The West Bengal State Cooperative Bank Ltd., Kolkata V. ACIT, Circle - 56, Kolkata, Kolkata

CO 36/KOL/2011

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2355 (ITAT-KOLKATA)
• Duration Of Justice: 5 year(s) 1 month(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 03-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 24-05-2016
• Assessment Year: 1996-1997
• Appeal Filed On: 22-06-2011
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Assessee Lawyers: N C MONDAL
• Keywords: Business income; Rule of consistency; Reassessment proceedings
• Section: 56

Judgement Text

ITA NOS.737-742/K/2011& CO.36-40/K/2011-THE W.B.STA TE COPT.BANK LTD. A.Y.1996-97 TO 2001-02 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & DR.ARJUN LAL SAINI, AM] I.T.ANOS.737-742/KOL/2011 ASSESSMENT YEARS : 1996-97 TO 2001-02 A.C.I.T., CIRCLE-56, -VS.- THE WEST BENGA L STATE CO-OPERATIVE KOLKATA BANK LTD.KOLKATA [PAN : AAAAT 7072 N] (APPELLANT) (RESPONDENT) C.O.NOS.36-40/KOL/2011 (A/O I.T.A NOS. 737-741/KOL/2011 ) ASSESSMENT YEARS : 1996- 97 TO 2000-2001 THE WEST BENGAL STATE CO-OPERATIVE -VS.- A. C.I.T., CIRCLE-56, BANK LTD., KOLKATA KOLKATA [PAN : AAAAT 7072 N] (APPELLANT) (RESPONDENT) FOR THE DEPARTMENT : SHRI G.MALLIKARJUNA, CIT( DR) FOR THE ASSESSEE : SHRI N.C.MONDAL, CA DATE OF HEARING : 27.07.2016. DATE OF PRONOUNCEMENT : 03.08.2016. ORDER PER BENCH ITA NO.737/KOL/2011 IS AN APPEAL BY THE REVENUE AGA INST THE ORDER DATED 10.3.2011 OF CIT(A)-XX, KOLKATA, RELATING TO AY 199 6-97. ITA NO.738 TO 742/KOL/ 2011 ARE APPEALS BY THE REVENUE AGAINST 5 DIFFERENT ORDERS ALL DATED 11.3.2011 OF CIT(A)-XX, KOLKATA, RELATING TO AY 1997-98 TO 2001- 2002. THE ASSESSEE HAS FILED C.O.NO.36 TO 40/KOL/2011 CHALLENGING THE CORRECTNES S OF THE ORDER OF CIT(A)-XX, KOLKATA, FOR AY 1996-97 TO 2000-01, IN SO FAR AS TH E SAID ORDER REJECTING THE CLAIM OF THE ASSESSEE THAT INITIATION OF REASSESSMENT PROCEE DINGS U/S.147 OF THE INCOME TAX ACT, 1961 (ACT), BY THE AO FOR THE AFORESAID ASSESS MENT YEARS WAS INVALID. SINCE COMMON ISSUES ARE INVOLVED IN ALL THESE APPEALS, TH EY WERE HEARD TOGETHER AND WE DEEM IT CONVENIENT TO PASS A COMMON ORDER. ITA NOS.737-742/K/2011& CO.36-40/K/2011-THE W.B.STA TE COPT.BANK LTD. A.Y.1996-97 TO 2001-02 2 2. THE ONLY COMMON ISSUE INVOLVED IN THE APPEAL BY THE REVENUE IS AS TO WHETHER THE CIT(A) WAS JUSTIFIED IN ALLOWING DEDUCTION U/S.80P( 2)(A)(I) OF THE ACT ON INTEREST INCOME EARNED FROM TRANSACTIONS WITH NON-MEMBERS AN D NOMINAL MEMBERS AND INTEREST INCOME EARNED FROM NON-SLR (STATUTORY LIQU IDITY RATIO) INVESTMENTS, I.E., INVESTMENTS MADE NOT OWING TO ANY COMPULSION OF RES ERVE BANK OF INDIA REGULATIONS TO MAINTAIN STATUTORY LIQUIDITY RATIO (SLR). THE R ELEVANT PROVISIONS OF SEC.80P(2)(A)(I) OF THE ACT READS THUS: DEDUCTION IN RESPECT OF INCOME OF CO-OPERATIVE SOC IETIES. 80P. (1) WHERE, IN THE CASE OF AN ASSESSEE BEING A CO-O PERATIVE SOCIETY, THE GROSS TOTAL INCOME INCLUDES ANY INCOME REFERRED TO IN SUB-SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE WITH AND SUBJECT T O 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 B E 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 ) A COTTAGE INDUSTRY, OR ( III ) THE MARKETING OF AGRICULTURAL PRODUCE GROWN BY I TS MEMBERS, OR ( IV ) THE PURCHASE OF AGRICULTURAL IMPLEMENTS, SEEDS, LIVESTOCK OR OTHER ARTICLES INTENDED FOR AGRICULTURE FOR THE PURPOSE O F SUPPLYING THEM TO ITS MEMBERS, OR ( V ) THE PROCESSING, WITHOUT THE AID OF POWER, OF THE AGRICULTURAL PRODUCE OF ITS MEMBERS, OR ( VI ) THE COLLECTIVE DISPOSAL OF THE LABOUR OF ITS MEM BERS, OR ( VII ) FISHING OR ALLIED ACTIVITIES, THAT IS TO SAY, THE CATCHING, CURING, PROCESSING, PRESERVING, STORING OR MARKETING OF FIS H OR THE PURCHASE OF MATERIALS AND EQUIPMENT IN CONNECTION THEREWITH FOR THE PURPOSE OF SUPPLYING THEM TO ITS MEMBERS, THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUS INESS ATTRIBUTABLE TO ANY ONE OR MORE OF SUCH ACTIVITIES : 3. THE AO FELT THAT DEDUCTION U/S 80P(2)(A)(I) SHO ULD BE RESTRICTED TO INCOME ARISING FROM TRANSACTIONS WITH MEMBERS ONLY, AND, THAT INCO ME ARISING FROM TRANSACTIONS WITH NON-MEMBERS AND NOMINAL MEMBERS IS NOT ELIGIBLE FOR SUCH DEDUCTION. ACCORDING TO ITA NOS.737-742/K/2011& CO.36-40/K/2011-THE W.B.STA TE COPT.BANK LTD. A.Y.1996-97 TO 2001-02 3 THE AO, NOMINAL MEMBERS CANNOT HOLD SHARES OR BECOM E DIRECTOR, AND ALSO, CANNOT ATTEND ANNUAL GENERAL MEETING; AND SO, THEY CANNOT BE REGARDED AT PAR WITH THE MEMBERS FOR GRANTING DEDUCTION U/S 