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TMI Blog2021 (2) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... peals), Davangere in so far as it is against the Appellant is opposed to law, weight of evidence, natural justice, probabilities, facts and circumstances of the Appellant Society's case. 2. The appellant denies itself to be assessed to an income of Rs. 62,02,872/- against the returned income of Rs. 11,25,150/-, on the facts and circumstances of the case. 3. The learned CIT(A) was not justified in law and on facts in not setting aside the order of assessment as bad in law, since the AO has estimated the income, without rejecting the books of accounts, on the facts and circumstances of the case. 4. The learned CIT(A) was not justified in appreciating that there was a clear nexus between the withdrawal and deposit of deposits, to dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofession but the same was to be offered under the head income from other sources. 3. The assessee while filing return of income reduced the interest paid to the state bank with interest received from Pragati Gramina bank. 4. The Ld.AO, after considering the submissions of assessee estimated amount of interest that was paid on overdraft and amount of interest received from Pragati Gramina bank towards business activities and made adhoc disallowance of Rs. 50,77,722/-, which was reduced from profit and gains of business of profession and the net profit computed for the purpose of deduction under section 80 P was Rs. 4,93,08,686/- as against Rs. 5,43,86,408/- claimed by assessee. 5. Aggrieved by the order of Ld.AO assessee preferred appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gati Gramina bank was equal and to the interest paid on OD account and therefore it is to be netted of and treated as business income. 10. The Ld.AR submitted that authorities below has rejected assessee's contention for the reason that interest income earned from Pragati Gramina Bank was to be considered as income from other sources as Pragati Gramina Bank is not a co-operative society has implied under section 80P(2)(d) of the Act. 11. The Ld.AR submitted that the interest earned from Pragati Gramina bank was derived from business income as Rs. 10 crore was temporarily deposited with the Gramina bank. The Ld.AR placed reliance on decision of Hon'ble Karnataka High Court in case of Tumkur Merchants Souharda Credit Co-operative Society Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing from the expression "attributable to" occurring in the phrase "profits and gains attributable to the business of the specified industry (here generation and distribution of electricity) on which the learned Solicitor-General relied, it will be pertinent to observe that the legislature. has deliberately used the expression "attributable to" and not the expression "derived from". It cannot be disputed that the expression "attributable to" is certainly wider in import than the expression "derived from". Had the expression "derived from" been used, it could have with some force been contended that a balancing charge arising from the sale of old machinery and buildings cannot he regarded as profits and gains derived from the conduct of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciety 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 co-operative 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 Co-operative Sale Society Ltd., on which reliance is placed, the Supreme Court was dealing with a case where the assessee-Cooperative Society, apart from providing credit facilities to the members, was also in the business of marketing of agricultural produce grown by its memb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. In fact similar view is taken by the Andhra Pradesh high Court in the case of (CIT vs. Andhra Pradesh State co-operative Bank Ltd., [20110 200 Taxman 220/12 taxmann.com 66. In that view of the matter, the order passed by the appellate authorities denying the benefit of deduction of the aforesaid amount is unsustainable in law. Accordingly it is hereby set aside. The substantial question of is answered in favour of the assessee and against the revenue. Hence, we pass the following order: 16. In the present facts of the case we note that amount invested with Pragati Gramina bank was neither due to any members nor a liability. The said money was temporarily parked with Pragati gramina bank, in order to maintain the overdraft lim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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