TMI Blog2020 (3) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... rest income on investment of sale of agricultural produce of the assessee in Totgar s [ 2010 (2) TMI 3 - SUPREME COURT] that assessee being one coming within sub-clause (a)(iv) under sub-section (2) in section 80P. Assessee being a credit society similar to assessee South Eastern Railways Employees Co-operative Credit Society Limited, Totgar s (supra) would apply to its such income. It follows that the question in this appeal is to be answered in the affirmative, in favour of revenue and we so answer it. Having answered the question as we have, we direct the matter be remanded to the Assessing Officer, to work out interest earned on the reserve fund, if invested and allow deduction therefore in addition to the deduction already allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tegory of income from other sources. Hence, such interest income would be taxable under section 56 of the Act. In that connection section 80P was analyzed and appellant, being a co-operative sale society, was held against as follows: As stated above, in this case, interest held as ineligible for deduction under section 80P(2)(a)(i) is not in respect of interest received from members. In this case, we are only concerned with interest which accrues on funds not required immediately by the assessee(s) for its business purposes and which have been only invested in specified securities as investment . Further, as stated above, the assessee(s) markets the agricultural produce of its members. It retains the sale proceeds in many cases. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s than 10% of its net profit to a reserve fund. Corresponding enabling procedure is as per rule 119 in West Bengal Co-operative Societies Rules, 2011. His client made investments as permitted by the Act, Rules and its existing bye-laws, the latter not being inconsistent with the provisions in the Act of 2006. Interest on these investments are profits and gains of his client, being a cooperative society, carrying on business of banking and providing credit facilities to its members. As such, the whole amount of profits and gains achieved from interest earnings on such investments, is to be deducted in computing the total income. Furthermore, he draws attention to the assessment order dated 25th February, 2015. He submits, the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in any year is to be transferred to the reserve fund. Investment of funds is permitted under section 64. The reserve fund was invested and interest income on the fund therefore must be taken to be as profit and gain of business attributable to banking and providing credit facilities to its members. The Division Bench took note of this argument in holding that the entire interest income, therefore, could not be disallowed. The question in that appeal is reproduced below:- Whether in the facts and circumstances of the case, the Income-tax appellate Tribunal by allowing deduction on income earned by the assessee from investment in banks and other financial institutions has rendered the provisions of section 80P(2)(a)(i) nugatory as the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Totgar s (supra), that assessee being one coming within sub-clause (a)(iv) under sub-section (2) in section 80P. Assessee being a credit society similar to assessee South Eastern Railways Employees Co-operative Credit Society Limited, Totgar s (supra) would apply to its such income. It follows that the question in this appeal is to be answered in the affirmative, in favour of revenue and we so answer it. Substantial question of law was formulated and answered in South Eastern Railways Employees Co-operative Credit Society Limited (supra). Substantial question of law, on which this appeal was admitted, has been answered. That does not automatically require same directions, as made in South Eastern Railways Employees Co-operative Credit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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