Income-tax Officer, Ward-1(2), Nashik V. M/s. Niphad Nagari Sahakari Pathsanstha Ltd,m, Nashik

ITA 1336/PUN/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4322 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 28-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K OJHA
• Keywords: Business income
• Section: 56; 28; 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1336/PN/2011 (ASSTT.YEAR : 2008-09) ITO WARD-1(4), NASHIK .. APPELLANT VS. NIPHAD NAGARI SAHAKARI PATSANSTHA LTD., UGAON ROAD, NIPHAD, NASHIK PAN NO.AAFFN 6079B .. RESPONDENT APPELLANT BY : SHRI K.K.OJHA RESPONDENT BY : SHRI NIKHIL PATHAK DATE OF HEARING : 10-06-2013 DATE OF PRONOUNCEMENT : 31-07-2013 ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 19- 08-2011 OF THE CIT(A)-I, NASHIK RELATING TO ASSESSM ENT YEAR 2008-09. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COOPERATIVE SOCIETY PROVIDING CREDIT FACILITY TO ITS MEMBERS AND ALSO E ARNS INCOME FROM VARIOUS INVESTMENTS MADE. DURING THE IMPUGNED ASSESSMENT Y EAR, THE ASSESSEE SOCIETY EARNED INCOME OF RS.64,20,855/- AS PER AUDITED PROF IT AND LOSS ACCOUNT. THE ASSESSEE HAS DECLARED THE SAID INCOME AS INCOME FRO M ITS BUSINESS AND CLAIMED DEDUCTION OF THE SAME U/S.80P(2)(A)(I) AND DECLARED THE INCOME OF THE SOCIETY AT NIL. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SHOWN BANK INTEREST O F RS.83,32,886/-. HE OBSERVED THAT THE ASSESSEE BEING A COOPERATIVE CRED IT SOCIETY IS ENTITLED TO 2 DEDUCTION U/S.80P(2)(A)(I) IN RESPECT OF INCOME ATT RIBUTABLE TO PROVIDING CREDIT FACILITY TO ITS MEMBER AND INTEREST INCOME FROM OTH ER COOPERATIVE SOCIETY U/S.80P(2)(D). HOWEVER, FROM THE DETAILS FURNISHED BY THE ASSESSEE HE NOTED THAT THERE IS INTEREST INCOME FROM OTHER INVESTMENT IN OTHER THAN COOPERATIVE BANK WHICH IS NOT DEDUCTIBLE U/S.80P(2)(A)(I). FRO M THE DETAILS FURNISHED BY THE ASSESSEE HE NOTED THAT THE INTEREST INCOME FROM BAN KS SHOWN AT RS.83,32,886/- INCLUDES INTEREST INCOME OF RS.36,15,925/-, THE DET AILS OF WHICH ARE AS UNDER : 3.1 RELYING ON THE DECISION OF HONBLE SUPREME COUR T IN THE CASE OF TOTOGARS COOPERATIVE SALES SOCIETY VS. ITO REPORTE D IN 322 ITR 283 HE HELD THAT THE INTEREST FROM BANK DEPOSITS AND GOVERNMENT SECURITIES FELL UNDER THE HEAD INCOME FROM OTHER SOURCES AND HENCE IS TAXABL E U/S.56 AND CANNOT FALL WITHIN THE EXPRESSION PROFIT AND GAINS OF BUSINESS . SUCH INTEREST INCOME CANNOT BE SAID TO BE ATTRIBUTABLE TO THE ACTIVITIES OF THE SOCIETY NAMELY THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMB ERS OR MARKETING OF AGRICULTURAL PRODUCE TO ITS MEMBERS. 3.2 THE ASSESSING OFFICER FURTHER NOTED THAT ASSESS EE HAS SHOWN INCOME FROM MUTUAL FUNDS AMOUNTING TO RS.44,64,353/. REJE CTING THE EXPLANATION GIVEN BY THE ASSESSEE AND RELYING ON THE DECISION O F HONBLE SUPREME COURT IN THE CASE OF TOTOGARS CO-OP SOCIETY LTD. (SUPRA) H E HELD THAT SUCH INCOME ON SALE OF MUTUAL FUNDS AMOUNTING TO RS.44,64,353/- CA NNOT BE ALLOWED U/S.80P. SL.NO. PARTICULARS AMOUNT 1. UTI BANK FDR INTEREST RS.91,303/- 2. KOTAK MAHINDRA RS.1,79,208/- 3. ICICI BANK RS.4,74,926/- 4. STATE BANK OF INDIA RS.19,64,302/- 5. OTHER (MISC. BANK) AS PER DETAILS GIVEN BY THE ASSESSEE WITHOUT GIVING THE BANK NAME RS.9,06,186/- TOTAL RS.36,15,925/- 3 HE ALSO REJECTED THE CLAIM OF THE ASSESSEE THAT LON G TERM CAPITAL GAIN OF RS.22,72,278/- ON SALE OF MUTUAL FUNDS IS EXEMPT U/ S.10(38) IN ABSENCE OF GIVING DETAILS OF NOTIFICATION OF MUTUAL FUNDS U/S. 10(23D) AND IN ABSENCE OF INFORMATION RELATING SECURITY TRANSACTION TAX PAID. THE ASSESSING OFFICER SIMILARLY HELD THAT INTEREST INCOME ON MUTUAL FUND SOLD AMOUNTING TO RS.23,21,994/- AND SHORT TERM CAPITAL GAIN OF RS.22 ,70,597/- ARE NOT DEDUCTIBLE U/S.80P(2)(A)(I) OR 80P(2)(D) OF THE INCOME TAX ACT , 1961. 