Ratnatray Gramin Bigar Sheti Sahkari Pat Sanstha Maryadit, Solapur V. Income-tax Officer,

ITA 1351/PUN/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1507 (ITAT-PUNE)
• Duration Of Justice: 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 20-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DOSHI
• Keywords: Business income; Question of law
• Section: 56; 12; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . . , BEFORE SHRI R.K. PANDA, AM . / ITA NO.1351/PN/2016 / ASSESSMENT YEAR : 2010-11 RATNATRAY GRAMIN BIGAR SHETI SAHKARI PATSANTHA MARYADIT, A/P. SADASHIVNAGAR, TALUK : MALSHIRAS, DIST. SOLAPUR PAN NO. AAAAR3399Q . /APPELLANT V/S ITO, WARD - 1(4), PANDHARPUR . /RESPONDENT / APPELLANT BY : SHRI S.N. DOSHI & SHRI PIYUSH BAFNA / RESPONDENT BY : SHRI SUHAS KULKARNI / ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 18-03-2016 OF THE CIT(A)-7, PUNE RELATING TO THE ASSESSMENT YEAR 2010-11. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A COOPERATIVE CREDIT SOCIETY REGISTERED UNDER THE MAHARASHTRA COOPER ATIVE SOCIETIES ACT, 1960. IT FILED ITS RETURN OF INCOME ON 27-09-2010 DECLARING TOTAL INCOME AT NIL AFTER CLAIMING DED UCTION U/S.80P OF THE ACT AT RS.2,52,820/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO OBSERVED FROM THE DETAILS FURNISHED BY THE ASSESSEE THAT IT HAS EARNED INTEREST INCOME FROM LOANS A ND ADVANCES GIVEN TO MEMBERS AND FROM OTHER COOPERATIVE SOCIETIES. H OWEVER, THE ASSESSEE COOPERATIVE CREDIT SOCIETY HAD ALSO DEPOSITED IT S SURPLUS FUNDS IN BANKS OTHER THAN COOPERATIVE SOCIETIES/COOPERAT IVE BANKS ON / DATE OF HEARING :27.07.2016 / DATE OF PRONOUNCEMENT:29.07.2016 2 ITA NO.1351/PN/2016 WHICH IT HAS EARNED INTEREST TO THE TUNE OF RS.2,52,820/- . AFTER DEBITING THE VARIOUS EXPENSES THE ASSESSEE HAS CLAIMED D EDUCTION U/S.80P(2)(A)(I) AMOUNTING TO RS.2,52,820/-. THE AO, THEREFORE, ASKED THE ASSESSEE TO JUSTIFY ITS CLAIM OF DEDUCTION U/S.80P(2)(A)(I) IN RESPECT OF THE INTEREST INCOME RECEIVED FROM NON COOPERATIVE SECT ORS AS THE SAID INTEREST INCOME IS NOT ATTRIBUTABLE TO THE BUSINESS O F THE ASSESSEE THAT OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. ACCORDING TO THE AO SUCH INCOME FALL UNDER THE HEAD INCOME FROM OTHER SOURCE S U/S.56 AND NOT U/S.28 OF THE I.T. ACT. 3. THE ASSESSEE FILED DETAILED SUBMISSIONS JUSTIFYING ITS CLAIM OF DEDUCTION U/S.80P(2)(A)(I). HOWEVER, THE AO WAS NOT SATISFIED WIT H THE EXPLANATION GIVEN BY THE ASSESSEE. RELYING ON THE DECIS ION OF HONBLE SUPREME COURT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY VS. ITO REPORTED IN 322 ITR 283 THE AO HELD THAT INCOME FROM INT EREST OF RS.2,52,820/- IS NOT ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I). 4. IN APPEAL THE LD.CIT(A) FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA) UPHELD THE ACTION OF THE AO. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY TAKING THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD.CIT(A) HAS ERRED IN SUSTAINING THE INTEREST OF RS.2,52,820/- EARN ED ON THE INVESTMENT MADE WITH THE NATIONALIZED BANK AS INCOME FROM OTHER SOURCES AND TAXING THE SAME U/S.56 OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, L D.CIT(A) HAS GROSSLY ERRED IN RELYING THE DECISION OF TOTGARS CO-OP ERATIVE SALE SOCIETY LTD. SC 322 ITR 283 THE FACTS OF WHICH ARE TOTALLY DISTINGUISHABLE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, L D.CIT(A) HAS FURTHER ERRED IN SUSTAINING THAT ADDITION OF SAID INTE REST INCOME AS TAXABLE DISREGARDING THE FACT THAT APPELLANTS ENTIRE INCOME IS EXEMPT 3 ITA NO.1351/PN/2016 U/S.80P(2)(A)(I) OF THE INCOME TAX ACT, 1961 AS THE A PPELLANT SOCIETY IS A PATSANSTHA AND NOT A BANK AND PROVIDING CREDIT FACILI TIES TO THE MEMBERS. THE ABOVE GROUNDS OF APPEAL MAY KINDLY BE ALLOWED TO BE AMENDED, ALTERED AND OR MODIFIED IN THE INTEREST OF NATURAL J USTICE. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A PATSANSTHA PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE REFORE, ITS TOTAL INCOME IS DEDUCTIBLE U/S.80P(2)(A)(I). INVESTMENT IN FIXED DEPOSITS IN NATIONALIZED BANKS IS IN LINE WITH THE BUSINESS ACTIVITY OF THE ASSESSEE SOCIETY AND ALSO AS PER THE PROVISIONS OF SECTIO N 70 OF THE MAHARASHTRA STATE COOPERATIVE SOCIETIES ACT. HE SUBMITT ED THAT THE DEPOSITS SERVE 3 PURPOSES NAMELY (1) THE MONIES WHICH A RE NOT IMMEDIATELY REQUIRED DO NOT REMAIN IDLE AND AT THE SAME T IME EARN SOME INTEREST, (2) THESE DEPOSITS PROVIDE IMMEDIATE SOURCES TO MEET THE PAYMENT AS AND WHEN REQUIRED AND (3) IT ENSURES SA FETY OF SURPLUS FUNDS AVAILABLE WITH THE ASSESSEE. HE SUBMITTED THAT VIDE GOVERNMENT RESOLUTION DATED 12-11-2008 PERMISSION IS GRANTED TO THE COOPERATIVE SOCIETIES TO KEEP DEPOSITS IN NATIONALIZED BANKS. HE SUBMIT TED THAT THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF NIPHAD NAGA RI SAHAKARI PATSANSTHA LTD. VIDE ITA NO.1336/PN/2011 ORDER DATED 3 1-07-2013 HAS UPHELD THE ORDER OF THE CIT(A) IN HOLDING THAT ASSESSE E IS ENTITLED TO DEDUCTION U/S.80P(2)(A)(I) ON ACCOUNT OF INTEREST FROM BANKS OTHER THAN COOPERATIVE BANKS/SOCIETIES. HE SUBMITTED THAT FOLLOW ING THE ABOVE DECISION THE PUNE BENCH OF THE TRIBUNAL IN VARIOUS O THER DECISIONS HAVE HELD THE SAME VIEW. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. I TO REPORTED IN 55 TAXMANN.COM 447 SUBMITTED THAT THE HONBLE HIGH CO URT IN THE SAID DECISION HAS HELD THAT ASSESSEE CREDIT COOPERATIVE S OCIETY WHICH HAS EARNED INTEREST FROM BANKS OTHER THAN CO-OPERATIVE BANK IS 4 ITA NO.1351/PN/2016 ENTITLED TO DEDUCTION U/S.80P(2)(A)(I) OF THE I.T. ACT, 1961. HE ALSO RELIED ON THE FOLLOWING DECISIONS : 1. MAHESH NAGARI SAHAKARI PATSANSTHA LTD. ITA NO.218 0/PN/2013 ORDER DATED 13-05-2015 2. CATHOLIC URBAN COOPERATIVE CREDIT SOCIETY LTD ITA NO.32/PN/2014 ORDER DATED 29-12-2014. 3. GUTIGEDERA CREDIT COOPERATIVE SOCIETY LTD. REPOR TED IN 60 TAXMANN.COM 215 (KARNATAKA HIGH COURT) 4. QUEPEM URBAN COOPERATIVE CREDIT SOCIETY REPORTED IN 377 ITR 272 (BOMBAY HIGH COURT) HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) B E SET ASIDE AND THE ORDER OF THE AO BE RESTORED. 7. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 8. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PA PER BOOK FILED ON BEHALF OF THE ASSESSEE. I HAVE ALSO CONSIDERED THE VA RIOUS DECISIONS CITED BEFORE ME. I FIND THE ASSESSEE IN THE INSTANT CASE IS A COOPERATIVE SOCIETY AND HAS RECEIVED INTEREST OF RS.2,52,8 20/- FROM ITS INVESTMENT WITH DIFFERENT BANKS OTHER THAN CO-OPERATIVE BANKS, AND CLAIMED THE INTEREST INCOME AS DEDUCTION U/S.80P(2)(A)(I) OF THE I.T. ACT, 1961. THE AO, FOLLOWING THE DECISION OF HONBLE SUPREM E COURT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA ), DISALLOWED THE CLAIM OF DEDUCTION U/S.80P(2)(A)(I). I FIND THE LD.CIT(A) DISTINGUISHING THE VARIOUS DECISIONS CITED BEFORE HIM DISMISSED THE APPEAL FILED BY THE ASSESSEE. 5 ITA NO.1351/PN/2016 9. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSE E THAT IN VIEW OF THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL AS WELL AS VARIOUS OTHER DECISIONS THE ISSUE STANDS COVERED IN FAVOU R OF THE ASSESSEE. I FIND MERIT IN THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE. I FIND THE PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF SWA ASHOKRAO BANKAR NAGARI SAHAKARI PATSANSTHA MARYADIT VID E ITA NO.1394/PN/2015 ORDER DATED 22-07-2016 FOLLOWING THE DEC ISION OF THE TRIBUNAL IN THE CASE OF NIPHAD NAGARI SAHAKARI PATSANS THA LTD. (SUPRA) AND THE DECISION OF THE HONBLE KARNATAKA HIGH COU RT IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE L TD. (SUPRA) HAS HELD THAT ASSESSEE IS ENTITLED TO DEDUCTION U/S.80P(2)(A )(I) ON THE INTEREST INCOME ON DEPOSITS WITH BANKS OTHER THAN COOPE RATIVE BANKS/COOPERATIVE SOCIETIES. THE RELEVANT OBSERVATION OF THE TRIBUNAL FROM PARA 9 ONWARDS READ AS UNDER : 9. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. I HAVE ALSO CONSIDERED THE VARI OUS DECISIONS CITED BEFORE ME. I FIND THE ASSESSEE IN THE INSTANT CASE IS A COOPERATIVE SOCIETY AND HAS RECEIVED INTEREST OF RS.48,16,346/- FROM ITS IN VESTMENTS WITH DIFFERENT BANKS. THE ASSESSEE CLAIMED DEDUCTION U/S.80P( 2)(A)(I) OF ITS INCOME ON ACCOUNT OF INTEREST FROM BANKS OTHER THAN C OOPERATIVE SOCIETIES. THE AO FOLLOWING THE DECISION OF HONBLE SUPREME COU RT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LTD. DISALLOWED AN AMOUNT OF RS.44,52,781/- AFTER ALLOWING DEDUCTION OF RS.3,63,56 5/- AS PROPORTIONATE EXPENSES FOR EARNING SUCH INTEREST INCOME. I FIND THE LD.CIT(A) FOLLOWING THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN TH E CASE OF NIPHAD NAGARI PATSANSTHA LTD. (SUPRA) HELD THAT THE SAID INTEREST IS I TS BUSINESS INCOME ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I) OF THE I.T. ACT. I FIND THE TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING ASSESSMENT Y EAR HAS ALSO DECIDED IDENTICAL ISSUE AND THE APPEAL FILED BY T HE REVENUE HAS BEEN DISMISSED. THE RELEVANT OBSERVATION OF THE TRIBUNAL FR OM PARA 6 ONWARDS READ AS UNDER : 6. AT THE TIME OF HEARING, IT WAS A COMMON POINT BE TWEEN THE PARTIES THAT AN IDENTICAL CONTROVERSY HAS BEEN CONSIDERED BY THE PU NE BENCH OF THE TRIBUNAL IN THE CASE OF ANOTHER CO-OPERATIVE SOCIETY, NAMELY, ITO VS. NIPHAD NAGARI SAHAKARI PATSANSTHA LTD. VIDE ITA NO.13 36/PN/2011 DATED 31.07.2013 WHEREIN THE ISSUE HAS BEEN HELD IN FAVOUR O F THE ASSESSEE AFTER CONSIDERING SIMILAR OBJECTION, WHICH HAS BEEN RAISED BY THE ASSESSING OFFICER IN THE PRESENT CASE. THE LEARNED REPRESENTATIV E FOR THE ASSESSEE HAS FURNISHED A COPY OF THE SAID ORDER OF THE TRIBUNAL DATED 31.07.2013 (SUPRA) AND HAS ALSO POINTED OUT THAT THE TRIBUNAL HAS DULY CONSIDERED THE 6 ITA NO.1351/PN/2016 DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TOTGARS CO-OPERATIVE SALE SOCIETY LTD. (SUPRA), WHICH HAS BEEN RELIED UPON BY THE ASSESSING OFFICER IN THE PRESENT CASE. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS NEITHER CONTROVERTED THE ABOVE MATRIX AND NOR REFER RED TO ANY CONTRARY DECISION AND THEREFORE FOR THE SAKE OF MAINTAINING CO NSISTENCY WE FOLLOW THE DECISION OF OUR CO-ORDINATE BENCH IN THE CASE OF NIPHAD NAGARI SAHAKARI PATSANSTHA LTD. (SUPRA) AND UPHOLD THE PLEAO F THE ASSESSEE. HOWEVER, BEFORE PARTING, WE MAY REPRODUCE HEREINAFT ER THE FOLLOWING PORTION OF THE ORDER OF THE TRIBUNAL DATED 31.07.20 13 (SUPRA) WHICH BRINGS OUT THE REASONING PREVAILING WITH THE TRIBUNAL TO UPHOLD THE PLEA OF THE ASSESSEE :- 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH 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 CONSID ERED THE VARIOUS DECISIONS CITED BEFORE US. IN THE INSTANT CASE THERE IS N O DISPUTE TO THE FACT THAT THE ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS ACTIVITY OF CREDIT COOPERATIVE SOCIETY, I.E. PROVIDING CREDI T FACILITY TO ITS MEMBERS. ACCORDING TO THE REVENUE THE INCOME OF THE SOCIETY O N ACCOUNT OF INTEREST FROM BANKS OTHER THAN COOPERATIVE BANKS, INTEREST ON M UTUAL FUNDS, LONG TERM AND SHORT TERM CAPITAL GAIN ON SALE OF MUTUAL FU NDS ETC. ARE NOT COVERED BY THE ACTIVITY OF PROVIDING CREDIT FACILIT IES TO ITS MEMBERS AND HENCE NOT ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I) OF THE INCOME TAX ACT IN VIEW OF THE 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 ASSESSEE ON THE GROUND THAT THE ASSESSEE IS ENT ITLED TO DEDUCTION U/S.80P(2)(A)(I) ON ACCOUNT OF INTEREST FRO M BANKS OTHER THAN COOPERATIVE BANKS, INTEREST ON MUTUAL FUNDS LONG TER M 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 IN TH AT CASE 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 FARMER MEMBERS MARKETED BY T HE SOCIETY. FURTHER, THE HONBLE APEX COURT HAS CONSIDERED ONLY THE LATTER PART OF SECTION 80P(2)(A)(I), I.E. INCOME OF A COOPERATIVE SOCIETY E NGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS IS ELIGIBLE FOR DEDUCT ION AND HAS NOT CONSIDERED THE EARLIER PART OF SECTION 80P(2)(A)(I), I.E. INCOME OF A COOPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINE SS 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 TOTAGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA) HAS OBSERVED AS UNDER : 17. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF TH E EITHER PARTY, PERUSED THE RELEVANT RECORDS AND ALSO THE CASE LAW ON WHICH THE LEARNED AR HAD RESERVATION IN ITS APPLICABLY IN THE CIRCUMSTA NCES OF THE ASSESSEE'S CASE. 18. IT WAS THE STAND OF THE LEARNED CIT (A) THAT THE 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 SECU RITIES INCLUDED IN THE TOTAL INCOME OF THIS SOCIETY WHICH HAS BEEN CLAIME D AS EXEMPT. ACCORDING TO THE CIT (A), A SIMILAR ISSUE TO THAT OF T HE PRESENT ONE WAS DEALT WITH BY THE HON'BLE SUPREME COURT IN THE CASE OF TOTGARS CO-OP. SALE 7 ITA NO.1351/PN/2016 SOCIETY LTD V. ITO (SUPRA). THE ISSUE BEFORE THE HON' BLE COURT FOR DETERMINATION WAS WHETHER INTEREST INCOME ON SHORT TER M BANK DEPOSITS AND SECURITIES WOULD BE QUALIFIED AS BUSINESS INCOME U/S 8 0P (2)(A)(I) OF THE ACT. 19. THE ISSUE DEALT WITH BY THE HON'BLE SUPREME COURT IN THE CASE OF TOTGARS (SUPRA) IS EXTRACTED, FOR APPRECIATION OF FACT S, AS UNDER: 'WHAT IS SOUGHT TO BE TAXED UNDER SECTION 56 OF THE AC T IS THE INTEREST INCOME ARISING ON THE SURPLUS INVESTED IN SHORT TERM DEP OSITS AND SECURITIES WHICH SURPLUS WAS NOT REQUIRED FOR BUSINESS PURP OSES? THE ASSESSEE(S) MARKETS THE PRODUCE OF ITS MEMBERS WHOSE SALE PRO CEEDS AT TIMES WERE RETAINED BY IT. IN THIS CASE, WE ARE CONCER NED WITH THE TAX TREATMENT OF SUCH AMOUNT. SINCE THE FUND CREATED BY SUCH BY SUCH RETENTION WAS NOT REQUIRED IMMEDIATELY FOR BUSINESS PU RPOSES, IT WAS INVESTED IN SPECIFIED SECURITIES. THE QUESTION, BEFORE US, IS-WHETHER INTEREST ON SUCH DEPOSITS/SECURITIES, WHICH STRICTLY SPEAKI NG ACCRUES TO THE MEMBERS' ACCOUNT, COULD BE TAXED AS BUSINESS INCOME UND ER SECTION 28 OF THE ACT? IN OUR VIEW, SUCH INTEREST INCOME WOULD COM E IN THE CATEGORY OF 'INCOME FROM OTHER SOURCES', HENCE, SUCH INTEREST INCOM E WOULD BE TAXABLE UNDER SECTION 56 OF THE ACT, AS RIGHTLY HELD BY THE A SSESSING 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 FIX ED DEPOSITS MADE WERE TO MAINTAIN LIQUIDITY AND THAT THERE WAS NO SURP LUS FUNDS WITH THE ASSESSEE AS ATTRIBUTED BY THE REVENUE. HOWEVER, IN REGAR D TO THE CASE BEFORE THE HON'BLE SUPREME COURT '(ON PAGE 286) 7............BEFORE THE ASSESSING OFFICE R, IT WAS ARGUED BY THE ASSESSEE(S) THAT IT HAD INVESTED THE FUNDS ON SHORT TERM BA SIS AS THE FUNDS WERE NOT REQUIRED IMMEDIATELY FOR BUSINESS PURPOSES AND, CONSEQUENTLY, SUCH ACT OF INVESTMENT CONSTITUTED A BUSINESS ACTIVITY BY A PRUDENT BUSINESSMAN; THEREFORE, SUCH INTEREST INCOME WAS LIABLE T O BE TAXED UNDER SECTION 28 AND NOT UNDER SECTION 56 OF THE ACT AND, C ONSEQUENTLY, 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 APP EALS HAVE BEEN FILED BY THEASSESSEE(S).' 19.2 FROM THE ABOVE, IT EMERGES THAT (A) THAT ASSESSEE (ISSUE BEFORE THE SUPREME COURT) HAD AD MITTED BEFORE THE AO THAT IT HAD INVESTED SURPLUS FUNDS, WHICH WERE N OT IMMEDIATELY REQUIRED FOR THE PURPOSE OF ITS BUSINESS, IN SHORT TERM DEPOSITS; (B) THAT THE SURPLUS FUNDS AROSE OUT OF THE AMOUNT RETA INED 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 (D) THAT THE SURPLUS HAD ARISEN EMPHATICALLY FROM MARK ETING OF AGRICULTURAL PRODUCES. 19.3 IN THE PRESENT CASE UNDER CONSIDERATION, THE ENTI RE FUNDS WERE UTILIZED FOR THE PURPOSES OF BUSINESS AND THERE WERE NO SURPLUS FUNDS. 