80P. THE AO NOTE D THAT THE VERY PURPOSE BEHIND INTRODUCTION OF SECTION 80P WAS PROMOTION OF THE CO -OPERATIVE MOVEMENT. THE AO ESTIMATED THE INTEREST INCOME FROM TRANSACTIONS WIT H NON-MEMBERS AND NOMINAL MEMBERS ON CERTAIN BASIS, SINCE THE BIFURCATION OF INTEREST INCOME AS BETWEEN MEMBERS AND NON-MEMBERS WAS NOT AVAILABLE BEFORE TH E AO AND HELD THAT IT WAS NOT ELIGIBLE FOR DEDUCTION U/S 80P. THE AO FURTHER HELD THAT INCOME DERIVED FROM INVESTMENT OF BANKING RESERVE ALONE IS BANKING BUSI NESS; AND, THAT INVESTMENT IN BONDS OUT OF BUILDING AND GENERAL FUND CANNOT BE CO NSIDERED AS BANKING BUSINESS ELIGIBLE FOR DEDUCTION U/S 80P. BY APPLYING THE RAT E OF 8 % ON SUCH INVESTMENT IN BONDS, THE AO ESTIMATED THE INTEREST INCOME FROM NO N-SLR INVESTMENT AND HELD THAT IT WAS NOT ELIGIBLE FOR DEDUCTION U/S 80P. 4. AGGRIEVED BY THE ORDERS OF AO, THE ASSESSEE PRE FERRED APPEAL BEFORE CIT(A). BEFORE CIT(A) IT WAS SUBMITTED THAT IN ITA NOS. 28 ,29, & 30/KOL/2008, THE HONBLE ITAT D BENCH, KOLKATA BY ORDER DT. 29.02.2008 FOR A.YS.2002-03 TO 2004-05 THE TRIBUNAL HELD THAT SIMILAR INTEREST INCOME DISPUTED BY THE AO AS NOT ELIGIBLE FOR DEDUCTION U/S 80P(2) (A)(I) OF THE ACT, WAS ELIGIBL E FOR SUCH DEDUCTION. THE FOLLOWING WERE THE RELEVANT OBSERVATIONS OF THE ITAT IN THE A FORESAID ORDER: 9. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE F IND FORCE IN THE COUNTER ARGUMENTS OF THE LD. A.R. FACTUALLY AS WELL AS LEGALLY. THE CASE LAWS CITED BY HIM ARE ANALYSED HEREUNDER ;- MEHSANA DISTRICT CENTRAL CO-OPT. BANK LTD. VS. ITO [2001) 251 ITR 522 (SC) 'HELD, (I) THAT THE ASSESSEE WAS ENTITLED TO DEDUCT ION U/S. 8P(2)(A)(I) OF THE INCOME-TAX ACT, 1961, IN RESPECT OF THE INTEREST EARNED FROM F UNDS UTILISED FOR THE STATUTORY RESERVES. (II) THAT PROVISION OF SAFE DEPOSIT VAULTS WAS PART OF THE ORDINARY BANKING BUSINESS OF A BANK AS SHOWN BY SECTION 6(1)(A) OF THE BANKING REG ULATION ACT, 1949, AND, THEREFORE, INCOME DERIVED BY THE ASSESSEE FROM THE HIRING OUT OF SAFE DEPOSIT VAULTS WAS INCOME FROM THE BUSINESS OF BANKING AND DEDUCTIBLE U/S. 80 P(2)(A)(I).' 'HELD ALSO, THAT THE QUESTION WHETHER INCOME DERIVE D BY THE ASSESSEE CO-OPERATIVE BANK FROM THE INVESTMENT OF ITS' VOLUNTARY RESERVES OTHE R THAN STATUTORY RESERVES IS EXEMPT U/S. ITA NOS.737-742/K/2011& CO.36-40/K/2011-THE W.B.STA TE COPT.BANK LTD. A.Y.1996-97 TO 2001-02 4 80P(2)(A)(I) DEPENDED UPON WHETHER THE VOLUNTARY RE SERVES. WERE UTILISED IN THE COURSE OF ITS ORDINARY BANKING BUSINESS.' CIT VS. BARODA PEOPLES CO-OPT. BANK LTD. [2006] 280 ITR 282 (GUJ.) 'THE ASSESSEE A CO-OPERATIVE BANK EARNED INTEREST F ROM INVESTMENTS IN (I) IDBI BONDS; (II) SBI BONDS; (III) SARDAR SAROVAR NARMADA BONDS; AND (IV) KISAN VIKAS PATRA. THE ASSESSING OFFICER TREATED ALL THE AFORESAID INVESTM ENTS AS . 'FIXED CAPITAL' AND HELD THAT THE INVESTMENTS WERE NOT .AVAILABLE FOR NOR-MAL BAN KING BUSINESS. THEREFORE THE ENTIRE INCOME WAS TAXABLE. THE SPECIAL BENCH OF THE TRIBUN AL HELD THAT THE INCOME WAS ENTITLED TO SPECIAL DEDUCTION U/S. 80P. ON APPEAL T O THE HIGH COURT ; HELD, DISMISSING THE APPEAL, THAT THE TRIBUNAL WAS RIGHT IN ALLOWING DEDUCTIONS U/S. 80P(2)(A)(I) OF ' THE ACT ON INTEREST INCOME AS BEI NG ATTRIBUTABLE TO THE BUSINESS OF BANKING.' MIILI CO-OP. URBAN BANK LTD. VS. ITO [2007] 291 ITR (AT) 163 (HYD.) 'HELD, THAT TO BE ELIGIBLE FOR EXEMPTION U/S. 80P(2 )(A)(I), A CO-OPERATIVE BANK NEED NOT DEAL ONLY WITH ITS MEMBERS. EXEMPTION UNDER THE SEC TION HAS NOT BEEN GRANTED ON, THE PRINCIPLE OF MUTUALITY ALONE. AS SUCH, A SEPARATE E XEMPTION PROVISIONS IS NOT REQUIRED FOR RECEIPTS THAT SATISFY THE PRINCIPLE' OF MUTUALI TY. SUCH RECEIPTS ARE NOT INCOME AND ARE OUTSIDE THE SCOPE OF SECTION 4 OF THE ACT. THERE WA S NO REASON WHY THE CONJUNCTION 'OR' SHOULD BE READ AS 'AND'. EXEMPTION IS ALLOWED TO CO -OPERATIVE CREDIT SOCIETIES U/S. 80P(2)(A)(I). ADMITTEDLY, SUCH SOCIETIES DO NOT CAR RY ON BANKING BUSINESS. WHEN TWO EXPRESSIONS ARE SEGREGATED BY THE CONJUNCTION 'OR', EACH BECOMES A SEPARATE ENTITY BY ITSELF AND THE PRINCIPLE OF EJUSDEM GENERIS CANNOT BE APPLIED. HENCE IN ORDER TO BE ELIGIBLE TO CLAIM EXEMPTION U/S. 80P(2)(A)(I), A CO - OPERATIVE BANK NEED NOT CARRY ON THE BUSINESS OF BANKING ONLY WITH ITS MEMBERS. INCOME A TTRIBUTABLE TO BANKING ACTIVITIES CARRIED ON WITH NON-MEMBERS WILL ALSO BE ENTITLED T O SPECIAL DEDUCTION UNDER THIS SECTION.' AS BOTH FACTUALLY AS WELL AS LEGALLY THE COUNTER AR GUMENTS OF THE LD. A.R. ARE APPEARED TO BE SOUND AND REASONABLE BACKED BY THE AFORESAID CASE LAWS, WE DO NOT HAVE ANY HESITATION TO REJECT THE GROUNDS OF THE APPEAL. ACC ORDINGLY, THE GROUNDS IN APPEALS FOR ALL THE THREE YEARS ARE HEREBY REJECTED. 