3.3 FROM THE VARIOUS DETAILS FURNISHED BY THE ASSES SEE HE NOTED THAT PART OF THE INVESTMENT HAS BEEN MADE OUT OF LOANS AND DEPOS ITS ON WHICH INTEREST HAS BEEN PAID. THE ASSESSEE HAS PAID INTEREST TO MEMBE RS ON DEPOSITS BY THEM AMOUNTING TO RS.2,20,86,063/-. THE LOANS AND DEPOS ITS ADVANCED BY THE ASSESSEE IS RS.17,34,15,808/- WHICH IS 64.74% OF TH E LOANS AND DEPOSITS FROM ITS MEMBERS. THEREFORE, HE HELD THAT OUT OF THE IN TEREST PAID AT RS.2.21 CRORES, 64.71% IS ATTRIBUTABLE TO LOANS WHICH WORKS OUT TO RS.1,42,91,891/-. THUS, HE HELD THAT THE BALANCE INTEREST AMOUNTING TO RS.77,9 4,172/- IS ATTRIBUTABLE TO INVESTMENT FOR THE FOLLOWING INCOME EARNED : 3.4 THE ASSESSING OFFICER COMPUTED THE INTEREST EXP ENDITURE ATTRIBUTABLE FOR EARNING THE SAID INCOME WHICH COMES TO 43.43%. THE ASSESSING OFFICER ACCORDINGLY WORKED OUT THE NET INCOME NOT ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I) AS UNDER: PARTICULARS AMOUNT BANK INTEREST RS. 83,32,886/- DIVIDEND RS.9,15,288/- MUTUAL FUND GAIN RS.44,64,353/- MUTUAL FUND INTEREST RS.23,21,994/- TOTAL RS.1,79,44,521/- 4 HEAD OF INCOME AMOUNT OF INCOME INTEREST AT 43.43% NET INCOME NOT ELIGIBLE DEDUCTION U/S.80P 1) INTEREST FROM BANKS OTHER THAN CO-OP BANK 36,15,925 17,70,396 18,45,529 2) INTEREST ON MUTUAL FUNDS 23,21,994 10,08,442 13, 13,552 3) LONG TERM CAPITAL GAIN 22,72,278 9,86,850 12,85, 428 4) SHORT TERM CAPITAL GAIN 22,70,597 9,86,120 12,84 ,477 TOTAL 1,04,80,794 47,51,808 57,28,986 THE A.O. HELD THAT THE ABOVE INCOME IS NOT ATTRIBUT ABLE TO THE ACTIVITY OF THE SOCIETY NAMELY BUSINESS OF PROVIDING CREDIT FACILIT IES TO ITS MEMBERS AND HENCE INCOME FROM THE SAID ACTIVITY IS NOT PROFIT A ND GAINS OF ITS BUSINESS BUT THE SAID INCOME IS 'INCOME FROM OTHER SOURCES' NOT ELIGIBLE FOR DEDUCTION U/S. 80P(2)(A)(I) OF THE IT. ACT. 4. BEFORE THE LD. CIT(A) THE ASSESSEE STRONGLY ARGU ED THAT THE DECISION RELIED ON BY THE ASSESSING OFFICER IN THE CASE OF T OTOGARS CO-OP SOCIETY LTD. (SUPRA) IS DISTINGUISHABLE AND NOT APPLICABLE TO TH E FACTS OF THE PRESENT CASE. THE ASSESSEE FURNISHED THE DISTINCTIONS WHICH ARE A S UNDER : CASE OF TOTOGARS CO-OP. SOCIETY LTD. CASE OF THE A PPELLANT 1) THE SOCIETY IS NOT A CREDIT CO-OP, SOCIETY I.E. PATSANSTHA. 1) THE SOCIETY IS A CREDIT CO-OP, SOCIETY I.E. PATSANSTHA, AUTHORIZED BY REGISTRAR OF CO- OP. SOCIETIES FOR ACCEPTING DEPOSITS AND LENDING MONEY TO ITS MEMBERS BY WAY OF LICENSE GRANTED BY THE SAID AUTHORITY. 2) THE MAIN OBJECT OF THE SOCIETY IS TO PROVIDE MARKETING FACILITY TO ITS MEMBERS WHO ARE FARMERS. THE ACTIVITY OF THE SOCIETY IS LIMITED IN RESPECT OF MEMBERS, WHO ARE FARMERS. 2) THE MAIN OBJECT OF THE SOCIETY IS TO PROVIDE CREDIT FACILITY TO MEMBERS WHO CAN BE ANY PERSON OF THE SOCIETY. AS PER THE BYLAWS OF THE SOCIETY ANY PERSON CAN BECOME MEMBER BY PAYING NOMINAL FEES AND NOMINAL COST OF SHARE OF THE SOCIETY. 3) THE AGRICULTURAL PRODUCE OF THE MEMBERS WHO ARE FARMERS HAS BEEN MARKETED BY THE SOCIETY AND THE FUNDS SO GENERATED HAVE BEEN INVESTED IN SHORT TERM DEPOSITS AND SECURITIES. ON THE ABOVE FACTS THE INTEREST INCOME WAS TREATED AS 'INCOME FROM OTHER SOURCES' BY HON'BLE COURT. 3) NO SUCH ACTIVITY OF PROVIDING MARKETING FACILITY OF AGRICULTURAL PRODUCE TO FARMERS AND THEN INVESTMENT OF THE SALE PROCEEDS IN SHORT TERM DEPOSITS AND SECURITIES HAS BEEN CARRIED OUT BY THE SOCIETY. THE SOCIETY HAS COLLECTED INTEREST BEARING DEPOSITS FROM ITS MEMBERS AND SURPLUS IDLE FUNDS HAVE BEEN INVESTED IN BANK DEPOSITS AND MUTUAL FUNDS. 5 4) SECTION 80P(2)(A)(I) READS AS UNDER: (A) IN THE CASE A CO-OPERATIVE SOCIETY ENGAGED IN - (I) CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS, OR ........... THE HON'BLE COURT HAS DECIDED THE ISSUE BY CONSIDERING THE LATER PART OF THE ABOVE SECTION I.E. THE INCOME OF THE SOCIETY PROVIDING CREDIT FACILITY TO ITS MEMBERS IS ONLY ELIGIBLE FOR DEDUCTION. THE HON'BLE COURT HAS NOT CONSIDERED THE EARLIER PART OF THE SECTION I.E. THE INCOME OF CO-OP, SOCIETY CARRYING ON THE BUSINESS OF BANKING IS ELIGIBLE FOR DEDUCTION. 