8 ITA NO.1351/PN/2016 19.4 WHILE COMPARING THE STATE OF AFFAIRS OF THE PRESE NT ASSESSEE WITH THAT ASSESSEE (BEFORE THE SUPREME COURT), THE FOLLOWING CLIN CHING DISSIMILARITIES EMERGE, NAMELY: (1) IN THE CASE OF THE ASSESSEE, THE ENTIRE FUNDS WERE UT ILIZED FOR THE PURPOSES OF BUSINESS AND THAT THERE WERE NO SURPLUS FUNDS; - IN THE CASE OF TOTGARS, IT HAD SURPLUS FUNDS, AS ADMI TTED BEFORE THE AO, OUT OF RETAINED AMOUNTS ON MARKETING OF AGRICULTURAL PRODUCE OF ITS MEMBERS; (2) IN THE CASE OF PRESENT ASSESSEE, IT DID NOT CARRY OUT ANY ACTIVITY EXCEPT IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS 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 FUNDS AS SUCH; - IN THE CASE OF TOTGARS, THE HON'BLE SUPREME COURT H AD NOT SPELT OUT ANYTHING WITH REGARD TO OPERATIONAL FUNDS; 19.5 CONSIDERING THE ABOVE FACTS, WE FIND THAT THERE IS FORCE IN THE ARGUMENT OF THE ASSESSEE THAT THE ASSESSEE NOT A CO-OPERATI VE BANK, BUT ITS NATURE OF BUSINESS WAS COUPLED WITH BANKING WITH ITS MEM BERS, AS IT ACCEPTS DEPOSITS FROM AND LENDS THE SAME TO ITS MEMBERS. T O MEET ANY EVENTUALITY, THE ASSESSEE WAS REQUIRED TO MAINTAIN SOME L IQUID FUNDS. THAT WAS WHY, IT WAS SUBMITTED BY THE ASSESSEE THAT IT HAD INV ESTED IN SHORT- TERM DEPOSITS. FURTHERMORE, THE ASSESSEE HAD MAINTAINED O VERDRAFT FACILITY WITH DENA BANK AND THE BALANCE AS AT 31.3.2009 WAS RS. 13,69,955/- [SOURCE: BALANCE SHEET OF THE ASSESSEE AVAILABLE ON RECO RD] 19.6 IN OVERALL CONSIDERATION OF ALL THE ASPECTS, WE A RE OF THE CONSIDERED VIEW THAT THE RATIO LAID DOWN BY THE HON'BLE SUPREM E COURT 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) WA S NOT JUSTIFIED IN COMING TO A CONCLUSION 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 REGARD S, 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 (201 2) 22 TAXMANN.COM 220(GUJ) HAS BEEN KEPT IN VIEW WHILE DEC IDING 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 (SU PRA) AFTER CONSIDERING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA) AND VARIOUS OT HER DECISIONS HAS OBSERVED AS UNDER : 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION ON EITHER SI DE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE AL SO CAREFULLY GONE THROUGH THE ORDER OF THE LOWER AUTHORITY. NO DOUBT, THE LATEST JUDGMENT IN TOTGAR'S CO-OPERATIVE SALE SOCIETY LTD VS ITO (SUPRA), THE APEX COURT FOUND THAT THE DEPOSIT OF SURPLUS FUNDS BY THE CO-OPERA TIVE SOCIETY IS NOT ELIGIBLE FOR DEDUCTION U/S 80P(2). IN THE CASE BEFOR E THE APEX COURT IN TOTGAR'S CO-OPERATIVE SALE SOCIETY LTD VS ITO (SUPRA), THE ASSESSEE CO- 9 ITA NO.1351/PN/2016 OPERATIVE SOCIETY WAS TO PROVIDE CREDIT FACILITY TO I TS MEMBERS AND MARKET THE AGRICULTURAL PRODUCE. THE ASSESSEE IS NOT IN THE BUSI NESS OF BANKING. THEREFORE, THIS TRIBUNAL IS OF THE OPINION THAT THE J UDGMENT OF THE APEX COURT IN TOTGAR'S CO-OPERATIVE SALE SOCIETY LTD (SUPR A) IS NOT APPLICABLE IN RESPECT OF THE CO-OPERATIVE SOCIETY WHOSE BUSINESS IS BANK ING. ADMITTEDLY, THE ASSESSEE HAS INVESTED FUNDS IN STATE PROMOTED TREASURY SM ALL SAVINGS FIXED DEPOSIT SCHEME. SINCE GOVERNMENT OF INDIA HAS WI THDRAWN INDIA VIKAS PATRA, AS A SMALL SAVINGS INSTRUMENT, FUNDS INVESTED AT THE DISCRETION OF THE BANK IS ONE OF THE ACTIVITIES OF THE BANKING AS PER THE BANKING REGULATION ACT. SINCE THE ASSESSEE CO-OPERATIVE SOCIETY IS IN THE BUSINESS OF BANKING THE INVESTMENT IN THE STATE PROMOTED TREASURY SMALL SAVINGS FIXED DEPOSIT CERTIFICATE SCHEME IS A BANKING ACTIVITY, THER EFORE, 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 IN COME, THE, ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80P(2)((A)(I). THEREFORE, THIS TRIBUNAL IS OF THE OPINION THAT THE JUDGMENT OF THE LARGER BENCH OF TH E APEX COURT IN KARNATAKA STATE CO- OPERATIVE APEX BANK (SUPRA) IS A PPLICABLE TO THE FACTS OF THIS CASE. BY RESPECTFULLY FOLLOWING THE JUDGMENT OF THE APEX COURT IN KARNATAKA STATE CO-OPERATIVE BANK (SUPRA), THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A) IS UPHELD. 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISM ISSED. 