5. THE CIT(A) AFTER CONSIDERING THE ABOVE SUBMISSI ONS OF THE ASSESSEE HELD THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S.80P(2)(A)(I) OF THE ACT ON THE INTEREST INCOME IN QUESTION. THE FOLLOWING WERE THE RELEVANT OBSERVAT IONS OF THE CIT(A): 13. I HAVE PERUSED THE ASSESSMENT ORDER AND THE RE LEVANT APPELLATE ORDERS. I HAVE ALSO CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND THE MATERIAL ON RECORD. I FIND THAT THE ISSUES RAISED IN THIS APPEAL REGARDING ALLOWABILITY OF DEDUCTION U/S 80P IN RESPECT OF INTEREST INCOME FROM NON-MEMBERS AND NOMINAL MEMBER S, AND, THAT ON NON-SLR INVESTMENT ARE COVERED BY THE ORDERS OF THE APPELLA TE AUTHORITIES IN APPELLANT'S OWN CASE FOR DIFFERENT ASSESSMENT YEARS. IN PARTICULAR, THE ISSUES ARE COVERED BY THE DECISION OF THE JURISDICTIONAL ITAT. IN VIEW OF THE FACTS OF THE CA SE, AND, THE PRINCIPLES LAID DOWN BY THE HON'BLE ITAT, IT IS HELD THAT THE INTEREST INCOME A RISING FROM TRANSACTIONS WITH NON- MEMBERS AND NOMINAL MEMBERS, AND, THAT FROM INVESTM ENT IN BONDS (I.E., INTEREST INCOME FROM NON-SLR INVESTMENT) IS ELIGIBLE FOR DED UCTION U/S 80P. ACCORDINGLY, THE ITA NOS.737-742/K/2011& CO.36-40/K/2011-THE W.B.STA TE COPT.BANK LTD. A.Y.1996-97 TO 2001-02 5 AO IS DIRECTED TO ALLOW APPELLANT'S CLAIM OF DEDUCT ION U/S 80P ON INTEREST INCOME FROM NON-MEMBERS AND NOMINAL MEMBERS, AND, THAT ON NON-S LR INVESTMENT. 14 - I HAVE CONSIDERED THE SUBMISSIONS REGARDING ES TIMATION OF INCOME MADE BY THE AO AND ALSO PERUSED THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE APPELLANT. THE AO HAS MENTIONED IN THE ASSESSMENT ORDER THAT THERE WAS NO N- COMPLIANCE ON THE PART OF THE APPELLANT. BUT, EVEN WHILE MAKING A BEST JUDGMENT A SSESSMENT U/S 144, THE AO DOES NOT POSSESS ABSOLUTE ARBITRARY AUTHORITY TO ASSESS ANY FIGURE HE LIKES. EVEN IF THE CIRCUMSTANCES OF THE CASE CALLED FOR RESORTING TO E STIMATING THE INCOME OF THE APPELLANT, SUCH ESTIMATION CANNOT BE A WILD ONE, BUT, SHOULD B E MADE HONESTLY AND NOT ARBITRARILY; MOREOVER, IT SHOULD HAVE A REASONABLE NEXUS WITH TH E MATERIAL AVAILABLE ON RECORD. WHILE ESTIMATING THE INCOME, THE AO MUST NOT ACT VI NDICTIVELY OR CAPRICIOUSLY OR WITH A VIEW TO PUNISH THE APPELLANT FOR NON-COMPLIANCE. FO R, THE AO HAS TO BE GUIDED BY THE RULES OF JUSTICE, EQUITY AND GOOD CONSCIENCE. THE A O HAS FOUND NO DEFECTS IN THE ACCOUNTS OF THE APPELLANT. THE AO HAS FAILED TO BRI NG ANY MATERIAL OR EVIDENCE ON RECORD TO JUSTIFY HIS ESTIMATION OF INCOME. THE ESTIMATION MADE BY THE AO IS ARBITRARY AND WITHOUT ANY BASIS; MOREOVER, IT IS NOT SUPPORTED BY ANY MATERIAL ON RECORD; AND, IS THEREFORE NOT SUSTAINABLE. IN 'VIEW OF THE ABOVE, T HE ESTIMATION MADE BY THE AO IN RESPECT OF INCOME FROM NON-MEMBERS AND NOMINAL MEMB ERS AND THAT ON NON-SLR INVESTMENT CANNOT BE UPHELD. HOWEVER, EVEN OTHERWIS E, SUCH INCOME FROM NON- MEMBERS AND NOMINAL MEMBERS AND THAT ON NON-SLR INV ESTMENT IS ELIGIBLE FOR DEDUCTION U/S 80P. THE GROUNDS RAISED BY THE APPELL ANT ARE LIABLE TO BE ALLOWED. 6. FOLLOWING THE AFORESAID ORDER WHICH WAS PASSED IN RELATION TO AY 1996-97, THE CIT(A) ALLOWED THE SIMILAR CLAIM OF THE ASSESSEE MA DE IN THE APPEALS FOR AY 1997-98 TO 2001-02. 7. AGGRIEVED BY THE ORDERS OF THE CIT(A), THE REVE NUE HAS PREFERRED APPEALS BEFORE THE TRIBUNAL. THE ASSESSEE CHALLENGED THE VALIDITY OF INITIATION OF REASSESSMENT PROCEEDINGS U/S.147 OF THE ACT FOR AY 1996-97 TO 20 00-01. THE SAME WAS REJECTED BY THE CIT(A). AGGRIEVED BY THE ORDER OF THE CIT(A) I N REJECTING THE CLAIM OF THE ASSESSEE, THE ASSESSEE HAS FILED CROSS-OBJECTIONS I N THE APPEALS FILED BY THE REVENUE FOR AY 1996-97 TO 2000-01. 8. THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN ALL ITS APPEALS ARE IDENTICAL. FOR THE SAKE OF READY REFERENCE, WE GIVE BELOW THE GROUNDS RAISED BY THE REVENUE IN THE APPEAL RELATING TO AY 1996-97. 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) WAS PERVERSE IN HOLDING THAT EVERY INCOME OF THE CO-OPERATIVE BANK IS ELIGIBLE FOR DEDUCTION U/S. 80P (2)(A)(I). ITA NOS.737-742/K/2011& CO.36-40/K/2011-THE W.B.STA TE COPT.BANK LTD. A.Y.1996-97 TO 2001-02 6 2. THAT THE LD. CIT(A) ERRED IN INTERPRETING SEC.80 P(2)(A)(I) TO MEAN THAT EVERY INCOME EARNED FROM NON-MEMBERS OF THE CO-OPERATIVE BANK IS ELIGIBLE FOR DEDUCTION U/S. 80P. 3. THAT THE LEARNED CITCA) WAS PERVERSE IN THE SENS E THAT THE PRINCIPLE OF MUTUALITY CANNOT BE EXTENDED TO NON-MEMBERS OF THE SOCIETY. 