TMI Blog2018 (1) TMI 1432X X X X Extracts X X X X X X X X Extracts X X X X ..... .08.2015 relating to assessment year 2012-13 against order passed under section 143(3) of the Income-tax Act, 1961 (in short the Act‟). 2. The Revenue has raised the following grounds of appeal:- 1. On the facts and in the circumstances of the case, and in law, the Learned CIT(A)-I, Nashik was not justified in holding that assessee is entitled to deduction u/s 80P(2)(a)(i) of the IT Act, when the income of the society on account of interest from banks other than Co-operative Banks are not covered by the activity of providing credit facilities to its members and hence, not eligible for deduction u/s 80P(2)(a)(i) of the IT Act. 2. The Ld. CIT(A)-I, Nashik has also disregarded the fact that the Co-operative society is required to satisfy the criteria for availing benefit of Sec. 80P(2)(d) i.e. the interest income should be from other co-operative society, whereas in the assessee society's case the interest income is from other than Co-operative Banks with regard to investment made. 3. The appellant prays the order of the Assessing Officer may be restored. 4. The appellant prays to adduce such further evidence to substantiate his case. 3. The learned Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nagari Sahakari Patsanstha Ltd. (supra) wherein the Tribunal had held that the assessee is entitled to claim deduction under section 80P(2)(a)(i) of the Act on the interest income received by it on bank fixed deposits. The relevant findings of the Tribunal are reproduced at page 9 of the appellate order but are not being reproduced for the sake of brevity. 10. We further find that the issue of allowability of deduction under section 80P(2)(a)(i) of the Act on interest income earned by the assessee in the hands of assessee was decided by the Tribunal in ITA No.1584/PN/2012, relating to assessment year 2009-10, vide order dated 30.04.2014; thereafter in ITA No.1394/PN/2015, relating to assessment year 2011-12, vide order dated 22.07.2016 and also in ITA No.2006/PUN/2014, relating to assessment year 2010-11, vide order dated 04.05.2017. The Tribunal in assessment year 2011-12 had made reference to the ratio laid down in the case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit in ITA No.604/PN/2014, relating to assessment year 2010-11, order dated 19.08.2015, wherein reliance was placed on the ratio laid down by the Hon‟ble High Court of Karnataka in Tumkur Merchant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest earned from shortterm deposits and from savings bank account. The assessee is a Cooperative Society providing credit facilities to its members. It is not carrying on any other business. The interest income earned by the assessee by providing credit facilities to its members is deposited in the banks for a short duration which has earned interest. Therefore, whether this interest is attributable to the business of providing credit facilities to its members, is the question. In this regard, it is necessary to notice the relevant provision of law i.e., Section 80P(2)(a)(i): Deduction in respect of income of cooperative societies: 80P (1) Where, in the case of an assessee being a cooperative society, the gross total income includes any income referred to in subsection (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in subsection (2), in computing the total income of the assessee. (2) The sums referred to in subsection (1) shall be the following, namely: (a) in the case of cooperative society engaged in- (i) carrying on the business of banking or providing credit facilities to its members, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lities to its members. The interest income so derived or the capital, if not immediately required to be lent to the members, they cannot keep the said amount idle. If they deposit this amount in bank so as to earn interest, the said interest income is attributable to the profits and gains of the business of providing credit facilities to its members only. The society is not carrying on any separate business for earning such interest income. The income so derived is the amount of profits and gains of business attributable to the activity of carrying on the business of banking or providing credit facilities to its members by a cooperative society and is liable to be deducted from the gross total income under Section 80P of the Act. 9. In this context when we look at the judgment of the Apex Court in the case of M/s. Totgars Cooperative Sale Society Ltd., on which reliance is placed, the Supreme Court was dealing with a case where the assesseeCooperative Society, apart from providing credit facilities to the members, was also in the business of marketing of agricultural produce grown by its members. The sale consideration received from marketing agricultural produce of its members ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igible for deduction u/s.80P(2)(a)(i). However, it is also the settled proposition of law that when two views are possible, the view which is in favour of the assessee has to be followed. Since in the instant case, two divergent decisions were cited before us and no decision of the Hon ble jurisdictional High Court is available, therefore, following the decision of the Hon ble Supreme Court in the case of CIT Vs. Vegetable products reported in 88 ITR 192 we hold that the view in favour of the assessee, i.e. the decision of the Hon ble Karnataka High Court has to be followed. Accordingly, we hold that the interest income earned by the assessee on short term deposits kept with banks has to be allowed as deduction u/s.80P(2)(a)(i) of the I.T. Act. The order of the CIT(A) is accordingly set aside and the grounds raised by the assessee are allowed. 11. In view of the issue being decided by the Pune Bench of Tribunal in assessee‟s own case in different years, we find no merit in the grounds of appeal raised by the Revenue and the same are dismissed. 12. In the result, appeal of Revenue is dismissed. Order pronounced on this 25th day of January, 2018. - - TaxTMI - TMIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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