4) IN THE CASE UNDER APPEAL THE APPELLANT SOCIETY IS CARRYING ON BUSINESS OF BANKING, THOUGH THE SOCIETY ITSELF IS NOT A BANK. THEREFORE THE FIRST PART OF SECTION 80P(2)(A)(I) I.E. DEDUCTION IS ALLOWABLE TO A CO-OP, SOCIETY CARRYING ON BUSINESS OF BANKING IS APPLICABLE TO THE CASE OF THE APPELLANT SOCIETY. THE TERM 'BANKING BUSINESS' HAS NOT BEEN DEFINED IN THE INCOME-TAX ACT. AS PER OXFORD DICTIONARY, 7 TH EDITION, SERVICES OF KEEPING MONEY OR LENDING MONEY AMOUNTS TO BANKING BUSINESS. WHILE DECIDING THE CASE OF A CREDIT SOCIETY I.E. PATSANSTHA IN THE CASE OF MAHAVIR NAGARI SAHAKARI PATSANSTHA LTD. VS. DCIT (2002) 74 TTJ 793 (PUNE), THE HON'BLE ITAT HAS HELD THAT THE SAID CREDIT SOCIETY IS CARRYING ON BUSINESS OF BANKING AND PROVIDING CREDIT FACILITIES TO ITS MEMBERS IS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I). IN THE SAID DECISION IN PARA 29 THE HON'BLE ITAT HAS TERMED THE SAID CREDIT SOCIETY I.E. PATSANSTHA AS BANKING CONCERN. FURTHER HON'BLE ITAT, CALCUTTA, IN THE CASE OF ELECTRO URBAN CO- OP. CREDIT SOCIETY LTD. VS. ITO (2001) 70 TTJ 441 (CAL)(T.M.), IT HAS BEEN HELD THAT INCOME FROM UNITS OF UTI INVESTED OUT OF CIRCULATING CAPITAL OF BANKING BUSINESS AND INTEREST ON FIXED DEPOSITS EARNED BY A CO-OPERATIVE SOCIETY ENGAGED IN LENDING MONEY TO ITS MEMBERS OUT OF MEMBERSHIP FUNDS AND DEPOSITS COLLECTED FROM SUCH MEMBERS WAS INCOME ATTRIBUTABLE TO BUSINESS OF BANKING CARRIED ON BY IT AND WAS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I). IT WAS ACCORDINGLY ARGUED THAT THE ASSESSEE SOCIETY IS CARRYING ON THE BUSINESS OF BANKING AND HENCE IS ELIGIBLE FOR DEDUCTION U/S. 80P(2)(A)(I) OF THE INCOME TAX ACT. 5. FOLLOWING DECISIONS WERE ALSO RELIED ON BY THE A SSESSEE TO THE PROPOSITION THAT INTEREST INCOME ON GOVERNMENT SECU RITIES, F.DS, KVPS/IVPS, INVESTMENTS IN UTI ETC. OUT OF SURPLUS/I DLE MONEY AVAILABLE FROM WORKING CAPITAL INCLUDING VOLUNTARY RESERVES A CCRUING TO COOPERATIVE 6 BANKS ARE ALL INCOME ATTRIBUTABLE TO BUSINESS OF BA NKING AND ARE ELIGIBLE FOR GRANT OF DEDUCTION U/S.80P(2)(A)(I) : 1. SURAT DISTRICT CO-OP. BANK LTD. & ORS VS. ITO (2003) 78 TTJ 1 (AHD, SPL.BENCH). 2. CIT VS. RAMANATHAPURAM DISTRICT CO-OP. CENTRAL BANK LTD. (2002) 255 ITR 423 (SC) 3. CIT VS. RATNAGIRI DISTRICT CENTRAL CO-OP. BANK LTD. (2002) 174 CTR 116 (BOM.) 4. CIT VS. MADURAI DISTRICT CO-OP. BANK LTD. (1991) 239 ITR 700 (MAD) AND 5. CIT VS. SOLAPUR NAGARI AUDYOGIC SAHAKARI BANK LT D. (2009) 182 TAXMAN, 231 (BOM).' 6. IT WAS ACCORDINGLY SUBMITTED THAT THE ASSESS EE SOCIETY IS CARRYING ON BUSINESS OF BANKING AND HENCE IS ELIGIBLE FOR DEDUC TION U/S. 80P(2)(A)(I), WHEREAS IN THE CASE OF TOTOGARS CO-OP. SOCIETY, THE SAID SOCIETY WAS NOT CARRYING ON BUSINESS OF BANKING AND THE HON'BLE COU RT, THEREFORE, HELD THAT INTEREST INCOME EARNED BY THE SAID SOCIETY ON SHORT TERM DEPOSITS AND SECURITIES OUT OF SALE PROCEEDS OF AGRICULTURAL PRO DUCE OF ITS FARMERS IS 'INCOME FROM OTHER SOURCES.' IN THE CASE OF THE ASS ESSEE SOCIETY, THE INTEREST INCOME AND SURPLUS ON SALE OF INVESTMENT IS FORMING PART AND PARCEL OF INCOME OF BANKING BUSINESS ACTIVITY AND HENCE IS EL IGIBLE FOR DEDUCTION U/S.80P(2)(A)(I). 7. BASED ON THE ARGUMENTS ADVANCED BY THE ASSES SEE THE LD.CIT(A) HELD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80P(2)(A) (I). THE RELEVANT OBSERVATIONS OF LD.CIT(A) AT PARA 5.2 OF HIS ORDER READS AS UNDER : 5.2. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE RIVAL SUBMISSIONS. THE A.O . HAS HELD THAT INTEREST INCOME FROM BANKS OTHER THAN CO-OPERATIVE BANKS, INTEREST FROM MUTUAL FUNDS AND SURPLUS ON SALE OF MUTUAL FUN DS IS 'INCOME FROM OTHER SOURCES' AND NOT 'INCOME FROM BUSINESS' OF THE SOCIETY. THE A.O. HELD THAT: THE BUSINESS OF THE SOCIETY IS PROVIDING CREDIT FACILITY TO ITS MEMBERS AND THE ABOVE INCOME IS NOT RELATED TO THE SAID 7 ACTIVITY OF THE SOCIETY AND HENCE THE SAME IS INCOM E FROM OTHER SOURCES NOT ELIGIBLE FOR DEDUCTION U/S. 80P(2)(A)( I) OF THE ACT. IN SUPPORT OF THIS PROPOSITION, THE A.O. HAS RELIED ON THE DECISION IN THE CASE OF TOTOGARS CO-OP. SOCIETY LTD. VS. ITO 322 I TR 283 (SC). ON THE OTHER HAND, THE APPELLANT HAS POIN TED OUT THAT THE FACTS OF THE CASE OF THE-APPELLANT ARE DISTINGUISHA BLE FROM THE FACTS OF THE CASE RELIED ON BY