11.3 IN THE INSTANT CASE THERE IS NO DISPUTE TO THE FA CT THAT THE SOCIETY IS A CREDIT COOPERATIVE SOCIETY AUTHORISED BY THE REGISTRAR OF COOPERATIVE SOCIETIES FOR ACCEPTING DEPOSITS AND LENDING MONEY TO ITS MEMBERS AS PER LICENSE GRANTED BY THE REGISTRAR OF COOPERATIVE SOCIET IES AND THE MAIN OBJECT OF THE SOCIETY IS TO PROVIDE CREDIT FACILITY T O MEMBERS WHO CAN BE ANY PERSON OF THE SOCIETY. WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF MAHAVIR NAGARI SAHAKARI PAT SANSTHA LTD. REPO RTED IN 74 TTJ 793 (PUNE) HAS HELD THAT THE CREDIT SOCIETY WHICH IS CARRY ING ON THE BUSINESS OF BANKING ACTIVITY AND PROVIDING CREDIT FACILITY TO I TS MEMBERS IS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I). IN VIEW OF THE ABOVE DISC USSION AND FOLLOWING THE DECISIONS OF THE AHMEDABAD BENCH OF THE TRIBUNAL AND COCHIN BENCH OF THE TRIBUNAL WHICH IN TURN HAVE CONSIDERED THE DE CISION OF THE HONBLE SUPREME COURT IN THE CASE OF TOTAGARS COOPERATIVE S ALE SOCIETY LTD. (SUPRA) WE FIND NO INFIRMITY IN THE ORDER OF THE LD .CIT(A). ACCORDINGLY, THE SAME IS UPHELD AND THE GROUNDS RAISED BY THE REVENUE AR E DISMISSED. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. 7. FOLLOWING THE AFORESAID PRECEDENT, WHICH HAS BEEN RENDERED IN IDENTICAL CIRCUMSTANCES AND FOR THE SAKE OF MAINTAINING CONSISTENC Y, WE AFFIRM THE ACTION OF THE CIT(A) ALLOWING THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 80P(2)(A)(I) OF THE ACT IN RELATION TO A SUM OF RS.75 ,36,432/-. ACCORDINGLY,REVENUE FAILS IN ITS APPEAL. 10. I FIND THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI LAXMI NARAYAN NAGARI SAHAKARI PATSANSTHA MARYADIT VIDE ITA NO.604/PN/2014 ORDER DATED 19-08-2015 FOLLOWING THE DECISION OF HON BLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO REPORTED IN 55 TAXMANN.COM 447 (TO WHICH I A M A PARTY) HAS OBSERVED AS UNDER : 9. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A ) AND THE PAPER 10 ITA NO.1351/PN/2016 BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSI DERED THE VARIOUS DECISIONS CITED BEFORE US. THE ONLY DISPUTE TO BE DECI DED IN THE GROUNDS RAISED BY THE ASSESSEE IS THAT WHETHER THE INTEREST AMOUN TING TO RS.25,01,774/- EARNED BY THE ASSESSEE ON SHORT TERM DEPOSI TS WITH BANKS HAS TO BE TREATED AS INCOME FROM OTHER SOURCES U/S.56 OR THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I). WE FIND TH E AO FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF THE TOTGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA) TREATED THE INTEREST EARNE D FROM SUCH SHORT TERM DEPOSITS AS INCOME FROM OTHER SOURCES AND BROUGHT THE SAME TO TAX WHICH HAS BEEN UPHELD BY THE CIT(A). 10. IT IS THE CASE OF THE ASSESSEE THAT IN VIEW OF THE D ECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR MERCHANTS SOUHARDS CREDIT COOPERATIVE LTD. (SUPRA) THE INTEREST EARNED FROM SUC H SHORT TERM DEPOSITS WITH BANK IS ENTITLED TO DEDUCTION U/S.80P(2)( A)(I). WE FIND THE HONBLE HIGH COURT OF KARNATAKA AFTER CONSIDERING TH E DECISION OF HONBLE SUPREME COURT IN THE CASE OF TOTGARS COOPERATIVE SAL E SOCIETY LTD. (SUPRA) HELD THAT THE INTEREST EARNED BY SUCH COOPERA TIVE SOCIETIES ON SHORT TERM DEPOSITS WITH SCHEDULED BANKS IS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I). THE RELEVANT OBSERVATION OF THE HO NBLE HIGH COURT FROM PARA 6 ONWARDS READ AS UNDER : 6. FROM THE AFORESAID FACTS AND RIVAL CONTENTIONS, TH E UNDISPUTED FACTS WHICH EMERGES IS, THE SUM OF RS. 1,77,305/- REPRESENTS T HE INTEREST EARNED FROM SHORT-TERM DEPOSITS AND FROM SAVINGS BANK ACCOUNT. THE ASSESSEE IS A COOPERATIVE SOCIETY PROVIDING CREDIT FACILITIES TO I TS MEMBERS. IT IS NOT CARRYING ON ANY OTHER BUSINESS. THE INTEREST INCOME EAR NED 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 PROVIDIN G CREDIT FACILITIES TO ITS MEMBERS, IS THE QUESTION. IN THIS REGARD, IT IS NECESSA RY TO NOTICE THE RELEVANT PROVISION OF LAW I.E., SECTION 80P(2)(A)(I) : 'DEDUCTION IN RESPECT OF INCOME OF CO-OPERATIVE SOC IETIES: 80P (1) WHERE, IN THE CASE OF AN ASSESSEE BEING A CO-OPE RATIVE SOCIETY, THE GROSS TOTAL INCOME INCLUDES ANY INCOME REFERRED TO IN SUB-SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE WITH AND SUBJE CT TO THE