. ITO, Ward 2(2), Mysore and ITA 307/2014 - M/s. Tumkur Merchants Souharda Credit Co-op. Ltd. Vs. ITO, Ward-1, Tumkur and also the recent judgement dated 15.12.2017 of ITAT, Hyderabad in ITA No. 673/Hyd/2017 in S.B.I. Officers Coop. Credit Society Ltd. Hyderabad Vs. ITO Ward 5(3), Hyderabad. 3. The grounds raised by the assessee for Assessment Year 2014-15 are as under. 1. The Assessing Officer as well as the Appellate authority failed to consider that the petitioner in appeal is a co-operative society engaged exclusively in providing credit facilities to its members and as such invests its surplus funds as are not immediately required for use in its business in co-operative societies as well as nationalized / commercial ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 395 ITR and pointed out that as per the facts of that case noted by Hon'ble Karnataka High Court in this para, the amount deposited by assessee in bank was payable to its members from whom produce was bought and it was a liability and it was shown by assessee in the balance sheet on the liability side. Thereafter, he placed reliance on an earlier judgement of Hon'ble Karnataka High Court rendered in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO in ITA No. 307/2014 dated 28.10.2014 and drawn my attention to para no. 10 of this judgement and pointed out that in that case, the facts were this that the amount which was invested in banks to earn interest was not an amount due to any members and it was not liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out of accumulated profits of the society and such funds are not immediately required for the business or as there were no loan takers and hence, the society has invested such funds with nationalized and co-op banks. The nationalized and co-op banks are not members of the society and accordingly the interest earned by the society from its investment with non members such as Nationalised and Co-op Banks are not qualified for claiming the deduction u/s 80P(2)(a)(i) of the Act. Further, the provisions of sec. 80P(2)(a)(i) which clearly states that, deduction is allowable only where business of banking or providing credit facility to its members . However, in the present case the society has earned interest from its investment with co-op ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as invested in banks to earn interest was not an amount due to any members. It was not the liability. It was not shown as liability in their account. In fact this amount which is in the nature of profits and gains, was not immediately required by the assessee for lending money to the members, as there were no takers. Therefore they had deposited the money in a bank so as to earn interest. The said interest income is attributable to carrying on the business of banking and therefore it is liable to be deducted in terms of Section 80P (1) of the Act. In fact similar view is taken by the Andhra Pradesh High Court in the case of COMMISSIONER OF INCOME-TAX III, HYDERABAD VS. ANDHRA PRADESH STATE COOPERATIVE BANK LTD., reported in (2011) 200 TA ..... X X X X Extracts X X X X X X X X Extracts X X X X
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