TMI Blog2017 (10) TMI 1498X X X X Extracts X X X X X X X X Extracts X X X X ..... members. The present issue is with regard to the income earned by the assessee from the running and maintenance of holiday homes for the members. Thus, the same cannot be allowed as deduction under the provisions of section 80P(2)(a)(i) of the Act - Deduction not allowed. Appeal allowed in part - decided partly in favor of Revenue. - I .T.A. No.1340/Kol /2015 - - - Dated:- 18-10-2017 - Shri Waseem Ahmed, Accountant Member And Shri S.S.Viswanethra Ravi, Judicial Member For the Appellant : Shri Saurbh Kumar, Addl. CIT(DR) For the Respondent : Shri Anil Kochar, Advocate ORDER Per Waseem Ahmed, AM This appeal by the revenue is against the order of Commissioner of Income Tax (Appeals)-10, Kolkata dated 24.08.2015. Assessment was framed by I.T.O., Ward-35(3), Kolkata u/s.143(3) of the Income tax Act, 1961 (hereinafter referred to as the Act ) vide his order dated 24.02.2015 for assessment year 2012-13. 2. The revenue has raised the following grounds of appeal : 1. On the facts and in the circumstances of the case, the Ld, CIT(A) has erred in deleting the addition on interest income earned from nati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO called upon the assessee to explain why deduction u/s 80P(2)(a)(i) of the Act is allowed to the assessee on such income. In compliance thereto the assessee submitted that deduction on account of interest income on the money deposited with the bank is available in view of the judgment of the Hon ble Uttarakhand High Court in the case of CIT vs Iqbalpur Cooperative Bank Development Union Ltd (2009) 315 ITR 441 (Uttarakhand). The assessee further submitted that identical issue was also decided in favour of the assessee by the Hon ble Patna High Court in the case of Bihar State Housing Cooperative Federation Ltd. Vs CIT(2009) 315 ITR 286 (Pat). However, the AO disregarded the contention of the assessee by observing as under :- (i) The Hon ble Supreme Court in the case of Totgar s Co-operative Sale Society Ltd. Vs ITO reported in 188 Taxman 282 has held that interest earned on investment of funds not required immediately for the purpose of business cannot fall under the head business and profession . Therefore the same would be treated as income from other sources. (ii) As per the provision of seciton 80P(2)(a)(i) of the Act the deduction is available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on the business of providing credit facilities to its members and earned interest by deposits made in nationalized banks, would be eligible for the deduction envisaged under Sec 80 P of the Income tax Act, 1961. The Hon'ble High Court of Karnataka in the case of Tumkur Merchants Souharda Credit Co-operative Society Ltd. in ITA No.307 of 2014 dt.28.10.2014, wherein their Lordships after considering the judgment of the Hon'ble Apex Court in the case of Totagars Co-operative Sale Society Ltd. (supra), have held that the interest earned by a co-operative society engaged in the business of providing credit facilities to its members has to be regarded as income eligible for deduction under Section 80P(2) of the Act. The Revenue, being aggrieved, is in appeal before us. 7. Before us both the parties relied on the orders of the authorities below as favourable to them. 8. We have heard the rival contentions and perused the materials on record. At the outset, we find that the Hon ble Tribunal of Kolkata Benches In ITA NO.2058/Kol/2014 has decided the identical issue in favour of the assessee after distinguishing the facts of Totagars Cooperative Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arely covered in favour of the assessee by the decision of the Hon'ble Jurisdictional High Court in assessee's own case. In this regard we would like to place reliance upon the. decision of the Hon 'ble Apex Court in the case of CIT vs Excel Industries 358 ITR 295 wherein the principle of consistency has been reiterated. Hence when the issue has been decided by the Jurisdictional High Court no convincing reason has been pointed to take a different view, any deviation is not permitted. 7.3. Now we come to the case laws relied upon by the Id. CIT(A). As regards the decision of the Hon 'ble Apex Court in the case of Totgars Co-operative Sale Society Ltd. (supra) we find that the said decision is not applicable in the facts of the case. We find that the Hon'ble Apex Court in the said decision in para 11 has itself mentioned that We are confining the judgment to the facts of the present case. The facts of the case were that assessee's business was to provide credit facilities to its members and to market their agricultural produce. In many cases assessee retained sale proceeds of members whose produce was marketed by it and since funds created by such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee for the deduction u/s 80P(2)(a)(i) of the Act on the ground that deduction is available on the income attributable to the business providing credit facilities to the members. As such the activity of holiday home is not eligible for deduction u/s 80P(2)(a)(i) of the Act. Accordingly the AO disallowed deduction claimed by the assessee for ₹ 5,11,100/- and added to the total income of the assessee. 11. Aggrieved the assessee preferred an appeal before the ld. CIT(A). The assessee before the ld. CIT(A) submitted that it has been running holiday home for the mutual benefit of the members. The surplus earned by the assessee from the holiday homes is used for providing credit facilities to the members. Therefore the activity of running the holiday home is ancillary and supportive to the impugned objects of the society. Thus the assessee is entitled for deduction u/s 80P(2)(a)(i) of the Act on the income earned from the holiday homes. The ld. CIT(A) after considering the submissions of the assessee has allowed deduction u/s 80P(2)(a)(i) of the Act by observing as under :- I have carefully considered the argument of the Assessing Officer in maki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. Ahmednagar District Central Co-Op. Bank Limited Others, ( cited supra), where the Hon'ble High Court has held that the commission collected from electricity bills was held to come qualifying for deduction u/s 80- P(2)(a)(i). I find myself in agreement with the contention of the appellant that it is a cooperative society formed under the relevant law laid down, and that it had started its activities in the year when the holiday home was acquired. As the same was being continuously maintained for the comfort of the members and that whatever surplus remains it is nothing but part of its activities in the matter of carrying on its activities for providing amenities to its members, there ought to be no disallowance of the this amount of ₹ 5,11,100/-. The AO is directed accordingly. The Revenue, being aggrieved, is in second appeal before us. 12. Before us both the parties relied on the order of Authorities Below as favourable to them. 13. We have heard the rival contentions and perused the material available on record. In the instant case the assessee has earned income for ₹ 5,11,100/- on the maintenance of holiday hom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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