THE A.O. THE APPELLANT HAS PO INTED OUT THAT THE ACTIVITY CARRIED OUT BY THE APPELLANT SOCIETY IS CO VERED BY ACTIVITY OF BUSINESS OF BANKING. IN SUPPORT OF THIS PROPOSITION THE APPELLANT HAS RELIED ON THE RATIO LAID DOWN IN THE CASES OF MAHAV IR NAGARI SAHAKARI PATSANSTHA LTD. VS. DCIT (2002) 74 TTJ 793 (PUNE) AND ELECTRO URBAN CO-OP. CREDIT SOCIETY LTD. VS. ITO (2 001) 70 TTJ 441 (CAL) (T.M.). IN THESE CASES THE ASSESSEES WERE CRE DIT CO-OPERATIVE SOCIETIES I.E. PATSANSTHA, AS IS THE CASE OF THE AP PELLANT. IN THESE CASES THE HON'BLE TRIBUNALS HAVE LAID DOWN THAT THE SAID SOCIETIES PROVIDING CREDIT FACILITIES TO ITS MEMBERS ARE CARR YING ON ACTIVITY WHICH IS COVERED BY ACTIVITY OF BUSINESS OF BANKING AND HENCE THEY ARE ELIGIBLE FOR DEDUCTION U/S. 80P(2)(A)(VI). I N THE CASE DECIDED BY CALCUTTA TRIBUNAL IT HAS BEEN HELD THAT EVEN INCOME FROM UTI INVESTMENT AND INTEREST ON BANK DEPOSITS INVESTED O UT OF AMOUNTS COLLECTED FROM MEMBERS AS DEPOSITS IS ELIGIBLE OR D EDUCTION U/S.80P(2)(A)(I). IN THE CASE DECIDED BY HON'BLE AP EX COURT RELIED ON BY THE A.O. THE AMOUNT INVESTED IN SHORT TERM DEPOSITS AND SECURITIES WAS NOT OUT OF INTEREST BEARING DEPOSITS COLLECTED FROM MEMBERS BUT OUT OF SALE PROCEEDS OF AGRICULTURAL PRODUCE OF FAR MER MEMBERS MARKETED BY THE SOCIETY. THE APPELLANT HAS THEREFOR E CORRECTLY POINTED OUT THAT THE FACTS OF THE CASE RELIED ON BY THE A.O. ARE DISTINGUISHABLE. IN THE SAID CASE RELIED ON BY THE A.O. THE SOCIETY HAS NOT CARRIED OUT THE ACTIVITY OF COLLECTING INTEREST BEARING DEPOSITS FROM MEMBERS AND LENDING THE SAME TO MEMBERS AND IN VESTING THE FUNDS IN BANK DEPOSITS AND MUTUAL FUNDS FOR EARNING INTEREST INCOME, ETC. THE HON'BLE APEX COURT HAS, THEREFORE, CONSIDE RED ONLY THE LATER PART OF SECTION 80P(2)(A)(I) I.E. INCOME OF A CO- O PERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBE RS IS ELIGIBLE FOR DEDUCTION AND HAS NOT CONSIDERED THE EARLIER PART O F SECTION 80P(2)(A)(I) I.E. INCOME OF A CO-OP. SOCIETY IN CAR RYING ON THE BUSINESS OF BANKING IN ELIGIBLE FOR DEDUCTION. IN VIEW OF THE ABOVE FACTS AND DISCUSSION, I AM OF THE CONSIDERED VIEW T HAT THE APPELLANT SOCIETY IS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I) IN RESPECT OF INTEREST ON BANK DEPOSITS, MUTUAL FUNDS AND SURPLUS ON SALE OF MUTUAL FUNDS. THE A.O. IS NOT JUSTIFIED IN HOLDING THAT THE APPEL LANT IS NOT ELIGIBLE TO CLAIM DEDUCTION U/S.80P(2)(A)(I) IN RESPECT OF INCO ME TO THE EXTENT OF RS.57,28,986/-. THE A.O. IS THEREFORE DIRECTED TO ALLOW THE SAID DEDUCTION OF RS.57,28,986/-. THIS GROUND OF APPEAL IS ALLOWED. 8. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT (A) IS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE IS EN TITLED TO DEDUCTION U/S.80P(2)(A)(I) WHEN THE INCOME OF THE SOCIETY ON ACCOUNT OF INTEREST 8 FROM BANKS OTHER THAN CO-OP. BANKS, INTEREST ON MUT UAL FUNDS, LONG TERM CAPITAL GAIN ON MUTUAL FUNDS AND SHORT TERM CA PITAL GAIN ON MUTUAL FUND ARE NOT COVERED BY THE ACTIVITY OF PROVIDING C REDIT FACILITIES TO ITS MEMBERS AND HENCE NOT ELIGIBLE FOR DEDUCTION U/S.80 P(2)(A) (I) OF THE I.T. ACT. 2. THE LD. CIT(A) HAS ALSO DISREGARDED THE FACT THA T THE CO-OPERATIVE SOCIETY IS REQUIRED TO SATISFY THE CRITERIA FOR AVA ILING BENEFIT OF SEC.80P(2)(D) I.E. THE INTEREST INCOME SHOULD BE FR OM OTHER CO-OP. SOCIETY, WHEREAS IN THE ASSESSEE SOCIETYS CASE THE INTEREST INCOME IS FROM OTHER THAN CO-OP BANK WITH REGARD TO INVESTMEN TS MADE. 3. THE ORDER OF THE LD. CIT(A) BE CANCELLED AND THA T OF THE A.O. BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD/ALTER/AMEND GR OUND OF APPEAL. 9. THE LD. DEPARTMENTAL REPRESENTATIVE HEAVILY RELI ED ON THE ORDER OF THE ASSESSING OFFICER. REFERRING TO THE DECISION OF HO NBLE SUPREME COURT IN THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY LTD. (SU PRA) HE SUBMITTED THAT THE ISSUE IS DECIDED AGAINST THE ASSESSEE. HE ALSO REL IED ON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. COOPERA TIVE SUPPLY & COMMISSION & SHOP LTD. REPORTED IN 204 ITR 713 AND THE DECISION OF JAPUR BENCH OF THE TRIBUNAL IN THE CASE OF JME EMPLOYEES COOPERATIVE CREDIT & THRIFT SOCIETY LTD. VS. ITO REPORTED IN 731 ITD 296 AND THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF MEHSANA D ISTRICT COOPERATIVE BANK LTD. VS. ITO REPORTED IN 251 ITR 520. 10. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF CIT(A). REFERRING TO THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY LTD. (SU PRA) HE DREW THE ATTENTION OF THE BENCH TO THE FOLLOWING OBSERVATIONS OF HONB LE SUPREME COURT AT PAGE 289 PLACETURN (10) : 9 AT THE OUTSET, AN IMPORTANT CIRCUMSTANCE NEEDS TO BE HIGHLIGHTED. IN THE PRESENT CASE, THE INTEREST HELD NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT IS NOT THE INTEREST RECEIVED FROM THE MEMBERS FOR PROVIDING CREDIT FACILITIES TO THEM. W HAT IS SOUGHT TO BE TAXED UNDER SECTION 56 OF THE ACT IS THE INTEREST I NCOME ARISING ON THE SURPLUS INVESTED IN SHORT TERM DEPOSITS AND SECURIT IES WHICH SURPLUS WAS NOT REQUIRED FOR BUSINESS PURPOSES. THE ASSESSEE(S) MARKETS THE PRODUCE OF ITS MEMBERS WHOSE SALE PROCEEDS AT TIMES WERE RE TAINED BY IT. IN THIS CASE, WE ARE CONCERNED WITH THE TAX TREATMENT OF SU CH AMOUNT. SINCE THE FUND CREATED BY SUCH RETENTION WAS NOT REQUIRED IMM EDIATELY FOR BUSINESS PURPOSES, IT WAS INVESTED IN SPECIFIED SECURITIES. THE QUESTION, BEFORE US, IS WHETHER INTEREST ON SUCH DEPOSITS/SECURITIES, WHICH STRICTLY SPEAKING ACCRUES TO THE MEMBERS ACCOUNT, COULD BE TAXED AS BUSINESS INCOME UNDER SECTION 28 OF THE ACT? IN OUR VIEW, SUCH INT EREST INCOME WOULD COME IN THE CATEGORY OF INCOME FROM OTHER SOURCES , HENCE, SUCH INTEREST INCOME WOULD BE TAXABLE UNDER SECTION 56 O F THE ACT, AS RIGHTLY HELD BY THE ASSESSING OFFICER. REFERRING TO THE ABOVE HE SUBMITTED THAT THE HONBL E APEX COURT HAD ONLY DECIDED A PART OF THE PROVISIONS OF SECTION 80P(2)( A)(I) AND THE FIRST PART IS NOT ANSWERED. 10.1 REFERRING TO THE DECISION OF THE AHMEDABAD BEN CH OF THE TRIBUNAL IN THE CASE OF ITO VS. M/S. JAFARI MOMIN VIKAS CO-OP. CRED IT SOCIETY LTD. VIDE ITA NO.1491/AHD/2012 AND CO NO.138/AHD/2012 ORDER DATED 31-10-2012 FOR A.Y. 2009-10 THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION AFTER CONSIDERING THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY LTD. (SU PRA) HAS HELD THAT CIT(A) WAS NOT JUSTIFIED IN DISALLOWING DEDUCTION U/S.80P TO THE EXTENT OF RS.6,40,639/- BY TREATING THE INCOME FROM INTEREST ON BANK DEPOSI T AS TAXABLE U/S.56 OF THE INCOME TAX ACT. HE ALSO RELIED ON THE DECISION OF THE COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF MUTTOM SERVICE COOPERATIVE BANK LTD. VS. ITO VIDE ITA NO.372/COCH/2010 ORDER DATED 20-01-2012. 10.2 SO FAR AS THE DECISIONS RELIED ON BY THE LD. D EPARTMENTAL REPRESENTATIVE HE SUBMITTED THAT THOSE DECISIONS ARE DISTINGUISHAB LE AND NOT APPLICABLE TO THE 10 FACTS OF THE PRESENT CASE. IN THE CASE OF JME EMPL OYEES COOPERATIVE CREDIT AND THRIFT SOCIETY LTD. VS. ITO (SUPRA) IT HAS BEEN HELD THAT ACTIVITY OF PURCHASING SHARES AND EARNING DIVIDEND INCOME IS NO T ATTRIBUTABLE TO BANKING ACTIVITY AND THEREFORE DIVIDEND INCOME EARNED BY CO OPERATIVE SOCIETY DID NOT QUALIFY FOR DEDUCTION U/S.80P(2)(I) MORE SO WHEN TH E SOCIETY HAD NO SURPLUS FUNDS AND IT HAD TO BORROW FUNDS FOR CARRYING ON BA NKING ACTIVITY. REFERRING TO THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. COOPERATIVE SUPPLY & COMMISSION & SHOP LTD. HE SUBM ITTED THAT IN THE ABOVE DECISION IT HAS BEEN HELD THAT A SOCIETY DOING NO B ANKING BUSINESS AND ONLY SUPPLYING GOODS TO ITS MEMBERS OF CREDIT CANNOT BE SAID TO BE PROVIDING CREDIT FACILITIES FOR PURPOSES OF 80P(2)(A)(I) AND INTERES T OF OUTSTANDING BALANCES OF MEMBERS CANNOT QUALIFY FOR RELIEF UNDER THAT SECTIO N. FURTHER, THE ASSESSEE HAS NO SURPLUS FUNDS AND IT IS NOT ENGAGED IN MARKETING AND ITS PRODUCE. REFERRING TO THE DECISION OF HONBLE BOMBAY HIGH COURT HE SUB MITTED THAT INTEREST ON IVP/KVP ETC. IS ALLOWABLE DEDUCTION U/S.80P. HE SU BMITTED THAT IN THE INSTANT CASE THE DECISION OF THE AHDMEDABAD