TMI Blog2018 (5) TMI 2158X X X X Extracts X X X X X X X X Extracts X X X X ..... thout restricting on/v to its own members. On facts therefore the A.O has not demonstrated as to how the appellant qualifies to be a bank. Thus hold that the appellant is a cooperative society and not a cooperative bank and is therefore eligible for deduction u/s 80P(2)(a)(i). A.O is accordingly directed to allow the deduction claimed by the appellant - Decided against revenue. - Shri R.C. Sharma, AM And Shri Ravish Sood, JM For the Revenue : Shri M.C. Omi Ningshen, D.R. For the Assessee : None. ORDER PER RAVISH SOOD, JUDICIAL MEMBER: The present appeal filed by the revenue is directed against the order passed by the CIT(A)-29, Mumbai, dated 25.09.2013 which in itself arises from the order passed by the A.O under Sec. 143(3) of the Income Tax Act, 1961 (for short Act ), dated 31.12.2012. The revenue assailing the order of the CIT(A) had raised before us the following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that interest and dividend income earned From surplus fund parked in short term deposits with co-operative banks and nationalized banks was entitled to claim exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,00,522/- 2. Dena Bank Rs.14,27,236/- 3. Mumbai District Central Cooperative Bank Ltd. Rs.32,60,150/- TOTAL Rs.65,88,008/- It was further submitted by the assessee that the aforesaid investments were not made out of surplus funds, but to meet the requirements of its business. It was claimed by the assessee that the purpose of maintaining the aforesaid fixed deposits was imperative for smooth functioning of the cooperative credit societies especially to cover any contingencies such as sudden spurt in demand for loans, repayment of deposits of members on demand amongst others. It was thus submitted by the assessee that the earning of interest on fixed deposits with bank was incidental to its business of acceptance of deposits and provision of credit facilities from/to its members. As such, it was submitted that the said interest income was to be treated as business income and assessed to tax under the head profit and gains from business. The assessee in order to drive home his aforesaid contention that parkin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative society which was engaged in providing credit facilities to its members and marketing their agricultural produce, had earned interest income by investing its surplus funds in short term deposits in the government securities, the same would fall within the sweep of Income from other sources and would be chargeable to tax under Sec. 56 of the Act. The A.O observed that the Hon ble Supreme Court had concluded that as such interest income earned by a Co-operative society cannot be attributed to the activities of the society, hence the interest income earned therefrom would not qualify for deduction under Sec. 80P(2)(a)(i). The A.O in support of his aforesaid view took support of the judgment of the Hon ble High Court of Bombay in the case of CIT Vs. Common Effluent Treatment Plant (Thane, Belapur) Association (2010) 328 ITR 362 (Bom). The High Court in the aforementioned case had observed that the interest income earned by an assessee co-operative society on money invested in fixed deposits of bank would not possess same character of mutuality as surplus fund derived by the assessee from contributions of its members, and would be exigible to tax as income from other sources. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nking of the co-operative society. The CIT(A) on the basis of his aforesaid deliberations concluded that the use of the word attributable by the legislature in Sec.80P(2)(a)(i) would mean that in the course of banking activity, if the society received any income which was the outcome of the business of banking of such society, such an income was to be construed as the profits and gains of the business and therefore be eligible for deduction under Sec. 80P(2)(a)(i) of the Act. The CIT(A) observed that as the Hon ble Supreme Court in the case of Totagars Co-operative Society Vs. ITO (2010) 322 ITR 283 (SC) was dealing with the proposition that where the interest income had accrued on funds invested in the banks which were not immediately required by the assessee for its business and were invested in securities and short term deposits with the others banks, such interest earned on the deposits would fall within the category of Income from other sources taxable under Sec. 56 and would not be eligible for deduction under Sec. 80P(2)(a)(i). The CIT(A) on the basis of his aforesaid observations concluded that the judgment of the Hon ble Apex Court in the case of Totagars Co-operative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer authorities and the material available on record. We find that our indulgence in the present case has been sought to adjudicate as to whether the CIT(A) is right in law and facts of the case in concluding that the interest and dividend income earned by the assessee co-operative society on the short term deposits with co-operative banks and nationalized banks, was eligible for claim of deduction under Sec.80P of the Act, or not. As observed by us hereinabove, the assessee is a co-operative society engaged in the business of providing credit facilities to its members. We have perused the order of the coordinate bench of the Tribunal, viz. ITAT H Mumbai in the assessee s own case for A.Y 2012-13 in ITA No. 344/Mum/2016, dated 05.07.2017 and are persuaded to be in agreement with the claim of the ld. A.R that the issue under consideration before us in the present appeal is squarely covered by the said order of the Tribunal. The Tribunal in the aforementioned order passed in the assessees own case for AY. 2012-13, viz. ITO-20(2)(1) Vs. The Mumbai Sales Tax Staff Co-op Credit Society Ltd (ITA No. 344/Mum/2016; dated 05.07.2017), had held as under: 5. We have heard the counsels ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to be a bank. In the circumstances, I hold that the appellant is a cooperative society and not a cooperative bank and is therefore eligible for deduction u/s 80P(2)(a)(i). A.O is accordingly directed to allow the deduction claimed by the appellant. Grounds 1, 2 are allowed in favour of the appellant. No new facts or contrary judgments have been brought on record before us in order to controvert or rebut the findings so recorded by Ld CIT(A). Since the Ld. CIT(A) while deciding these grounds have relied upon the orders passed by the different benches of Hon ble ITAT in identical circumstances, therefore, there are no reasons for us to interfere into or deviate from the findings recorded by the Ld. CIT(A). Hence, we are of the considered view that the findings so recorded by the Ld. CIT(A) are judicious and are well reasoned. Resultantly, these grounds raised by the revenue stands dismissed. 7. We have given a thoughtful consideration to the observations of the Tribunal and finding no reason to take a different view, therefore, respectfully follow the same. We thus, in terms of our aforesaid observations, finding no infirmity in the order of the CIT(A), uphold the same ..... X X X X Extracts X X X X X X X X Extracts X X X X
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