TMI Blog2024 (1) TMI 1028X X X X Extracts X X X X X X X X Extracts X X X X ..... ts deposited by the assessee society in commercial / nationalised banks shall be eligible for deduction u/s 80P(2)(a)(i) of the Act. Consequently, ground pertaining to impugned controversy is decided in favour of the assessee. Delayed payment of PF- ESI - assessee has submitted that all the payments of EPF were made in time considering the extended grace period of 5 days available to the assessee - HELD THAT:- After going through the facts and on a thoughtful consideration of submissions and explanations, it is observed that the aforesaid issues has been dealt with coordinate bench of the ITAT, Raipur in Dilip Construction Company [ 2023 (6) TMI 1358 - ITAT RAIPUR] wherein regarding delay and grace period it has been observed that the assessee was found to have deposited the amount within grace period and hence there is no substance in the grievance of the Revenue. The contention raised by the assessee regarding grace period is found to be acceptable, but subject to verification of the fact that the payments were made in prescribed time including the time available with grace period. Under such facts and circumstances, we direct the Ld. AO to verify the payment details of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l explain the detail of proportionate expenses as income exempted and taxable income were mixed. (4) That the 25% of the net profit of the society is kept in reserve fund as well 5% of remaining net profit shell be kept for common interest of member hence the society kept fund in fixed deposit, recurring deposit and M.I.S. (5) That in the appeal cases given on 80P(2)(d) The Case Law ITA No. 418 419 /JP/2017 And 23 24 /JP 512, 633, 513 634 /JP/2019 of M/s Jaipur Jila Dugdh Utpadak Sahkari Sangh Ltd. Jaipur Vs. DCIT Jaipur copy of the above cited case law is enclosed here with for your ready reference. In sugar mill Bundi case judgement in para 6.4 it is clearly decided that cooperative society for the purpose of the u/s 80p(2)(d). (6) That the Hon ble supreme court of India in civil appeal no. 8719/2022 decided that co-operative credit society shall be title to exemption u/s 80p(2) of the income tax act 1961. (7) E.P.F. was paid in time hence addition made u/s. 36(1)(va) is wrong and be allowed. 4. The common issue involved is pertaining to disallowance of claim u/s 80P(2)(d) regarding interest income received by the assessee society from deposits in saving bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... please see page no.- 3 pr. 6.1 As regards the claim u/s 80P(2)(d), we find that the only condition for availing the deduction under this provision is any income by way of interest or dividend derived by the Cooperative society from its investment with any other cooperative society, the whole of such income is allowable for deduction u/s 80P(1). Therefore, there is no condition for the assessee society to engaged in the activity of provide credits to the Members or banking business for availing the deduction u/s 80P(2)(d) read with Section 80P(1) of the Act. As regards the cooperative bank shall be treated as cooperative societies for the purpose of the interest income on investment in such cooperative bank u/s 80P(2)(d) the Mumbai Bench of this Tribunal in case of Lands End Co-operative Housing Society Ltd. vs. ITO (Supra), after considering the decision of the Hon'ble Supreme Court in case of Totagar's Co-operative Sale Society Ltd. Vs. ITO (Supra) has considered and decided this issue in. D. m/s the totgar's co-operative sale...Vs. income tax officer Karnataka on 08 February 2010 (S.C. Case) in which section 80P(2)(d) is not discussed and it is a case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his aforesaid contentions. 13. We shall first advert to the assessee's grievance that the lower authorities had erred in declining its claim for deduction u/s. 80P(2)(a)(i) of the Act, i.e, as regards the interest income that was earned on the surplus funds which were deposited by it with Jila Sahakari Kendriya Bank, i.e, a co-operative bank. After deliberating at length on the issue in hand, we find that the aforesaid claim of the assessee hinges around the aspect that as to whether or not the interest income earned by it on its surplus funds which were parked as deposits in the normal course of its business of providing credit facilities to its members, i.e., at the point of time when there were no takers for the said funds, was eligible for deduction u/s. 80P(2)(a)(i) of the Act. We have given a thoughtful consideration to the contentions advanced by the Ld. Authorized representatives for both the parties. Before proceeding any further, we deem it fit to cull out the provisions of section 80P(2)(a)(i) of the Act, the scope and gamut of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernible from the record that the funds deposited by the assessee-society with the bank, viz. Jila Sahakari Kendriya Bank (supra) were the amounts that were payable by the society to its