TMI Blog2014 (4) TMI 1237X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome earned from the investments made with other co-operative banks is eligible for the exemption u/s 80P(2)(d) - HELD THAT:- Provisions of section 80P(2)(d) of the Act which reads as follows :- “(d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income;” - Thus Decision of the CIT(A) to allow exemption u/s 80P(2)(d) of the Act is expressly in accordance with the provisions of clause (d) of subsection (2) of section 80P of the Act and no infirmity on the same has been pointed out by the learned Departmental Representative before us. Accordingly, we hereby affirm the order of the CIT(A) and the Revenue fails in its cross-appeal. - ITA Nos.845 & 846/PN/2013, ITA Nos.1068 & 1069/PN/2013, ITA No.60/PN/2014, ITA No.1728/PN/2014 - - - Dated:- 24-4-2014 - SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER For the Appellant : Mr. Pramod Shingte For the Respondent : Mr. S. P. Walimbe ORDER PER G. S. PANNU, AM These are three set of cross-appeals by the assessee and the Revenue relating to the assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that such interest income, which was earned on investments made with banks could not be said to be attributable to the activities of the assessee society, namely, the business of providing credit facilities to its members and therefore he denied exemption u/s 80P(2)(a)(i) of the Act. Accordingly, the total income was assessed at ₹ 22,27,520/- after rejecting the assessee s claim for exemption u/s 80P(2)(a)(i) of the Act with respect to the aforesaid amount of 4s urplus declared in its Profit Loss Account. 5. The aforesaid matter was carried in appeal before the CIT(A). The CIT(A) has concurred with the Assessing Officer and affirmed the action of denying exemption u/s 80P(2)(a)(i) of the Act with respect to the income of ₹ 22,27,523/- representing interest income earned on investments made with the banks. However, the alternative plea of the assessee that interest income in question was earned from investments made with other co-operative banks and was thus eligible for exemption u/s 80P(2)(d) of the Act, was upheld by the CIT(A). 6. In the background of the aforesaid order of the CIT(A), assessee is in further appeal challenging the decision of the CIT(A) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than cooperative banks, interest on mutual funds, long term and short term capital gain on sale of mutual funds etc. 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 Income Tax Act in view of the decision of Hon ble Supreme Court in the case of Totagar s Cooperative Sale Society Ltd. (Supra). We find the Ld. CIT(A) allowed the claim of the assessee on the ground that the assessee is entitled to deduction u/s.80P(2)(a)(i) on account of interest from banks other than cooperative banks, interest on mutual funds long term and short term capital gain on mutual funds etc. While doing so, he held that the decision in the case of Totagar s Cooperative Sale Society Ltd. (Supra) is not applicable to the facts of the present case since in that case the amount invested in short term deposits and securities was not out of interest bearing deposits collected from members but out of sale proceeds of agricultural produce of farmer members marketed by the society. Further, the Hon ble Apex Court has considered only the latter part of section 80P(2)(a)(i), i.e. income of a cooperative society engaged in provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t income would be taxable under section 56 of the Act, as rightly held by the assessing officer... 19.1 However, in the present case, on verification of the balance sheet of the assessee as on 31.3.2009, it was observed that the fixed deposits made were to maintain liquidity and that there was no surplus funds with the assessee as attributed by the Revenue. However, in regard to the case before the Hon'ble Supreme Court - (On page 286) 7............Before the assessing officer, it was argued by the assessee(s) that it had invested the funds on short term basis as the funds were not required immediately for business purposes and, consequently, such act of investment constituted a business activity by a prudent businessman; therefore, such interest income was liable to be taxed under section 28 and not under section 56 of the Act and, consequently, the assessee(s) was entitled to deduction under section 80P(2)(a)(i) of the Act. The argument was rejected by the assessing officer as also by the Tribunal and the High Court, hence, these civil appeals have been filed by the assessee(s). 19.2 From the above, it emerges that (a) that assessee (issue before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -op Sale Society Ltd (supra) cannot in any way come to the rescue of either the Ld. CIT (A) or the Revenue. In view of the above facts, we are of the firm view that the learned CIT (A) was not justified in coming to a conclusion that the sum of ₹ 9,40,639/- was to be taxed u/s 56 of the Act. It is ordered accordingly. 19.7 Before parting with, we would, with due regards, like to record that the ruling of the Hon'ble jurisdictional High Court in the case of CIT v. Manekbang Co-op Housing Society Ltd reported in (2012) 22 Taxmann.com 220(Guj) has been kept in view while deciding the issue. 11.2 We find the Cochin Bench of the Tribunal in the case of Muttom Service Cooperative Aplappuzha Bank Ltd. Vs. ITO (Supra) after considering the decision of Hon ble Supreme Court in the case of Totagar s Cooperative Sale Society Ltd. (Supra) and various other decisions has observed as under : 5. We have considered the rival submission on either side and also perused the material available on record. We have also carefully gone through the order of8 t he lower authority. No doubt, the latest judgment in Totgar's Co-operative Sale Society Ltd vs ITO (supra), the Apex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for deduction u/s.80P(2)(a)(i). In view of the above discussion and following the decisions of the Ahmedabad Bench of the Tribunal and Cochin Bench of the Tribunal which in turn have considered the decision of the Hon ble Supreme Court in the case of Totagar s Cooperative Sale Society Ltd. (Supra) we find no infirmity in the order of the Ld.CIT(A). Accordingly, the same is upheld and the grounds raised by the Revenue are dismissed. 12. In the result, the appeal filed by the Revenue is dismissed. 8. Following the aforesaid precedent, which has been rendered in identical circumstances and for the sake of maintaining consistency, we allow the plea of the assessee. Accordingly, assessee succeeds in its appeal. 9. In so far as the cross-appeal is concerned in relates to the decision of the CIT(A) in holding that the interest income earned from the investments made with other co-operative banks is 9e ligible for the exemption u/s 80P(2)(d) of the Act. In this connection, the CIT(A) has referred to the details of interest income noted by the Assessing Officer in para 5 of the assessment order and noted that the same have been received from other co-operative banks/societies. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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