BENCH OF THE TR IBUNAL IS SQUARELY APPLICABLE AND THE ASSESSEE IS ENTITLED TO CLAIM DE DUCTION U/S.80P(2)(A)(I). HE SUBMITTED THAT WHEN DIVERGENT VIEWS ARE AVAILABLE, THE VIEW WHICH IS IN FAVOUR OF ASSESSEE HAVE TO BE ACCEPTED UNLESS IT IS THE VI EW OF HONBLE APEX COURT OR JURISDICTIONAL HIGH COURT 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. IN THE INSTANT CASE THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS ACTIVIT Y OF CREDIT COOPERATIVE SOCIETY, I.E. PROVIDING CREDIT FACILITY TO ITS MEMB ERS. ACCORDING TO THE REVENUE 11 THE INCOME OF THE SOCIETY ON ACCOUNT OF INTEREST FR OM BANKS OTHER THAN COOPERATIVE BANKS, INTEREST ON MUTUAL FUNDS, LONG T ERM AND SHORT TERM CAPITAL GAIN ON SALE OF MUTUAL FUNDS ETC. ARE NOT COVERED B Y THE ACTIVITY OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND HENCE NOT ELIG IBLE FOR DEDUCTION U/S.80P(2)(A)(I) OF THE INCOME TAX ACT IN VIEW OF T HE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA). WE FIND THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASS ESSEE ON THE GROUND THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80P(2)(A) (I) ON ACCOUNT OF INTEREST FROM BANKS OTHER THAN COOPERATIVE BANKS, INTEREST ON MUT UAL FUNDS LONG TERM AND SHORT TERM CAPITAL GAIN ON MUTUAL FUNDS ETC. WHILE DOING SO, HE HELD THAT THE DECISION IN THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE SINCE I N THAT CASE THE AMOUNT INVESTED IN SHORT TERM DEPOSITS AND SECURITIES WAS NOT OUT O F INTEREST BEARING DEPOSITS COLLECTED FROM MEMBERS BUT OUT OF SALE PROCEEDS OF AGRICULTURAL PRODUCE OF FARMER MEMBERS MARKETED BY THE SOCIETY. FURTHER, T HE HONBLE APEX COURT HAS CONSIDERED ONLY THE LATTER PART OF SECTION 80P(2)(A )(I), I.E. INCOME OF A COOPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FAC ILITIES TO ITS MEMBERS IS ELIGIBLE FOR DEDUCTION AND HAS NOT CONSIDERED THE E ARLIER PART OF SECTION 80P(2)(A)(I), I.E. INCOME OF A COOPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF BANKING IS ELIGIBLE FOR DEDUCTION. 11.1 WE FIND THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF M/S. JAFARI MOMIN VIKAS COOPERATIVE CREDIT SOCIETY LTD. (SUPRA) AFTER CONSIDERING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TO TAGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA) HAS OBSERVED AS UNDER : 17. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE EITHER PARTY, PERUSED THE RELEVANT RECORDS AND ALSO THE CASE LAW ON WHICH THE LEARNED AR HAD RESERVATION IN ITS APPLICABLY IN THE CIRCUMSTANCES OF THE ASSE SSEE'S CASE. 12 18. IT WAS THE STAND OF THE LEARNED CIT (A) THAT T HE ENTIRE INCOME WAS NOT EXEMPT AND THAT IT WAS TO BE EXAMINED AS TO WHETHER THERE WAS ANY INTEREST INCOME ON THE SHORT TERM BANK DEPOSITS AND SECURITIES INCL UDED IN THE TOTAL INCOME OF THIS SOCIETY WHICH HAS BEEN CLAIMED AS EXEMPT. ACCORDING TO THE CIT (A), A SIMILAR ISSUE TO THAT OF THE PRESENT ONE WAS DEALT WITH BY THE HO N'BLE SUPREME COURT IN THE CASE OF TOTGARS CO-OP. SALE SOCIETY LTD V. ITO (SUPRA). THE ISSUE BEFORE THE HON'BLE COURT FOR DETERMINATION WAS WHETHER INTEREST INCOME ON SH ORT TERM BANK DEPOSITS AND SECURITIES WOULD BE QUALIFIED AS BUSINESS INCOME U/ S 80P (2)(A)(I) OF THE ACT. 19. THE ISSUE DEALT WITH BY THE HON'BLE SUPREME CO URT IN THE CASE OF TOTGARS (SUPRA) IS EXTRACTED, FOR APPRECIATION OF FACTS, AS UNDER: 'WHAT IS SOUGHT TO BE TAXED UNDER SECTION 56 OF THE ACT IS THE INTEREST INCOME ARISING ON THE SURPLUS INVESTED IN SHORT TER M DEPOSITS AND SECURITIES WHICH SURPLUS WAS NOT REQUIRED FOR BUSINESS PURPOSE S? THE ASSESSEE(S) MARKETS THE PRODUCE OF ITS MEMBERS WHOSE SALE PROCE EDS AT TIMES WERE RETAINED BY IT. IN THIS CASE, WE ARE CONCERNED WITH THE TAX TREATMENT OF SUCH AMOUNT. SINCE THE FUND CREATED BY SUCH BY SUCH RETE NTION WAS NOT REQUIRED IMMEDIATELY FOR BUSINESS PURPOSES, IT WAS INVESTED IN SPECIFIED SECURITIES. THE QUESTION, BEFORE US, IS-WHETHER INTEREST ON SUC H DEPOSITS/SECURITIES, WHICH STRICTLY SPEAKING ACCRUES TO THE MEMBERS' ACC OUNT, COULD BE TAXED AS BUSINESS INCOME UNDER SECTION 28 OF THE ACT? IN OUR VIEW, SUCH INTEREST INCOME WOULD COME IN THE CATEGORY OF 'INCOME FROM O THER SOURCES', HENCE, SUCH INTEREST INCOME WOULD BE TAXABLE UNDER SECTION 56 OF THE ACT, AS RIGHTLY HELD BY THE ASSESSING OFFICER...' 