PROVISIONS OF THIS SECTION, THE SUMS SPECIFIED IN SUB-SECTION (2), I N 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 PR OVIDING CREDIT FACILITIES TO ITS MEMBERS, OR (II) TO (VII) XX XX XX THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUSIN ESS 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 MEANIN G OF THE WORD 'ATTRIBUTABLE' AS SUPPOSED TO DERIVE FROM ITS USE IN VA RIOUS OTHER 11 ITA NO.1351/PN/2016 PROVISIONS OF THE STATUTE IN THE CASE OF CAMBAY ELECTRIC SUPPLY INDUSTRIAL CO. LTD. V. CIT [1978] 113 ITR 84 (SC) AS UNDER: 'AS REGARDS THE ASPECT EMERGING FROM THE EXPRESSION 'ATT RIBUTABLE TO' OCCURRING IN THE PHRASE 'PROFITS AND GAINS ATTRIBU TABLE TO THE BUSINESS OF THE SPECIFIED INDUSTRY (HERE GENERATION AND DISTRIBUTION OF ELECTRICITY) ON WHICH THE LEARNED SOLICITOR-GENE RAL RELIED, IT WILL BE PERTINENT TO OBSERVE THAT THE LEGISLATURE, HAS DELI BERATELY USED THE EXPRESSION 'ATTRIBUTABLE TO' AND NOT THE EXPRESSION 'DERIVED FROM'. IT CANNOT BE DISPUTED THAT THE EXPRESSION 'ATTR IBUTABLE TO' IS CERTAINLY WIDER IN IMPORT THAN THE EXPRESSION 'DERIVE D FROM'. HAD THE EXPRESSION 'DERIVED FROM' BEEN USED, IT COULD HAVE WITH SOME FORCE BEEN CONTENDED THAT A BALANCING CHARGE ARISING FROM THE SALE OF OLD MACHINERY AND BUILDINGS CANNOT BE REGARDED AS PROFITS AND GAINS DERIVED FROM THE CONDUCT OF THE BUSINESS OF GENER ATION AND DISTRIBUTION OF ELECTRICITY. IN THIS CONNECTION, IT MAY BE POINTED OUT THAT WHENEVER THE LEGISLATURE WANTED TO GIVE A RESTRI CTED MEANING IN THE MANNER SUGGESTED BY THE LEARNED SOLICITOR-GENE RAL, IT HAS USED THE EXPRESSION 'DERIVED FROM', AS, FOR INSTANCE, IN SECTION-80J. IN OUR VIEW, SINCE THE EXPRESSION OF WIDER IMPORT, NAM ELY, 'ATTRIBUTABLE TO', HAS BEEN USED, THE LEGISLATURE INTE NDED TO COVER RECEIPTS FROM SOURCES OTHER THAN THE ACTUAL CONDUCT OF THE BUSINESS OF GENERATION AND DISTRIBUTION OF ELECTRICITY. 8. THEREFORE, THE WORD 'ATTRIBUTABLE TO' IS CERTAINL Y WIDER IN IMPORT THAN THE EXPRESSION 'DERIVED FROM'. WHENEVER THE LEGISLATUR E WANTED TO GIVE A RESTRICTED MEANING, THEY HAVE USED THE EXPRESSION 'DERI VED FROM'. THE EXPRESSION 'ATTRIBUTABLE TO' BEING OF WIDER IMPORT, T HE SAID EXPRESSION IS USED BY THE LEGISLATURE WHENEVER THEY INTENDED TO GAT HER RECEIPTS FROM SOURCES OTHER THAN THE ACTUAL CONDUCT OF THE BUSINESS. A COOPERATIVE 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 C APITAL, IF NOT IMMEDIATELY REQUIRED TO BE LENT TO THE MEMBERS, THEY CANNOT KEEP THE SAID AMOUNT IDLE. IF THEY DEPOSIT THIS AMOUNT IN BANK SO AS TO EARN INTEREST, THE SAID INTEREST INCOME IS ATTRIBUTABLE TO THE PROFITS AND GAINS OF THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS ONLY. TH E SOCIETY IS NOT CARRYING ON ANY SEPARATE BUSINESS FOR EARNING SUCH INTER EST INCOME. THE INCOME SO DERIVED IS THE AMOUNT OF PROFITS AND GAINS O F BUSINESS ATTRIBUTABLE TO THE ACTIVITY OF CARRYING ON THE BUSI NESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS BY A CO-OPE RATIVE SOCIETY AND IS LIABLE TO BE DEDUCTED FROM THE GROSS TOTAL INCOME UND ER SECTION 80P OF THE ACT. 9. IN THIS CONTEXT WHEN WE LOOK AT THE JUDGMENT OF T HE APEX COURT IN THE CASE OF M/S. TOTGARS CO-OPERATIVE SALE SOCIETY LTD., O N WHICH RELIANCE IS PLACED, THE SUPREME COURT WAS DEALING WITH A CASE WHE RE THE ASSESSEE- COOPERATIVE SOCIETY, APART FROM PROVIDING CREDIT FA CILITIES TO THE MEMBERS, WAS ALSO IN THE BUSINESS OF MARKETING OF AGRICULTURAL P RODUCE GROWN BY ITS MEMBERS. THE SALE CONSIDERATION RECEIVED FROM MARKETIN G AGRICULTURAL PRODUCE OF ITS MEMBERS WAS RETAINED IN MANY CASES. THE SA ID RETAINED AMOUNT WHICH WAS PAYABLE TO ITS MEMBERS FROM WHOM PROD UCE WAS BOUGHT, WAS INVESTED IN A SHORT-TERM DEPOSIT/SECURITY. S UCH AN AMOUNT WHICH WAS RETAINED BY THE ASSESSEE-SOCIETY WAS A LIABILIT Y AND IT WAS SHOWN IN THE BALANCE SHEET ON THE LIABILITY SIDE. THE REFORE, 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 UND ER SECTION 12 ITA NO.1351/PN/2016 