4. THAT THE LEARNED CIT(A) ERRED IN UNDERSTANDING T HE PROVISIONS OF MUTUALITY, AND EXTENDING IT TO THE GENERAL PUBLIC WHO ARE NOT MEMB ERS OF THE CO-OPERATIVE. WHILE NO ONE CAN MAKE PROFIT FROM ONESELF ON THE PRINCIPLE O F MUTUALITY, THE LEARNED CIT(A) FAILED TO APPRECIATE THE BASIC CONCEPT OF MUTUALITY, AND H ELD THAT THE ASSESSEE COULD MAKE PROFITS FROM NON-MEMBERS AND STILL CLAIM THE PROFIT S FROM SUCH ACTIVITY TO BE EXEMPT FROM TAX. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) FAILED TO APPRECIATE THE PLAIN MEANING OF THE WORDS IN SECTION 80P(2)(A) (I) IN THE SENSE THAT THE ASSESSEE DID NOT DERIVE ITS INCOME FROM EXTENDING BANKING OR CRE DIT FACILITIES TO ITS MEMBERS AND INSTEAD DERIVED INCOME ONLY FROM GENERAL PUBLIC THR OUGH COMMERCIAL BANKING ACTIVITIES , AND ERRED IN ALLOWING DEDUCTION U/S. 80P(2)(A)(I) . 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CITCA) HAS ERRED IN NOT TAKING COGNIZANCE OF THE FACT THAT THE ASSESSEE HAV ING BEEN CREATED UNDER THE WEST BENGAL CO-OPERATIVE SOCIETIES ACT, 1973 , HAS VIOLA TED THE AIMS AND OBJECTIVES OF THE ACT AND THE BYE-LAWS OF THE ASSESSEE CO-OPERATIVE S OCIETY BY DIVERTING ITS FUND FROM THE AREA CORE ACTIVITIES I.E. MUTUAL BENEFITS OF THE ME MBERS OF THE SOCIETY INVOLVED IN THE AMELIORATION OF THE DOWNTRODDEN PEOPLE OF THE SOCIE TY AND CANNOT BE GRANTED TAX BENEFITS U/S. 80P(2)(A)(I) MERELY ON THE PLEA THAT REGULATORY BODIES HAVE NOT ACTED AGAINST IT WHICH WOULD BE CONTRARY TO THE PRINCIPLE LAID DOWN IN BIHARI LAL JAISWAL & ORS 217 ITR 746 (SC) . 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CITCA) HAS ERRED IN NOT TAKING COGNIZANCE OF THE RECENT DECISION OF THE HON 'BLE SUPREME COURT ,IN THE CASE OF TOTGARS' CO-OPERATIVE SALE SOCIETY LTD-VS- INCOME T AX OFFICER, KARNATAKA, IN WHICH HON'BLE SUPREME COURT CLEARLY ACCEPTED THE DEPARTME NT VIEW THAT INCOME, WHICH IS ATTRIBUTABLE TO ANY OF THE SPECIFIED ACTIVITIES IN SECTION 80P(2) OF THE ACT, WOULD BE ELIGIBLE FOR DEDUCTION. INCOME ARISING FROM INVESTM ENT OF SURPLUS FUND OR ANY OTHER ACTIVITY WHICH DOES NOT COME UNDER THE CORE ACTIVIT Y OF THE SOCIETY IS NOT ELIGIBLE FOR SUCH DEDUCTION. 8. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT(A) HAS ERRED IN NOT CONSIDERING THE PRIM ISSUE THAT PUBLIC POLICY LAID DOWN BY THE PARLIAMENT OR LEGISLATURE CANNOT BE OVERLOOKED AND TAX BENEFITS BE GRANTED, D ESPITE OBJECTION OF THE REVENUE, ON THE GROUND THAT REGULATORY BODY HAS NOT TAKEN ACTIO N AGAINST THE ASSESSEE FOR ITS VIOLATION. 9. ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. C IT(A) HAS ERRED IN NOT CONSIDERING THE FACT THAT THE LEGISLATURE HAS NOT GIVEN DEDUCTI ON TO ALL BANKS BUT TO SUCH CO-OPERATIVE BANKS TO PROMOTE TARGET AREA AND GROUP FOR UP-LIFTM ENT AND IN SUCH SITUATION, ACTIVITIES OTHER THAN SUCH ACTIVITIES NOT BE GIVEN THE BENEFIT S OF DEDUCTION UNLESS THE INCOME IS IN CONFORMITY WITH THE AIMS AND OBJECTIVES OF THE WEST BENGAL CO-OPERATIVE SOCIETIES ACT , 1973 AND BYE-LAWS OF THE SOCIETY ITSELF. ITA NOS.737-742/K/2011& CO.36-40/K/2011-THE W.B.STA TE COPT.BANK LTD. A.Y.1996-97 TO 2001-02 7 10. THAT THE LEARNED CIT(A) ERRED IN ROUTINELY APPL YING THE DECISIONS IN THE CASES OF MEHSANA DISTRICT CENTRAL CO-OPERATIVE BANK LTD. VS ITO (2001) 251 ITR 522 (SC); CIT VS. BARODA PEOPLES CO-OPERATIVE BANK LIMITED [2006} 280 ITR 282 (GUJ.) AND MILLI CO- OPERATIVE URBAN BANK LTD. VS. ITO [2007] 291 IT R (AT) 163 (HYD.) TO THE FACTS OF THE CASE WHILE IGNORING THE RECENT DECISIONS OF THE HON'BLE SUPREME COURT ,IN THE CASE OF TOTGARS' CO-OPERATIVE SALE SOCIETY LTD-VS- INCOM E TAX OFFICER, KARNATAKA, [2010), 188 TAXMAN 282. 11. THAT THE LEARNED CIT(A) ERRED IN IGNORING THE D ECISIONS IN U.P. CO-OPERATIVE CANE UNION FEDERATION LTD. VS. CIT 237 ITR 574 (ALL.) AS WELL AS ASSAM CO-OPERATIVE APEX MARKETING SOCIETY LTD. VS. CIT 201 ITR 332 WHILE GR ANTING TAX EXEMPTION TO INCOME EARNED FROM NON-MEMBERS. 12. THAT THE LEARNED CIT(A) FAILED TO NOTICE THAT T HE ASSESSEE CO-OPERATIVE BANK IS FUNCTIONING ON PURELY COMMERCIAL BASIS AND ACCORDED TAX EXEMPTION TO THE CO-OPERATIVE BANK FUNCTIONING ON COMMERCIAL BASIS WHEREAS NO SUC H EXEMPTION IS AVAILABLE TO COMMERCIAL BANKS. 