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TMI Blog2016 (7) TMI 1665X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s.80P(2)(a)(i) of the Act. However, the AO was of the opinion that the interest income was not the assessee's business income since the same was earned out of deposits made with banks other than cooperative society/cooperative bank. In this connection, the assessee's submissions along with several judgments of various ITATs in its favour were rejected by the AO. Relying on the decision of Hon'ble Supreme Court in the case of Totgar's Cooperative Sale Society Ltd. Vs. ITO reported in 229 CTR 209 (SC) the AO held that the assessee earned interest income out of the transactions with other than members of the assessee cooperative credit society and did not fall u/s. 80P(2)(a)(i) of the Act. The AO further observed that such interest income on deposits kept with banks other than Co-operative Credit Society like an ordinary investor would be income from other sources taxable u/s. 56. In view of these observations the AO assessed the income from interest as income from other sources u/s.56 of the Act. 4. Before CIT(A) it was submitted that an identical claim of deduction u/s. 80P(2)(a)(i) of the Act in its own case for A.Y. 2010-11 was decided in its favour by the Tribunal. It was acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Society Ltd vs. ITD reported as 322 ITR 283 (SC) and not eligible for deduction u/s 80P(2)(a)(i) of the Act." 7. The Ld. Counsel for the assessee at the outset filed a copy of the order of the Tribunal in assessee's own case for A.Y. 2010-11 vide ITA No.604/PN/2014 order dated 19-08-2015 and submitted that under identical circumstances the Tribunal after considering the decision of Hon'ble Supreme Court in the case of Totgar's Cooperative Sale Society Ltd. and various other decisions has allowed the claim of deduction u/s.80P(2)(a)(i) on account of interest income earned by the assessee on short term deposits kept with banks other than cooperative banks. Since the facts of the impugned assessment year are identical, therefore, this being a covered matter in favour of the assessee the grounds raised by the revenue should be dismissed. 8. The Ld. Departmental Representative on the other hand fairly conceded that the issue has been decided in favour of the assessee by the decision of the Tribunal in assessee's own case in A.Y. 2010-11. 9. After hearing both the sides, I find the only issue that has to be decided in the grounds raised by the revenue is regarding allowability of dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned 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 co-operative societies: 80P (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. (2) The sums referred to in sub-section (1) shall be the following, namely: (a) in the case of co-operative society engaged in- (i) carrying on the business of banking or providing credit facilities to its members, or (ii) to (vii) xx xx xx the whole of the amount of profits and gains of business attributable to any one or more of such activities." 7. The word 'attributable' used in the said section is of great importa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 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 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 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 was retained in many cases. The said retained amount which was payable to its members from whom produce was bought, was invested in a short-term deposit/security. Such an amount which was retained by the assessee-Society ..... 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