19.1 HOWEVER, IN THE PRESENT CASE, ON VERIFICATION OF THE BALANCE SHEET OF THE ASSESSEE AS ON 31.3.2009, IT WAS OBSERVED THAT THE FIXED DEPOSITS MADE WERE TO MAINTAIN LIQUIDITY AND THAT THERE WAS NO SURPLUS FU NDS WITH THE ASSESSEE AS ATTRIBUTED BY THE REVENUE. HOWEVER, IN REGARD TO TH E CASE BEFORE THE HON'BLE SUPREME COURT - '(ON PAGE 286) 7............BEFORE THE ASSESSING OF FICER, IT WAS ARGUED BY THE ASSESSEE(S) THAT IT HAD INVESTED THE FUNDS ON SHORT TERM BASIS AS THE FUNDS WERE NOT REQUIRED IMMEDIATELY FOR BUSINESS PURPOSES AND, CONSEQUENTLY, SUCH ACT OF INVESTMENT CONSTITUTED A BUSINESS ACTIV ITY BY A PRUDENT BUSINESSMAN; THEREFORE, SUCH INTEREST INCOME WAS LI ABLE TO BE TAXED UNDER SECTION 28 AND NOT UNDER SECTION 56 OF THE ACT AND, CONSEQUENTLY, THE ASSESSEE(S) WAS ENTITLED TO DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. THE ARGUMENT WAS REJECTED BY THE ASSESSING OFFICER AS ALSO BY THE TRIBUNAL AND THE HIGH COURT, HENCE, THESE CIVIL APPEALS HAVE BEEN FILED BY THE ASSESSEE(S).' 19.2 FROM THE ABOVE, IT EMERGES THAT (A) THAT ASSESSEE (ISSUE BEFORE THE SUPREME COURT) HAD ADMITTED BEFORE THE AO THAT IT HAD INVESTED SURPLUS FUNDS, WHICH WE RE NOT IMMEDIATELY REQUIRED FOR THE PURPOSE OF ITS BUSINESS, IN SHORT TERM DEPOSITS; (B) THAT THE SURPLUS FUNDS AROSE OUT OF THE AMOUNT RETAINED FROM MARKETING THE AGRICULTURAL PRODUCE OF THE MEMBERS; (C) THAT ASSESSEE CARRIED ON TWO ACTIVITIES, NAMELY , (I) ACCEPTANCE OF DEPOSIT AND LENDING BY WAY OF DEPOSITS TO THE MEMBERS; AND (II) MARKETING THE AGRICULTURAL PRODUCE; AND 13 (D) THAT THE SURPLUS HAD ARISEN EMPHATICALLY FROM M ARKETING OF AGRICULTURAL PRODUCES. 19.3 IN THE PRESENT CASE UNDER CONSIDERATION, THE ENTIRE FUNDS WERE UTILIZED FOR THE PURPOSES OF BUSINESS AND THERE WERE NO SURPLUS FUNDS. 19.4 WHILE COMPARING THE STATE OF AFFAIRS OF THE P RESENT ASSESSEE WITH THAT ASSESSEE (BEFORE THE SUPREME COURT), THE FOLLOWING CLINCHING DISSIMILARITIES EMERGE, NAMELY: (1) IN THE CASE OF THE ASSESSEE, THE ENTIRE FUNDS WERE UTILIZED FOR THE PURPOSES OF BUSINESS AND THAT THERE WERE NO SURPLUS FUNDS; - IN THE CASE OF TOTGARS, IT HAD SURPLUS FUNDS, AS ADMITTED BEFORE THE AO, OUT OF RETAINED AMOUNTS ON MARKETING OF AGRICUL TURAL PRODUCE OF ITS MEMBERS; (2) IN THE CASE OF PRESENT ASSESSEE, IT DID NOT CA RRY OUT ANY ACTIVITY EXCEPT IN PROVIDING CREDIT FACILITIES TO ITS MEMBER S AND THAT THE FUNDS WERE OF OPERATIONAL FUNDS. THE ONLY FUND AVAILABLE WITH THE ASSESSEE WAS DEPOSITS FROM ITS MEMBERS AND, THUS, THERE WAS NO SURPLUS FU NDS AS SUCH; - IN THE CASE OF TOTGARS, THE HON'BLE SUPREME COURT HAD NOT SPELT OUT ANYTHING WITH REGARD TO OPERATIONAL FUNDS; 19.5 CONSIDERING THE ABOVE FACTS, WE FIND THAT THE RE IS FORCE IN THE ARGUMENT OF THE ASSESSEE THAT THE ASSESSEE NOT A CO-OPERATIVE B ANK, BUT ITS NATURE OF BUSINESS WAS COUPLED WITH BANKING WITH ITS MEMBERS, AS IT AC CEPTS DEPOSITS FROM AND LENDS THE SAME TO ITS MEMBERS. TO MEET ANY EVENTUALITY, T HE ASSESSEE WAS REQUIRED TO MAINTAIN SOME LIQUID FUNDS. THAT WAS WHY, IT WAS SU BMITTED BY THE ASSESSEE THAT IT HAD INVESTED IN SHORT-TERM DEPOSITS. FURTHERMORE, T HE ASSESSEE HAD MAINTAINED OVERDRAFT FACILITY WITH DENA BANK AND THE BALANCE A S AT 31.3.2009 WAS RS.13,69,955/- [SOURCE: BALANCE SHEET OF THE ASSESS EE AVAILABLE ON RECORD] 19.6 IN OVERALL CONSIDERATION OF ALL THE ASPECTS, WE ARE OF THE CONSIDERED VIEW THAT THE RATIO LAID DOWN BY THE HON'BLE SUPREME COU RT IN THE CASE OF TOTGARS CO-OP SALE SOCIETY LTD (SUPRA) CANNOT IN ANY WAY COME TO THE RESCUE OF EITHER THE LD. CIT (A) OR THE REVENUE. IN VIEW OF THE ABOVE FACTS, WE ARE OF THE FIRM VIEW THAT THE LEARNED CIT (A) WAS NOT JUSTIFIED IN COMING TO A CO NCLUSION THAT THE SUM OF RS.9,40,639/- WAS TO BE TAXED U/S 56 OF THE ACT. IT IS ORDERED ACCORDINGLY. 