13. THAT THE LEARNED CIT(A) ERRED IN FAILING TO UND ERSTAND THE IMPORT OF LAW THAT INCOME EARNED FROM VOLUNTARY AND WILFUL DIVERSION OF FUNDS (BEYOND MEETING THE CRR AND SLR AND RESERVE REQUIREMENTS) IS NOT INCOME EARNED TO F URTHER ITS STATEMENT OF OBJECTS OF CREATION AS A CO-OPERATIVE AND SUCH DIVERTED FUNDS TO EARN INCOME ARE NOT IN CONSONANCE WITH THE PUBLIC POLICY AND CANNOT BE ELI GIBLE TO BE REWARDED WITH SUBSTANTIAL TAX BENEFITS, AND THE DECISIONS IN THE CASE OF MEHSANA DISTRICT CO-OPERATIVE BANK LIMITED VS ITO 251 ITR 572 AND GUJARAT STATE C O-OPERATIVE BANK LIMITED VS CIT OUGHT TO HAVE BEEN BETTER APPRECIATED BEFORE GRANTI NG TOTAL TAX EXEMPTION TO ENTIRE GLOBAL INCOME OF THE CO- OPERATIVE FROM EVERY SOURC E. 9. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED DR , WHO REITERATED THE STAND OF THE REVENUE AS REFLECTED IN THE GROUNDS OF APPEAL FILED BY THE REVENUE. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE TRIBUNAL RENDERED BY THE TRIBUNAL ON IDENTICAL ISSUE IN THE CASE OF THE ASSE SSEE FOR AY 2002-03 TO 2004-05. 10. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. AS WE HAVE ALREADY SEEN, SIMILAR ISSUE RAISED BY THE REVENUE I N ITS APPEALS HAD BEEN CONSIDERED AND DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2002-03 TO 2004-05. WE DO NOT SEE ANY GROUND TO TAKE VIEW DIFFERENT FROM T HE VIEW TAKEN BY THE TRIBUNAL. 11. SINCE THE REVENUE HAS LAID MUCH EMPHASIS ON TH E DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TOTAGARS CO-OPERATIVE SOCIEITY 322 ITR 283 (SC), WE DEEM IT NECESSARY TO DEAL WITH THOSE CONTENTIONS AL SO. THIS TRIBUNAL HAD AN OCCASION TO DEAL WITH SIMILAR OBJECTIONS IN THE CASE OF ANOTHER CO-OPERATIVE SOCIETY SIMILAR TO THE ASSESSEE IN THE PRESENT APPEALS. IN ITA NO.07/KOL/ 2014 FOR ASSESSMENT YEAR : 2009- ITA NOS.737-742/K/2011& CO.36-40/K/2011-THE W.B.STA TE COPT.BANK LTD. A.Y.1996-97 TO 2001-02 8 10 IN THE CASE OF RUPNARAYANPUR SAMABAY KRISHIUNNAY AN SAMITY LTD. VS.A.C.I.T., CIRCLE-1, HOOGHLY, THE ASSESSEE WAS AN IS AN AGRICU LTURAL CREDIT SOCIETY DULY REGISTERED UNDER THE WEST BENGAL COOPERATIVE SOCIETIES ACT, 19 83. IN THE COURSE OF PROCEEDINGS BEFORE CIT(A), THE CIT(A) NOTICED THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80P(2(A) (I) OF THE ACT ON INTEREST INCOME ARISING FROM SAVINGS BANK A/C. AND RECURRING DEPOSIT(RD) ACCOUNT WHICH WAS MADE BY THE ASSESSEE FROM AND OUT OF THE RD ACCOUNT MADE BY ITS MEMBERS WITH THE ASSESSEE. THE REVENUE TOOK THE VIEW THAT AS PER THE DECISION RENDERED BY THE HONBLE SUPREME COURT IN THE CASE OF TOTGARS CO- OPERATIVE SALE SOCIETY LTD VS ITO 322 ITR 283 (SC) INTEREST EARNED ON DEPOSITS HAD TO BE REGARDED AS INCOME UNDER THE HEAD INCOME FRO M OTHER SOURCES AND THEREFORE DEDUCTION U/S 80P(2)(A)(I) OF THE ACT OUGHT NOT TO HAVE ALLOWED TO THE ASSESSEE AS ONLY THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUS INESS ATTRIBUTABLE TO CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS IS ALLOWED AS DEDUCTION UNDER THE SAID PROVISION. ON FURTHER APPE AL BY THE ASSESSEE BEFORE THE TRIBUNAL, THE TRIBUNAL HELD AS FOLLOWS: 6. AT THE TIME OF HEARING OF THIS APPEAL THE LD. C OUNSEL FOR THE ASSESSEE FILED BEFORE ME A COPY OF THE DECISION RENDERED BY ITAT, KOLKATA BENCH IN THE CASE OF S.E., S.E.C. & E.CO. RAILWAYS EMPLOYEESCO- OPERATIVE CREDIT SOCIETY LTD. VS ACIT IN ITA NO.1693/KOL/2012 ORDER DATED 30 .10.2014. IN THE AFORESAID CASE THE IDENTICAL QUESTION AS TO WHETHER INTEREST INCOME HAD TO BE REGARDED AS INCOME FROM BUSINESS OR INCOME FROM OTHER SOURCES H AD COME UP FOR CONSIDERATION. THE ASSESSEE IN THE AFORESAID DECISI ON ACCEPTED LOANS AND DEPOSITS FROM ITS MEMBERS AND UTILIZED THE SAME TOWARDS PROV IDING LOANS AND CREDIT FACILITIES TO ITS MEMBERS. HOWEVER EXCESS FUNDS WE RE UTILIZED IN MAKING DEPOSITS IN BANKS AND INVESTMENTS. THE TRIBUNAL RELYING UPO N THE DECISION RENDERED BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS SOUTH EASTERN RAILWAY EMPLOYEES CO-OPERATIVE CREDIT SOCIETY IN G.A.NO.183 8 OF 2010 DATED 22.07.2010 CAME TO THE CONCLUSION THAT INTEREST INC OME HAS TO BE REGARDED AS INCOME FROM BUSINESS OF BANKING AND IS ENTITLED FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. THE TRIBUNAL HAD ALSO DISTINGUISHED THE DE CISION RENDERED BY THE HONBLE SUPREME COURT IN THE CASE OF TOTGARS CO-O PERATIVE SALE SOCIETY LTD VS ITO (SUPRA). THE FOLLOWING OBSERVATIONS OF THE H ONBLE TRIBUNAL READ AS UNDER :- 7.1. WE FURTHER FIND THAT THE ISSUE INVOLVED IS CO VERED IN FAVOUR OF THE ASSESEE BY CATENA OF DECISIONS OF THE TRIBUNAL IN A SSESSEES OWN CASE. THESE DECISIONS ARE ALSO AFFIRMED BY THE HONBLE JURISDIC TIONAL HIGH COURT IN ITS ORDER FOR A.YR.2005-06. IN THIS ORDER THE HONBLE J URISDICTIONAL HIGH COURT HAS