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. FURTHE R THEY MADE IT CLEAR THAT THEY ARE CONFINING THE SAID JUDGMENT TO THE FAC TS OF THAT CASE. THEREFORE IT IS CLEAR, SUPREME COURT WAS NOT LAYING D OWN ANY LAW. 10. IN THE INSTANT CASE, THE AMOUNT WHICH WAS INVESTED IN B ANKS TO EARN INTEREST WAS NOT AN AMOUNT DUE TO ANY MEMBERS. IT WAS N OT THE LIABILITY. IT WAS NOT SHOWN AS LIABILITY IN THEIR ACCOUNT. IN FACT T HIS AMOUNT WHICH IS IN THE NATURE OF PROFITS AND GAINS, WAS NOT IMMEDIATELY R EQUIRED BY THE ASSESSEE FOR LENDING MONEY TO THE MEMBER'S, AS THERE WERE NO TAKERS. THEREFORE THEY HAD DEPOSITED THE MONEY IN A BANK SO A S TO EARN INTEREST. THE SAID INTEREST INCOME IS ATTRIBUTABLE TO CARRYING O N 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 ANDH RA PRADESH HIGH COURT IN THE CASE OF CIT V. ANDHRA PRADESH STATE CO-OPERATIVE BANK LTD., [2011 ] 200 TAXMAN 220/12 TAXMANN.COM 66. IN THAT VIEW OF THE MATTER, THE ORDER PASSED BY THE APPELLATE AUTHORITIES DENYING THE BENEFI T OF DEDUCTION OF THE AFORESAID AMOUNT IS UNSUSTAINABLE IN LAW. ACCORDINGLY I T IS HEREBY SET ASIDE. THE SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN FAV OUR OF THE ASSESSEE AND AGAINST THE REVENUE. HENCE, WE PASS THE FOLL OWING ORDER: 11. NO DOUBT, A CONTRARY DECISION TO THIS EFFECT WAS A LSO CITED BY THE LD. DEPARTMENTAL REPRESENTATIVE WHERE THE HONBLE DELHI HIGH COURT IN THE CASE OF MANTOLA COOPERATIVE THRIFT & CREDIT SOCIETY LTD. (SUPRA) HAS HELD THAT WHERE THE ASSESSEE COOPERATIVE SOCIETY WAS ENGAGED I N PROVIDING CREDIT FACILITIES TO ITS MEMBERS EARNS INTEREST INCOME O N SURPLUS FUNDS DEPOSITED AS FIXED DEPOSITS, SUCH INTEREST INCOME WOULD B E ASSESSABLE AS INCOME FROM OTHER SOURCES AND THUS NOT ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I). HOWEVER, IT IS ALSO THE SETTLED PROP OSITION OF LAW THAT WHEN TWO VIEWS ARE POSSIBLE, THE VIEW WHICH IS IN FAVOU R OF THE ASSESSEE HAS TO BE FOLLOWED. SINCE IN THE INSTANT CASE, TWO DI VERGENT DECISIONS WERE CITED BEFORE US AND NO DECISION OF THE HONBLE JURISDI CTIONAL HIGH COURT IS AVAILABLE, THEREFORE, FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS REPORTED IN 88 ITR 192 WE HOLD THAT THE VIEW IN FAVOUR OF THE ASSESSEE, I.E. THE DECI SION OF THE HONBLE KARNATAKA HIGH COURT HAS TO BE FOLLOWED. ACCORDINGL Y, WE HOLD THAT THE INTEREST INCOME EARNED BY THE ASSESSEE ON SHORT TERM DEPO SITS KEPT WITH BANKS HAS TO BE ALLOWED AS DEDUCTION U/S.80P(2)(A)(I) O F THE I.T. ACT. THE ORDER OF THE CIT(A) IS ACCORDINGLY SET ASIDE AND THE G ROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 11. IN VIEW OF THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE AS WELL AS THE DECISION OF THE COORDINATE BENCH OF THE T RIBUNAL IN THE CASE OF SHRI LAXMI NARAYAN NAGARI SAHAKARI PATSANSTHA MARYADI T CITED (SUPRA), I DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A ) HOLDING THAT ASSESSEE IS ENTITLED TO DEDUCTION U/S.80P(2)(A)(I) ON THE INTERE ST INCOME. ACCORDINGLY, THE SAME IS UPHELD AND THE GROUNDS RAISED BY THE REVENU E ARE DISMISSED. 10. SINCE I AM A PARTY TO THE ABOVE DECISION, THEREFORE, FO LLOWING MY OWN DECISION IN THE CASE OF SWA ASHOKRAO BANKAR NAGARI S AHAKARI PATSANSTHA MARYADIT (SUPRA) I HOLD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80P(2)(A)(I) ON THE INTEREST INCOME KEPT WITH BANKS OTHE R 13 ITA NO.1351/PN/2016 THAN COOPERATIVE BANKS/COOPERATIVE SOCIETIES. THEREFORE, THE ORDER OF THE CIT(A) IS SET ASIDE AND THE GROUNDS RAISED BY THE AS SESSEE ARE ALLOWED. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29-07-2016. SD/- (R.K. PANDA) ACCOUNTANT MEMBER PUNE; ! DATED : 29 TH JULY, 2016. '# $# / COPY OF THE ORDER FORWARDED TO : / BY ORDER, // TRUE COPY // // # $ //UE %& $ ) / SR. PRIVATE SECRETARY ) , / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3 . THE CIT (A) - 7, PUNE 4. THE CIT - 7, PUNE 5. # $$) , ) , SMC BENCH / DR, ITAT, SMC BENCH PUNE; 6. 1 / GUARD FILE.