members, and the same having being retained were for the time being invested as a short-term deposit/security with the bank. If that would have been so, then, the interest income earned on such short-term deposit/security with the bank would not have been eligible for deduction u/s. 80P(2)(a)(i) of the Act. But then, as the amount deposited by the assessee-society with the bank, viz. Jila Sahakari Kendriya Bank (supra) was in the nature of simpliciter surplus or idle funds of the assessee society, for which there were no takers for the time being in course of its business of providing credit facilities to its members, therefore, depositing of the same by way of short-term deposits with the aforesaid bank, as stated by the ld. A.R, and rightly so, would clearly be inextricably interlinked, or in fact interwoven with its aforesaid primary business activity, i.e., providing of credit facilities to its members. At this stage, we may herein observe, that the Hon'ble Supreme Court in the case of Totga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be the following, namely: (a) in the case of a co-operative society engaged in (i) carrying on the business of banking or providing credit facilities to its members, or (ii) to (vii)** ** ** 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 importance. The Apex Court had an occasion to consider the meaning of the word 'attributable' as supposed to derive from its use in various other provisions of the statute in the case of Cambay Electric Supply Industrial Co. Ltd. v. CIT, Gujarat-II reported in ITR Vol. 113 (1978) Page 842 at Page 93 as under: As regards the aspect emerging 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iety, 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 was a liability and it was shown in the balance sheet on the liability side. Therefore, to that extent, such interest income cannot be said to be attributable either to the activity mentioned in section 80P(2)(a)(i) of the Act or under section 80P(2)(a)(iii) of the Act. Therefore, in the facts of the said case, the Apex Court held the Assessing Officer was right in taxing the interest income indicated above under section 56 of the Act. Further they made it clear that they are confining the said judgment to the facts of that case. Therefore, it is clear, Supreme Court was not laying down any law. 10. In the instant case, the amount which was invested in banks to earn interest was not an amount due to any members. It was not the liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly following the same, we hold that the interest income received on amounts deposited by the assessee society in commercial / nationalised banks shall be eligible for deduction u/s 80P(2)(a)(i) of the Act. Consequently, ground pertaining to impugned controversy is decided in favour of the assessee. 10. Another issue raised by the assess in ITA 285/RPR/2023 is regarding disallowance made by in the AY 2017-18 on account of delayed payment of PF- ESI. On this issue Ld. AR of the assessee has submitted that all the payments of EPF were made in time considering the extended grace period of 5 days available to the assessee. Such facts were not considered by the Ld. AO as well as Ld. CIT(A), thus no disallowance on this count is called for. 11. Per contra, Ld. Sr DR has vehemently supported orders of the revenue authorities. 12. After going through the facts and on a thoughtful consideration of submissions and explanations, it is observed that the aforesaid issues has been dealt with coordinate bench of the ITAT, Raipur in ITA No.78/RPR/2023 in the case of Dilip Construction Company Vs. DCIT, 1(1), Bhilai (CG) dated 01.06.2023, wherein regarding delay and grace period it has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uming applicability of Section 43B, the requirement of law is deemed to have been complied. Furthermore, the payment having been made within grace period, the same was held to have been made within the period prescribed by law. On this ground also the order of CIT(A) was upheld by the Tribunal. The order of the CIT(A) noted that the due date of the amount was 21 st September, 2008 and the actual date of payment was 29th September, 2008. The CIT(A) also had found that the addition made by the Assessing Officer was not justified and the same was deleted. The only ground on which the Assessing Officer sought to make addition was apparently default in payment before the due date and the amount of Rs. 9,770/- was required to be treated as income of the assessee in accordance with Section 2(24)(x), however, it was admittedly deposited in the ESIC account before expiry of the grace period which was not considered by the Assessing Officer. 8. xxxxxxxxx 9. xxxxxxxxx 10. xxxxxxxx 11. In our view the decision of the Tribunal in upholding the order of the CIT(A) in the case at hand cannot be faulted. The assessee was found to have deposited the amount within grace peri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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