CONSIDERED ALL THE RELEVANT ORDERS AND HAS DECI DED THE ISSUE IN FAVOUR OF ITA NOS.737-742/K/2011& CO.36-40/K/2011-THE W.B.STA TE COPT.BANK LTD. A.Y.1996-97 TO 2001-02 9 THE ASSESSEE. WE MAY GAINFULLY REPRODUCE THE OPERAT IVE ORDER OF THE JURISDICTIONAL HIGH COURT WHICH IS AS UNDER :- WE HAVE GONE THROUGH THE IMPUGNED JUDGMENT AND ORD ER OF THE LEARNED TRIBUNAL. IT APPEARS THAT THE POINT INVOLVE D .IS WHETHER INTEREST EARNED OUT OF THE INVESTMENT EARNED BY THE ASSESSEE COOPERATIVE CAN BE TREATED TO BE THE INCOME ARISING OUT OF BUSINESS ACTIVITY OR FROM OTHER SOURCES IN ORDER TO APPLY TH E PROVISION OF SECTION 80P(2)(A)(I) OF THE I.T.ACT. IT IS AN UNDIS PUTED FACTUAL POSITION THAT SIMILAR ISSUE AROSE BEFORE THE COMMIS SIONER OF INCOME TAX (APPEAL) IN RELATION TO THE ASSESSMENT Y EAR 1998-99 TO 2002-2003 AS ALSO FOR THE ASSESSMENT YEAR 1995-96 A ND 1996-97. THEN AGAIN IN RELATION TO THE ASSESSMENT YEARS 2003 -04 AND 2004- 05 A SIMILAR POINT AROSE. THE LEARNED TRIBUNAL IN R ELATION TO THE ASSESSMENT YEARS 1998-99 TO 2002-2003 BY ORDER DATE D 10.11.2006 IN ITA NOS. 840 TO 844/KOL/2006 AND AGAIN BY ORDER DATED 29.12.2006 IN RELATION TO ASSESSMENT YEARS 2003-04 AND 2004-05 HAS DELETED THE DISALLOWANCE MADE IN THOSE ASSESSME NT YEARS AND IT WAS HELD THAT THE INTEREST EARNED BY THE ASSESSEE C OOPERATIVE SOCIETY FROM ITS SHORT TERM AND FIXED DEPOSITS WITH THE BANS AND OTHER INSTITUTIONS WERE DISALLOWED ON THE GROUND TH AT THIS INCOME WAS NOT BUSINESS PROFIT OF THE ASSESSEE SOCIETY BUT WAS INCOME FROM OTHER SOURCES. THE LD.TRIBUNAL HAS ALSO HELD THAT I NCOME FROM INVESTMENT IN BANKS AND OTHER FINANCIAL INSTITUTION S IS THE BUSINESS INCOME OF THE ASSESSEE SOCIETY AND IT IS ELIGIBLE T O GET DEDUCTION UNDER SECTION 80P(2)(A)(I). THE TRIBUNAL HAS OVERRU LED THE DECISIONS RENDERED AGAINST THE ASSESSEE IN RELATION TO ASSESSMENT YEARS 1995-96 AND 1996-97 ON THE SAME ISSUE IN RELA TION TO SUBSEQUENT YEARS. IT WAS FOUND BY THE TRIBUNAL WHILE AFFI RMING THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL) THAT THERE IS N O CHANGE IN THE FACTS AND CIRCUMSTANCES OF THIS CASE AND IT WAS HELD THAT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 8 0P(2)(A)(I) ON INTEREST ON INVESTMENT AMOUNTING TO RS.1,18,07,645/ - IN THIS ASSESSMENT YEAR ALSO. SINCE THE TRIBUNAL FOUND THAT THIS DECISION OF THE TRIBUNAL WAS FOLLOWED BY CIT(A) THERE IS NO REA SON TO TAKE A DIFFERENT VIEW. UNDER THESE CIRCUMSTANCES, WE FEEL THA T WHEN THE COMMISSIONER OF INCOME TAX (A) AS WELL AS THE TRIBU NAL HAS FOLLOWED THE EARLIER UNCHALLENGED DECISION NO QUEST ION OF LAW IS INVOLVED IN THIS MATTER. NOTHING HAS BEEN PRODUCED BEFORE US TO SHOW SUBSEQUENT DECISION OF THE TRIBUNAL IN RELATIO N TO THE ASSESSMENT YEARS 1998-99 TO 2002-03 AND 2003-04 HAV E BEEN CHALLENGED BY ANY OF THE PARTIES BEFORE THIS COURT. IT IS SUBMITTED BY MR.BHOWMICK THAT THE RE HAS BEEN CHALLENGE OF THE DECISION IN RELATION TO ASSESSMENT YEARS 1995-96, ITA NOS.737-742/K/2011& CO.36-40/K/2011-THE W.B.STA TE COPT.BANK LTD. A.Y.1996-97 TO 2001-02 10 1996-97 AND THE SAME IS PENDING BEFORE THIS COURT W E THINK THAT CHALLENGE OF THE ASSESSEE HAS NOW BECOME REDUNDANT AS THE EARLIER VIEW TAKEN IN BOTH THE ASSESSMENT YEARS HAVE BEEN R EVERSED BY THE TRIBUNAL BY ITS SUBSEQUENT DECISION. HENCE, THE PEN DENCY OF THAT EARLIER MATTER IS OF NO CONSEQUENCE IN THIS MATTER. HAD THERE BEEN A CHALLENGE OF THE DECISION OF THE TRIBUNAL IN RELATI ON TO THE ASSESSMENT YEARS 1998-99 TO 2002-03 AND ALSO 2003-0 4 TO 2004-05 THE MATTER WOULD HAVE BEEN DIFFERENT. THE REVENUE D ID NOT TAKE ANY STEP WHATSOEVER. THEREFORE, WE PRESUME THE REVENUE HAS ACCEPTED THE SUBSEQUENT VIEW OF THE TRIBUNAL AND THE SAME NO W HOLD THE FIELD RIGHT NOW. 7.2. CONSIDERING THE ABOVE WE FIND THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONB LE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE. IN THIS REGARD WE WOU LD LIKE TO PLACE RELIANCE UPON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF CIT VS EXCEL INDUSTRIES 358 ITR 295 WHEREIN THE PRINCIPLE OF CO NSISTENCY HAS BEEN REITERATED. HENCE WHEN THE ISSUE HAS BEEN DECIDED B Y THE JURISDICTIONAL HIGH COURT NO CONVINCING REASON HAS BEEN POINTED TO TAKE A DIFFERENT VIEW, ANY DEVIATION IS NOT PERMITTED. 7.3. NOW WE COME TO THE CASE LAWS RELIED UPON BY TH E LD. CIT(A). AS REGARDS THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF TOTGARS CO-OPERATIVE SALE SOCIETY LTD. (SUPRA) WE FIND THAT THE SAID DE CISION IS NOT APPLICABLE IN THE FACTS OF THE CASE. WE FIND THAT THE HONBLE APE X COURT IN THE SAID DECISION IN PARA 11 HAS ITSELF MENTIONED THAT WE A RE CONFINING THE JUDGMENT TO THE FACTS OF THE PRESENT CASE.. THE FA CTS OF THE CASE WERE THAT ASSESSEES BUSINESS WAS TO PROVIDE CREDIT FACILITIE S TO ITS MEMBERS AND TO MARKET THEIR AGRICULTURAL PRODUCE. IN MANY CASES AS SESSEE RETAINED SALE PROCEEDS OF MEMBERS WHOSE PRODUCE WAS MARKETED BY I T AND SINCE FUNDS CREATED BY SUCH RETENTION WERE NOT REQUIRED IMMEDIA TELY FOR BUSINESS PURPOSES, IT INVESTED SAME IN SPECIFIED SECURITIES AND EARNED INTEREST INCOME. IN THESE CIRCUMSTANCES THE HONBLE APEX COU RT HAD HELD THAT INTEREST EARNED WOULD COME IN CATEGORY OF INCOME F ROM OTHER SOURCES TAXABLE U/S 56 OF THE ACT AND WOULD NOT QUALIFY FOR DEDUCTION AS BUSINESS INCOME U/S 80P(2)(A)(I). FROM THE ABOVE IT IS AMPLY EVIDENT IN THE PRESENT CASE THE ASSESSEE HAS NOT RETAINED ANY AMOUNT DUE T O ITS MEMBERS AND INSTEAD OF PAYING THE SAME HAD INVESTED THE SAME AN D EARNED INTEREST. THUS THIS CASE LAW IS NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. 7.4. AS REGARDS THE DECISION OF HONBLE PATNA HIGH COURT IN THE CASE OF BIHAR RAJYA SAHKARI BHOOMI BIKASH CO-OP.BANK LTD. ( SUPRA) THE SAME IS ALSO NOT APPLICABLE TO THE FACTS OF THE PRESENT CAS E. IN THAT CASE THE QUESTION WAS THE TREATMENT OF INTEREST EARNED ON PROVIDENT F UND AND RENTAL INCOME AS ATTRIBUTABLE TO BANKING BUSINESS AND THIS QUALIFYI NG FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. ITA NOS.737-742/K/2011& CO.36-40/K/2011-THE W.B.STA TE COPT.BANK LTD. A.Y.1996-97 TO 2001-02 11 7.5. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENT WE HOLD THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL AND THE JURISDICTIONAL HIGH COURT IN A SSESSEES OWN CASE. THE DECISION RELIED UPON BY THE LD. CIT(A) ARE NOT APPL ICABLE IN THE FACTS OF THE CASE. THE PRINCIPLE OF CONSISTENCY AS CONVEYED BY T HE HONBLE APEX COURT MANDATES THAT THE REVENUE DOES NOT TAKE A DIFFERENT STAND. ACCORDINGLY WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND D ECIDE THE ISSUE IN FAOVUR OF THE ASSESSEE. 6.1. RESPECTFULLY FOLLOWING THE ABOVE DECISION AND TAKING DOWN THE FACT THAT INTEREST INCOME IN THE PRESENT CASE IS IDENTICAL TO THE INTEREST INCOME RECEIVED BY THE ASSESSEE IN THE DECISION REFERRED TO ABOVE. I H OLD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80P(2)(A)(I) OF THE ACT IN RESPECT OF THE INTEREST INCOME. 12. THE HONBLE KARNATAKA HIGH COURT HAD ALSO AN O CCASION TO EXAMINE THE SCOPE OF SEC.80P(2)(A)(I) OF THE ACT, IN THE LIGHT OF THE DE CISION OF THE HONBLE SUPREME COURT IN THE CASE OF TOTAGAR CO-OPERATIVE SOCIETY (SUPRA) IN THE CASE OF GUTTIGEDARAR CREDIT CO-OPERATIVE SOCIETY LTD. VS. ITO WARD 2(2), MYSORE 377 ITR 464 (KARNATAKA). THE ASSESSEE IN THAT CASE WHICH WAS A CO-OPERATIVE SOCI ETY CLAIMED DEDUCTION IN RESPECT OF INTEREST INCOME IT EARNED ON DEPOSIT OF SURPLUS FUNDS AS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I) OF THE ACT. THE APPELLATE AUTHORI TIES UNDER THE ACT HELD THAT ASSESSEE IS LIABLE TO INCOME TAX IN VIEW OF THE JUDGMENT OF THE APEX COURT IN THE CASE OF TOTGARS CO-OPERATIVE SALE SOCIETY LTD. V. ITO 377 ITR 283 (KARN.). ON APPEAL BY THE ASSESSEE, THE HONBLE KARNATAKA HIGH COURT HELD : 9. THE WORD 'ATTRIBUTABLE' USED IN THE SAID SECTION I S 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 113 ITR 84 (SC) (AT PAGE 93) AS UNDER: 'AS REGARDS THE ASPECT EMERGING FROM THE EXPRESSION 'ATTRIBUTABLE TO' OCCURRING IN THE PHRASE 'PROFITS AND GAINS ATTRIBUT ABLE TO THE BUSINESS OF' THE SPECIFIED INDUSTRY (HERE GENERATION AND DIS TRIBUTION OF ELECTRICITY) ON WHICH THE LEARNED SOLICITOR-GENERAL RELIED, IT WILL BE PERTINENT TO OBSERVE THAT THE LEGISLATURE HAS DELIB ERATELY USED THE EXPRESSION 'ATTRIBUTABLE TO' AND NOT THE EXPRESSION 'DERIVED FROM'. IT CANNOT BE DISPUTED THAT THE EXPRESSION 'ATTRIBUTABL E TO' IS CERTAINLY WIDER IN IMPORT THAN THE EXPRESSION 'DERIVED FROM'. HAD THE EXPRESSION 'DERIVED FROM' BEEN USED, IT COULD HAVE WITH SOME F ORCE BEEN CONTENDED THAT A BALANCING CHARGE ARISING FROM THE SALE OF OLD ITA NOS.737-742/K/2011& CO.36-40/K/2011-THE W.B.STA TE COPT.BANK LTD. A.Y.1996-97 TO 2001-02 12 MACHINERY AND BUILDINGS CANNOT BE REGARDED AS PROFI TS AND GAINS DERIVED FROM THE CONDUCT OF THE BUSINESS OF GENERAT ION AND DISTRIBUTION OF ELECTRICITY. IN THIS CONNECTION, IT MAY BE POINT ED OUT THAT WHENEVER THE LEGISLATURE WANTED TO GIVE A RESTRICTED MEANING IN THE MANNER SUGGESTED BY THE LEARNED SOLICITOR- GENERAL, IT HAS USED THE EXPRESSION 'DERIVED FROM', AS, FOR INSTANCE, IN SECTION 80J. I N OUR VIEW, SINCE THE EXPRESSION OF WIDER IMPORT, NAMELY, 'ATTRIBUTABLE T O', HAS BEEN USED, THE LEGISLATURE INTENDED TO COVER RECEIPTS FROM SOU RCES OTHER THAN THE ACTUAL CONDUCT OF THE BUSINESS OF GENERATION AND DI STRIBUTION OF ELECTRICITY.' 10. THEREFORE, THE WORD 'ATTRIBUTABLE TO' IS CERTAINLY WIDER IN IMPORT THAN THE EXPRESSION 'DERIVED FROM'. WHENEVER THE LEGISLATURE WANTED TO GIVE A RESTRICTED MEANING, THEY HAVE USED THE EXPRESSION 'DERIVED FRO M'. THE EXPRESSION 'ATTRIBUTABLE TO' BEING OF WIDER IMPORT, THE SAID E XPRESSION IS USED BY THE LEGISLATURE WHENEVER THEY INTENDED TO GATHER RECEIP TS FROM SOURCES OTHER THAN THE ACTUAL CONDUCT OF THE BUSINESS. A CO-OPERATIVE SOCIETY WHICH IS CARRYING ON THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS, EARNS PROFITS AND GAINS OF BUSINESS BY PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE INTEREST INCOME SO DERIVED OR THE CAPITAL, IF NOT IMMEDIATEL Y REQUIRED TO BE LENT TO THE MEMBERS, THE SOCIETY CANNOT KEEP THE SAID AMOUNT ID LE. IF THEY DEPOSIT THIS AMOUNT IN BANK SO AS TO EARN INTEREST, THE SAID INT EREST 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 B USINESS FOR EARNING SUCH INTEREST INCOME. THE INCOME SO DERIVED IS THE AMOUN T OF PROFITS AND GAINS OF BUSINESS ATTRIBUTABLE TO THE ACTIVITY OF CARRYING O N 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 SE CTION 80P OF THE ACT. 11. IN THIS CONTEXT WHEN WE LOOK AT THE JUDGMENT OF TH E APEX COURT IN TOTGARS CO-OPERATIVE SALE SOCIETY'S CASE ( SUPRA ), ON WHICH RELIANCE IS PLACED, THE SUPREME COURT WAS DEALING WITH A CASE WHERE THE ASS ESSEE/CO-OPERATIVE 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 WH ICH 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-S OCIETY 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 ATTRIBUTA BLE EITHER TO THE ACTIVITY MENTIONED IN SECTION 80P(2)(A)(I) OF THE ACT OR UND ER SECTION 80P(2)(A)(III) OF THE ACT. THEREFORE IN THE FACTS OF THE SAID CASE, T HE 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 T HAT THEY ARE CONFINING THE SAID ITA NOS.737-742/K/2011& CO.36-40/K/2011-THE W.B.STA TE COPT.BANK LTD. A.Y.1996-97 TO 2001-02 13 JUDGMENT TO THE FACTS OF THAT CASE. THEREFORE IT IS CLEAR, SUPREME COURT WAS NOT LAYING DOWN ANY LAW. 12. 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 TH E LIABILITY. IT WAS NOT SHOWN AS LIABILITY IN THEIR ACCOUNT. IN FACT THIS A MOUNT WHICH IS IN THE NATURE OF PROFITS AND GAINS, WAS NOT IMMEDIATELY REQUIRED BY THE ASSESSEE FOR LENDING MONEY TO ITS MEMBERS, AS THERE WERE NO TAKERS. THER EFORE THEY HAD DEPOSITED THE MONEY IN A BANK SO AS TO EARN INTEREST. THE SAI D INTEREST INCOME IS ATTRIBUTABLE TO CARRYING ON THE BUSINESS OF BANKING AND THEREFORE IT IS LIABLE TO BE DEDUCTED IN TERMS OF SECTION 80P(1) OF THE ACT. IN FACT SIMILAR VIEW IS TAKEN BY THE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT V. ANDHRA PRADESH STATE CO-OPERATIVE BANK LTD. 336 ITR 516(AP) . 13. IN THAT VIEW OF THE MATTER, THE ORDER PASSED BY TH E APPELLATE AUTHORITIES DENYING THE BENEFIT OF DEDUCTION OF THE AFORESAID A MOUNT IS UNSUSTAINABLE IN LAW.. 13. IN VIEW OF THE AFORESAID JUDICIAL PRONOUNCEMEN TS, WE ARE OF THE VIEW THAT THE OBJECTIONS RAISED BY THE REVENUE IN THE GROUNDS OF APPEAL BEFORE US, CANNOT BE SUSTAINED. RESPECTFULLY FOLLOWING THE PRECEDENT AV AILABLE ON THE ISSUE, WE CONFIRM THE ORDERS OF THE CIT(A). 14. AS FAR AS THE CROSS-OBJECTIONS OF THE ASSESSEE ARE CONCERNED, SINCE WE HAVE UPHELD THE ORDER OF THE CIT(A) ON MERITS, WE DO NOT THINK IT NECESSARY TO DEAL WITH THE CHALLENGE TO THE VALIDITY OF INITIATION OF REASSESS MENT PROCEEDINGS U/S.147 OF THE ACT FOR AY 1996-97 TO 2000-01 RAISED BY THE ASSESSEE IN THE CROSS-OBJECTIONS FILED FOR THOSE YEARS. THE CROSS-OBJECTIONS ARE THEREFORE DI SMISSED AS NOT CALLING FOR ANY ADJUDICATION. 15. IN THE RESULT, THE APPEALS AS WELL AS THE CROS S-OBJECTIONS ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 03.08.2016. SD/- SD/- [DR.ARJUN LAL SAINI] [ N. V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 03.08.2016. [RG PS] ITA NOS.737-742/K/2011& CO.36-40/K/2011-THE W.B.STA TE COPT.BANK LTD. A.Y.1996-97 TO 2001-02 14 COPY OF THE ORDER FORWARDED TO: 1. THE WEST BENGAL STATE CO-OPERATIVE BANK LTD., 24 A, WATERLOO STREET, KOLKATA- 700069. 2. A.C.I.T., CIRCLE-56, KOLKATA. 3. CIT(A)-XX, KOLKATA. 4. CIT-XXI, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, ITAT, KOLKATA BENCHES