19.7 BEFORE PARTING WITH, WE WOULD, WITH DUE REGAR DS, LIKE TO RECORD THAT THE RULING OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. MANEKBANG CO-OP HOUSING SOCIETY LTD REPORTED IN (2012) 22 TAXMANN.C OM 220(GUJ) HAS BEEN KEPT IN VIEW WHILE DECIDING THE ISSUE. 11.2 WE FIND THE COCHIN BENCH OF THE TRIBUNAL IN TH E CASE OF MUTTOM SERVICE COOPERATIVE APLAPPUZHA BANK LTD. VS. ITO (SUPRA) AF TER CONSIDERING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TO TAGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA) AND VARIOUS OTHER DECISIONS HA S OBSERVED AS UNDER : 14 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFULL Y GONE THROUGH THE ORDER OF THE LOWER AUTHORITY. NO DOUBT, THE LATEST JUDGMENT IN T OTGAR'S CO-OPERATIVE SALE SOCIETY LTD VS ITO (SUPRA), THE APEX COURT FOUND THAT THE D EPOSIT OF SURPLUS FUNDS BY THE CO- OPERATIVE SOCIETY IS NOT ELIGIBLE FOR DEDUCTION U/S 80P(2). IN THE CASE BEFORE THE APEX COURT IN TOTGAR'S CO-OPERATIVE SALE SOCIETY LT D VS ITO (SUPRA), THE ASSESSEE CO- OPERATIVE SOCIETY WAS TO PROVIDE CREDIT FACILITY TO ITS MEMBERS AND MARKET THE AGRICULTURAL PRODUCE. THE ASSESSEE IS NOT IN THE BU SINESS OF BANKING. THEREFORE, THIS TRIBUNAL IS OF THE OPINION THAT THE JUDGMENT OF THE APEX COURT IN TOTGAR'S CO- OPERATIVE SALE SOCIETY LTD (SUPRA) IS NOT APPLICABL E IN RESPECT OF THE CO-OPERATIVE SOCIETY WHOSE BUSINESS IS BANKING. ADMITTEDLY, THE ASSESSEE HAS INVESTED FUNDS IN STATE PROMOTED TREASURY SMALL SAVINGS FIXED DEPOSIT SCHEME. SINCE GOVERNMENT OF INDIA HAS WITHDRAWN INDIA VIKAS PATRA, AS A SMALL S AVINGS INSTRUMENT, FUNDS INVESTED AT THE DISCRETION OF THE BANK IS ONE OF THE ACTIVIT IES OF THE BANKING AS PER THE BANKING REGULATION ACT. SINCE THE ASSESSEE CO-OPERA TIVE SOCIETY IS IN THE BUSINESS OF BANKING THE INVESTMENT IN THE STATE PROMOTED TREASU RY SMALL SAVINGS FIXED DEPOSIT CERTIFICATE SCHEME IS A BANKING ACTIVITY, THEREFORE , THE INTEREST ACCRUED ON SUCH INVESTMENT HAS TO BE TREATED AS BUSINESS INCOME IN THE COURSE OF ITS BANKING ACTIVITY. ONCE IT IS A BUSINESS INCOME, THE ASSESSE E IS ENTITLED FOR DEDUCTION U/S 80P(2)((A)(I). THEREFORE, THIS TRIBUNAL IS OF THE O PINION THAT THE JUDGMENT OF THE LARGER BENCH OF THE APEX COURT IN KARNATAKA STATE C O- OPERATIVE APEX BANK (SUPRA) IS APPLICABLE TO THE FACTS OF THIS CASE. BY RESPECT FULLY FOLLOWING THE JUDGMENT OF THE APEX COURT IN KARNATAKA STATE CO-OPERATIVE BANK (SU PRA), THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A) IS UPHELD. 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 11.3 IN THE INSTANT CASE THERE IS NO DISPUTE TO THE FACT THAT THE SOCIETY IS A CREDIT COOPERATIVE SOCIETY AUTHORISED BY THE REGIST RAR OF COOPERATIVE SOCIETIES FOR ACCEPTING DEPOSITS AND LENDING MONEY TO ITS MEM BERS AS PER LICENSE GRANTED BY THE REGISTRAR OF COOPERATIVE SOCIETIES AND THE M AIN OBJECT OF THE SOCIETY IS TO PROVIDE CREDIT FACILITY TO MEMBERS WHO CAN BE ANY P ERSON OF THE SOCIETY. WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF MAHAVIR NAGARI SAHAKARI PAT SANSTHA LTD. REPORTED IN 74 TTJ 793 (PUNE) HAS HELD THAT THE CREDIT SOCIETY WHICH IS CARRYING ON THE BUSINESS OF BANKING ACTIVI TY AND PROVIDING CREDIT FACILITY TO ITS MEMBERS IS ELIGIBLE FOR DEDUCTION U /S.80P(2)(A)(I). IN VIEW OF THE ABOVE DISCUSSION AND FOLLOWING THE DECISIONS OF THE AHMEDABAD BENCH OF THE TRIBUNAL AND COCHIN BENCH OF THE TRIBUNAL WHICH IN TURN HAVE CONSIDERED THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F TOTAGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA) WE FIND NO INFIRMITY IN T HE ORDER OF THE LD.CIT(A). 15 ACCORDINGLY, THE SAME IS UPHELD AND THE GROUNDS RAI SED BY THE REVENUE ARE DISMISSED. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 31 ST DAY OF JULY, 2013. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCO UNTANT MEMBER PUNE, DATED : 31 ST JULY 2013 SATISH COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-I, NASHIK 4. THE CIT-I, NASHIK 5. D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE