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

ITA 1352/PUN/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1509 (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; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . . , BEFORE SHRI R.K. PANDA, AM . / ITA NO.1352/PN/2016 / ASSESSMENT YEAR : 2010-11 CHANDRAPRABHU GRAMIN BIGAR SHETI SAHKARI PATSANTHA MARYADIT, A/P. NATEPUTE, TALUK : MALSHIRAS, DIST. SOLAPUR PAN NO. AAAAC2702L . / 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 T O THE ASSESSMENT YEAR 2010-11. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A COOPERATIVE CREDIT SOCIETY REGISTERED UNDER THE MAHARAS HTRA COOPERATIVE SOCIETIES ACT, 1960. IT FILED ITS RETURN OF INCOM E ON 14-10-2010 DECLARING TOTAL INCOME AT NIL AFTER CLAIMING DED UCTION U/S.80P OF THE ACT AT RS.10,41,382/- DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO OBSERVED FROM THE DETA ILS FURNISHED BY THE ASSESSEE THAT IT HAS EARNED INTEREST INCOME FROM LOANS AND ADVANCES GIVEN TO MEMBERS AND FROM OTHER COOPERATIVE S OCIETIES. / DATE OF HEARING :27.07.2016 / DATE OF PRONOUNCEMENT:29.07.2016 2 ITA NO.1352/PN/2016 HOWEVER, THE ASSESSEE COOPERATIVE CREDIT SOCIETY HAD ALS O DEPOSITED ITS SURPLUS FUNDS IN BANKS OTHER THAN COOPERATIVE SOCIETIES/COOPERATIVE BANKS ON WHICH IT HAS EARNED INTERE ST TO THE TUNE OF RS.15,36,248/-. AFTER DEBITING THE VARIOUS EXPENSES THE ASSESSEE HAS CLAIMED DEDUCTION U/S.80P(2)(A)(I) AMOUNTING TO RS.10,41,382/-. THE AO, THEREFORE, ASKED THE ASSESSEE TO JUSTIFY ITS CLAIM OF DEDUCTION U/S.80P(2)(A)(I) IN RESPECT OF THE INTEREST INCO ME RECEIVED FROM NON COOPERATIVE BANKS AS THE SAID INTEREST INCOME IS NOT ATTRIBUTABLE TO THE BUSINESS OF THE ASSESSEE THAT O F PROVIDING CREDIT FACILITIES TO ITS MEMBERS. ACCORDING TO THE AO SUCH INCOME FALL UNDER THE HEAD INCOME FROM OTHER SOURCES U/S.56 AN D 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 W ITH THE EXPLANATION GIVEN BY THE ASSESSEE. RELYING ON THE D ECISION OF HONBLE SUPREME COURT IN THE CASE OF TOTGARS COOPERAT IVE SALE SOCIETY VS. ITO REPORTED IN 322 ITR 283 THE AO HELD THA T INCOME FROM INTEREST OF RS.15,36,248/- IS NOT ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I). 4. IN APPEAL THE LD.CIT(A) BY FOLLOWING THE DECISION OF HONB VLE 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.15,36,248/- 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 A CT, 1961. 3 ITA NO.1352/PN/2016 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 INT EREST INCOME AS TAXABLE DISREGARDING THE FACT THAT APPELLANTS ENTIRE INCOME IS EXEMPT 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 FACI LITIES 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. THEREFORE, ITS TOTAL INCOME IS DEDUCTIBLE U/S.80P(2)(A)(I). INVESTMENT IN FIXE D DEPOSITS IN NATIONALIZED BANKS IS IN LINE WITH THE BUSINESS A CTIVITY OF THE ASSESSEE SOCIETY AND ALSO AS PER THE PROVISIONS OF SECTION 70 OF THE MAHARASHTRA STATE COOPERATIVE SOCIETIES ACT. HE SUBMITTED THAT THE DEPOSITS SERVE 3 PURPOSES NAMELY (1) THE MONIE S WHICH ARE NOT IMMEDIATELY REQUIRED DO NOT REMAIN IDLE AND AT THE SA ME TIME EARN SOME INTEREST, (2) THESE DEPOSITS PROVIDE IMMEDIATE S OURCES TO MEET THE PAYMENT AS AND WHEN REQUIRED AND (3) IT ENSURE S SAFETY OF SURPLUS FUNDS AVAILABLE WITH THE ASSESSEE. HE SUBMITTED TH AT VIDE GOVERNMENT RESOLUTION DATED 12-11-2008 PERMISSION IS GRA NTED TO THE COOPERATIVE SOCIETIES TO KEEP DEPOSITS IN NATIONALIZED BANKS. HE SUBMITTED THAT THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF NIPHAD NAGARI SAHAKARI PATSANSTHA LTD. VIDE ITA NO.1336/PN/2011 ORDER DATED 31-07-2013 HAS UPHELD THE ORDER OF THE CIT(A) IN HOLDING THAT ASSESSEE IS ENTITLED TO DEDUCTION U/S.80P(2)(A)(I) ON ACCOUNT OF INTEREST FROM BANKS OTHER THAN COOPERATIVE BANKS/SOCIETIES. HE SUBMITTED THAT FOLLOWING TH E ABOVE DECISION THE PUNE BENCH OF THE TRIBUNAL IN VARIOUS OTHER DECISIONS 4 ITA NO.1352/PN/2016 HAVE HELD THE SAME VIEW. THE LD. COUNSEL FOR THE ASSESSE E REFERRING TO THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE L TD. VS. ITO REPORTED IN 55 TAXMANN.COM 447 SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HELD THAT THE ASSESS EE CREDIT COOPERATIVE SOCIETY WHICH HAS EARNED INTEREST FROM BANKS OTHER THAN CO-OPERATIVE BANKS IS 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.2180/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) BE 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 T HE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. I HAVE ALSO CONSIDER ED THE VARIOUS DECISIONS CITED BEFORE ME. I FIND THE ASSESSEE IN THE INSTANT CASE IS A COOPERATIVE SOCIETY AND HAS EARNED INT EREST INCOME OF RS.15,36,248/- FROM ITS INVESTMENT WITH DIFFERENT BANKS WH ICH IT CLAIMED AS DEDUCTION U/S.80P(2)(A)(I) OF THE I.T. ACT, 1961. T HE AO, FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA), DISALLOWED T HE ABOVE 5 ITA NO.1352/PN/2016 AMOUNT BY REJECTING 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. 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 CA SE OF SWA ASHOKRAO BANKAR NAGARI SAHAKARI PATSANSTHA MARYADIT V IDE 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 COOPERAT IVE LTD. (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 COOPERATIVE BANKS/COOPERATIVE SOCIETIES. THE RELEVA NT 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 VA RIOUS DECISIONS CITED BEFORE ME. I FIND THE ASSESSEE IN THE INSTANT CA SE IS A COOPERATIVE SOCIETY AND HAS RECEIVED INTEREST OF RS.48,16,346/- FR OM ITS INVESTMENTS WITH DIFFERENT BANKS. THE ASSESSEE CLAIMED DE DUCTION U/S.80P(2)(A)(I) OF ITS INCOME ON ACCOUNT OF INTEREST FROM BANKS OTHER THAN COOPERATIVE SOCIETIES. THE AO FOLLOWING THE DEC ISION OF HONBLE SUPREME COURT IN THE CASE OF TOTGARS COOPERATIVE SAL E SOCIETY LTD. DISALLOWED AN AMOUNT OF RS.44,52,781/- AFTER ALLOWING DEDUCTION OF RS.3,63,565/- AS PROPORTIONATE EXPENSES FOR EARNING SUC H INTEREST INCOME. I FIND THE LD.CIT(A) FOLLOWING THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF NIPHAD NAGARI PATSANSTH A LTD. (SUPRA) HELD THAT THE SAID INTEREST IS ITS BUSINESS INCOME ELIGIBL E FOR DEDUCTION U/S.80P(2)(A)(I) OF THE I.T. ACT. I FIND THE TRIBUN AL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR HAS ALSO DECIDED IDENTICAL ISSUE AND THE APPEAL FILED BY THE REVENUE H AS BEEN DISMISSED. THE RELEVANT OBSERVATION OF THE TRIBUNAL FROM PARA 6 ONWARDS READ AS UNDER : 6 ITA NO.1352/PN/2016 6. AT THE TIME OF HEARING, IT WAS A COMMON POINT BE TWEEN THE PARTIES THAT AN IDENTICAL CONTROVERSY HAS BEEN CONSIDERED BY T HE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ANOTHER CO-OPERATIVE SOCIETY, NAMELY, ITO VS. NIPHAD NAGARI SAHAKARI PATSANSTHA LTD. VIDE ITA NO .1336/PN/2011 DATED 31.07.2013 WHEREIN THE ISSUE HAS BEEN HELD IN FA VOUR OF THE ASSESSEE AFTER CONSIDERING SIMILAR OBJECTION, WHICH HAS BE EN RAISED BY THE ASSESSING OFFICER IN THE PRESENT CASE. THE LEARNED RE PRESENTATIVE 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 DECISION OF THE HONBLE SUPREM E 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 REFERRED TO ANY CONTRARY DECISION AND THEREFORE FOR THE SAKE OF MAINTAINING CONSISTENCY WE FOLLOW THE DECISION OF OUR CO- ORDINATE BENCH IN THE CASE OF NIPHAD NAGARI SAHAKARI PATSANSTHA LTD. (SUPRA) AND UPHOLD THE PLEAOF THE ASSESSEE. HOWEVER, BEF ORE PARTING, WE MAY REPRODUCE HEREINAFTER THE FOLLOWING PORTION OF THE ORDER OF THE TRIBUNAL DATED 31.07.2013 (SUPRA) WHICH BRINGS OUT TH E REASONING PREVAILING WITH THE TRIBUNAL TO UPHOLD THE PLEA OF THE ASSESSEE :- 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 THE VARIOUS DECISIONS CITED BEFORE US. I N THE INSTANT CASE THERE IS NO DISPUTE TO THE FACT THAT THE ASSES SEE IS A COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS ACTIVIT Y OF CREDIT COOPERATIVE SOCIETY, I.E. PROVIDING CREDIT FACILITY TO ITS MEMBERS. ACCORDING TO THE REVENUE THE INCOME OF THE SOCIETY ON ACCOUNT OF INTEREST FROM BANKS OTHER THAN COOPERATIVE BANKS, I NTEREST ON MUTUAL FUNDS, LONG TERM AND SHORT TERM CAPITAL GAIN ON SALE OF MUTUAL FUNDS ETC. ARE NOT COVERED BY THE ACTIVITY O F PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND HENCE NOT ELIGIBLE FO R 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 COOP ERATIVE SALE SOCIETY LTD. (SUPRA). WE FIND THE LD. CIT(A) ALLOWE D 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 F ROM BANKS OTHER THAN COOPERATIVE BANKS, INTEREST ON MUTUAL FUNDS LO NG TERM AND SHORT TERM CAPITAL GAIN ON MUTUAL FUNDS ETC. WHILE DOING SO, HE HELD THAT THE DECISION IN THE CASE OF TOTAGARS COOPERAT IVE SALE SOCIETY LTD. (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE SINCE IN THAT CASE THE AMOUNT INVESTED IN SHORT TERM DEPO SITS AND SECURITIES WAS NOT OUT OF INTEREST BEARING DEPOSITS COLLECTED FROM MEMBERS BUT OUT OF SALE PROCEEDS OF AGRICULTURAL PR ODUCE OF FARMER MEMBERS MARKETED BY THE SOCIETY. FURTHER, THE HONB LE APEX COURT HAS CONSIDERED ONLY THE LATTER PART OF SECTION 80P( 2)(A)(I), I.E. INCOME OF A COOPERATIVE SOCIETY ENGAGED IN PROVIDIN G CREDIT FACILITIES TO ITS MEMBERS IS ELIGIBLE FOR DEDUCTION 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 BUSI NESS 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 C OURT IN THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY LTD. (SU PRA) HAS OBSERVED AS UNDER : 7 ITA NO.1352/PN/2016 17. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS O F 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 ASSESSEE'S C ASE. 18. IT WAS THE STAND OF THE LEARNED CIT (A) THAT TH E ENTIRE INCOME WAS NOT EXEMPT AND THAT IT WAS TO BE EXAMINE D AS TO WHETHER THERE WAS ANY INTEREST INCOME ON THE SHO RT TERM BANK DEPOSITS AND SECURITIES INCLUDED IN THE TOTAL INCOME OF THIS SOCIETY WHICH HAS BEEN CLAIMED AS EXEMPT. ACCO RDING TO THE CIT (A), A SIMILAR ISSUE TO THAT OF THE PRES ENT ONE WAS DEALT WITH BY THE HON'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 WHET HER INTEREST INCOME ON SHORT TERM BANK DEPOSITS AND SEC URITIES 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 COU RT IN THE CASE OF TOTGARS (SUPRA) IS EXTRACTED, FOR APPRE CIATION 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 TERM DEPOSITS AND SECURITIES WHICH SURPLUS WAS NOT REQUIRED FOR BUSINESS PURPOSES? THE ASSESSEE(S) MARKETS THE PRODUCE OF ITS MEMBERS WHOSE SALE PROCEEDS 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 RETENTION WAS NOT REQUIRED IMMEDIATELY FOR BUSINESS PURPOSES, IT WAS INVESTED IN SPECIFIED SECURITIES. THE QUESTION, BEFORE US, IS-WHETHER INTEREST ON SUCH DEPOSITS/SECURITIES, WHICH STRICTLY SPEAKING ACCRUE S TO THE MEMBERS' ACCOUNT, COULD BE TAXED AS BUSINESS INCOME UNDER SECTION 28 OF THE ACT? IN OUR VIEW, SUCH INTE REST INCOME WOULD COME IN THE CATEGORY OF 'INCOME FROM O THER SOURCES', HENCE, SUCH INTEREST INCOME WOULD BE TAXA BLE 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 W AS OBSERVED THAT THE FIXED DEPOSITS MADE WERE TO MAINT AIN LIQUIDITY AND THAT THERE WAS NO SURPLUS FUNDS WITH THE ASSESSEE AS ATTRIBUTED BY THE REVENUE. HOWEVER, IN REGARD TO THE 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 IMM EDIATELY FOR BUSINESS PURPOSES AND, CONSEQUENTLY, SUCH ACT O F INVESTMENT CONSTITUTED A BUSINESS ACTIVITY BY A PRU DENT 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. TH E ARGUMENT WAS REJECTED BY THE ASSESSING OFFICER AS A LSO BY THE TRIBUNAL AND THE HIGH COURT, HENCE, THESE CIVIL APPEALS HAVE BEEN FILED BY THEASSESSEE(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, 8 ITA NO.1352/PN/2016 WHICH WERE 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 MEMB ERS; (C) THAT ASSESSEE CARRIED ON TWO ACTIVITIES, NAMELY , (I) ACCEPTANCE OF DEPOSIT AND LENDING BY WAY OF DEPOSIT S TO THE MEMBERS; AND (II) MARKETING THE AGRICULTURAL PRODUC E; AND (D) THAT THE SURPLUS HAD ARISEN EMPHATICALLY FROM M ARKETING OF AGRICULTURAL PRODUCES. 19.3 IN THE PRESENT CASE UNDER CONSIDERATION, THE E NTIRE FUNDS WERE UTILIZED FOR THE PURPOSES OF BUSINESS AN D THERE WERE NO SURPLUS FUNDS. 19.4 WHILE COMPARING THE STATE OF AFFAIRS OF THE PR ESENT ASSESSEE WITH THAT ASSESSEE (BEFORE THE SUPREME COU RT), THE FOLLOWING CLINCHING DISSIMILARITIES EMERGE, NAM ELY: (1) IN THE CASE OF THE ASSESSEE, THE ENTIRE FUNDS W ERE UTILIZED FOR THE PURPOSES OF BUSINESS AND THAT THER E 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 AGRICULTURAL PRODUCE OF ITS MEMBERS; (2) IN THE CASE OF PRESENT ASSESSEE, IT DID NOT CAR RY OUT ANY ACTIVITY EXCEPT IN PROVIDING CREDIT FACILITIES TO I TS MEMBERS AND THAT THE FUNDS WERE OF OPERATIONAL FUNDS. THE O NLY FUND AVAILABLE WITH THE ASSESSEE WAS DEPOSITS FROM ITS M EMBERS AND, THUS, THERE WAS NO SURPLUS FUNDS 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 THER E IS FORCE IN THE ARGUMENT OF THE ASSESSEE THAT THE ASSESSEE N OT A CO- OPERATIVE BANK, BUT ITS NATURE OF BUSINESS WAS COUP LED WITH BANKING WITH ITS MEMBERS, AS IT ACCEPTS DEPOSITS FR OM AND LENDS THE SAME TO ITS MEMBERS. TO MEET ANY EVENTUAL ITY, THE ASSESSEE WAS REQUIRED TO MAINTAIN SOME LIQUID F UNDS. THAT WAS WHY, IT WAS SUBMITTED BY THE ASSESSEE THAT IT HAD INVESTED IN SHORT-TERM DEPOSITS. FURTHERMORE, THE A SSESSEE HAD MAINTAINED OVERDRAFT FACILITY WITH DENA BANK AN D THE BALANCE AS AT 31.3.2009 WAS RS.13,69,955/- [SOURCE: BALANCE SHEET OF THE ASSESSEE AVAILABLE ON RECORD] 19.6 IN OVERALL CONSIDERATION OF ALL THE ASPECTS, W E ARE OF THE CONSIDERED VIEW THAT THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF TOTGARS CO-OP SALE SOC IETY LTD (SUPRA) CANNOT IN ANY WAY COME TO THE RESCUE OF EITHER THE LD. CIT (A) OR THE REVENUE. IN VIEW OF THE ABOV E 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 JURISDICTIONA L HIGH COURT IN THE CASE OF CIT V. MANEKBANG CO-OP HOUSING SOCIE TY LTD 9 ITA NO.1352/PN/2016 REPORTED IN (2012) 22 TAXMANN.COM 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) AFTER CONSIDERING THE DECISION OF HONBLE S UPREME COURT IN THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA) AND VARIOUS OTHER DECISIONS HAS OBSERVED AS UNDER : 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE ORDER OF THE LOWER AUTHORITY. NO DOUBT, THE LATEST JUDGMENT IN TOTGAR'S CO-OPERAT IVE SALE SOCIETY LTD VS ITO (SUPRA), THE APEX COURT FOUND TH AT THE DEPOSIT OF SURPLUS FUNDS BY THE CO-OPERATIVE SOCIET Y IS NOT ELIGIBLE FOR DEDUCTION U/S 80P(2). IN THE CASE BEFO RE 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 T HE 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 APPLICABLE IN RESPECT OF THE CO- OPERATIVE SOCIETY WHOSE BUSINESS IS BANKING. ADMITT EDLY, THE ASSESSEE HAS INVESTED FUNDS IN STATE PROMOTED T REASURY SMALL SAVINGS FIXED DEPOSIT SCHEME. SINCE GOVERNMEN T 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 ACTIVITIES OF THE BANKING AS PER THE BAN KING REGULATION ACT. SINCE THE ASSESSEE CO-OPERATIVE SOC IETY IS IN THE BUSINESS OF BANKING THE INVESTMENT IN THE ST ATE PROMOTED TREASURY SMALL SAVINGS FIXED DEPOSIT CERTI FICATE SCHEME IS A BANKING ACTIVITY, THEREFORE, THE INTERE ST ACCRUED ON SUCH INVESTMENT HAS TO BE TREATED AS BUSINESS IN COME IN THE COURSE OF ITS BANKING ACTIVITY. ONCE IT IS A BU SINESS INCOME, THE, ASSESSEE 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 CO- OPERATIVE APEX BANK (SUPRA) IS APPLICABLE TO THE FACTS OF THIS CASE. BY RESPECTFUL LY FOLLOWING THE JUDGMENT OF THE APEX COURT IN KARNATAKA STATE C O- OPERATIVE BANK (SUPRA), THE ORDER OF THE COMMISSION ER 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 REGISTRAR OF COOPERATIVE SOCIETIES FOR ACCEPTING DEPOSITS AND LE NDING MONEY TO ITS MEMBERS AS PER LICENSE GRANTED BY THE REGISTRAR OF COOPERATIVE SOCIETIES AND THE MAIN OBJECT OF THE SOCIETY IS TO PROVIDE CREDIT FACILITY TO MEMBERS WHO CAN BE ANY PERSON OF THE SO CIETY. WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF MAHAV IR NAGARI SAHAKARI PAT SANSTHA LTD. REPORTED IN 74 TTJ 793 (P UNE) HAS HELD THAT THE CREDIT SOCIETY WHICH IS CARRYING ON THE BU SINESS OF BANKING ACTIVITY AND PROVIDING CREDIT FACILITY TO ITS MEMBE RS IS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I). IN VIEW OF THE ABOVE DI SCUSSION AND FOLLOWING THE DECISIONS OF THE AHMEDABAD BENCH OF T HE TRIBUNAL AND COCHIN BENCH OF THE TRIBUNAL WHICH IN TURN HAVE CONSIDERED THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF TOTAGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA) WE FIND NO IN FIRMITY IN THE 10 ITA NO.1352/PN/2016 ORDER OF THE LD.CIT(A). ACCORDINGLY, THE SAME IS UP HELD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 7. FOLLOWING THE AFORESAID PRECEDENT, WHICH HAS BEEN RENDERED IN IDENTICAL CIRCUMSTANCES AND FOR THE SAKE OF MAINTAININ G CONSISTENCY, WE AFFIRM THE ACTION OF THE CIT(A) ALLOWING THE CLA IM OF THE ASSESSEE FOR EXEMPTION U/S 80P(2)(A)(I) OF THE ACT IN RELATION T O A SUM OF RS.75,36,432/-. ACCORDINGLY,REVENUE FAILS IN ITS APPE AL. 10. I FIND THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI LAXMI NARAYAN NAGARI SAHAKARI PATSANSTHA MARYADIT VI DE ITA NO.604/PN/2014 ORDER DATED 19-08-2015 FOLLOWING THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR M ERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO REPORTED IN 55 TAXMANN.COM 447 (TO WHICH I AM 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 BOOK FILED ON BEHALF OF THE ASSESSEE. WE HA VE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THE ONLY DISPUTE TO BE DECIDED IN THE GROUNDS RAISED BY THE ASSESSEE IS THAT W HETHER THE INTEREST AMOUNTING TO RS.25,01,774/- EARNED BY THE ASSE SSEE ON SHORT TERM DEPOSITS WITH BANKS HAS TO BE TREATED AS INCOME FR OM OTHER SOURCES U/S.56 OR THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I). WE FIND THE AO FOLLOWING THE DECI SION OF HONBLE SUPREME COURT IN THE CASE OF THE TOTGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA) TREATED THE INTEREST EARNED FROM SUCH SHORT TE RM DEPOSITS AS INCOME FROM OTHER SOURCES AND BROUGHT THE SAME TO TA X WHICH HAS BEEN UPHELD BY THE CIT(A). 10. IT IS THE CASE OF THE ASSESSEE THAT IN VIEW OF THE DE CISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR M ERCHANTS SOUHARDS CREDIT COOPERATIVE LTD. (SUPRA) THE INTEREST EARNED FROM SUCH SHORT TERM DEPOSITS WITH BANK IS ENTITLED TO DEDUCT ION U/S.80P(2)(A)(I). WE FIND THE HONBLE HIGH COURT OF KARNATAKA AFTER CONSIDERING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA) HELD THAT THE INTEREST EARNED BY SUCH COOPERATIVE SOCIETIES ON SHORT TERM DEPO SITS WITH SCHEDULED BANKS IS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A) (I). THE RELEVANT OBSERVATION OF THE HONBLE 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 TH E INTEREST EARNED FROM SHORT-TERM DEPOSITS AND FROM SAVINGS BANK AC COUNT. THE ASSESSEE IS A COOPERATIVE SOCIETY PROVIDING CREDIT FACIL ITIES TO ITS MEMBERS. IT IS NOT CARRYING ON ANY OTHER BUSINESS. THE I NTEREST INCOME EARNED BY THE ASSESSEE BY PROVIDING CREDIT FACILITIES TO ITS MEMBERS IS DEPOSITED IN THE BANKS FOR A SHORT DURATION WHICH HAS E ARNED INTEREST. THEREFORE, WHETHER THIS INTEREST IS ATTRIBUTABLE TO TH E BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS, IS THE QUE STION. IN THIS REGARD, IT IS NECESSARY TO NOTICE THE RELEVANT PROVISIO N OF LAW I.E., SECTION 80P(2)(A)(I): 'DEDUCTION IN RESPECT OF INCOME OF CO-OPERATIVE SOC IETIES: 11 ITA NO.1352/PN/2016 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 SUBJECT TO THE PROVISIONS OF THIS SECTION, THE SUMS SPECIFIED IN SUB-SECTIO N (2), IN 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 BUSINE SS ATTRIBUTABLE TO ANY ONE OR MORE OF SUCH ACTIVITIES.' 7. THE WORD 'ATTRIBUTABLE' USED IN THE SAID SECTION I S OF GREAT IMPORTANCE. THE APEX COURT HAD AN OCCASION TO CONSIDE R 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 [1978] 113 ITR 84 (SC) AS UNDER: 'AS REGARDS THE ASPECT EMERGING FROM THE EXPRESSION 'ATTRIBUTABLE TO' OCCURRING IN THE PHRASE 'PROFITS AN D GAINS ATTRIBUTABLE TO THE BUSINESS OF THE SPECIFIED INDUSTRY ( HERE GENERATION AND DISTRIBUTION OF ELECTRICITY) ON WHICH THE LEARNED SOLICITOR-GENERAL RELIED, IT WILL BE PERTINENT TO O BSERVE THAT THE LEGISLATURE, HAS DELIBERATELY USED THE EXPRESSION 'ATTRI BUTABLE TO' AND NOT THE EXPRESSION 'DERIVED FROM'. IT CANNOT BE DISPUTED THAT THE EXPRESSION 'ATTRIBUTABLE TO' IS CERTAINLY WID ER IN IMPORT THAN THE EXPRESSION 'DERIVED FROM'. HAD THE EXPRESSION 'DERIVED FROM' BEEN USED, IT COULD HAVE WITH SOME FOR CE BEEN CONTENDED THAT A BALANCING CHARGE ARISING FROM THE SA LE 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 RESTRICTED MEANING IN THE MANNER SUGGESTED BY THE LEAR NED SOLICITOR-GENERAL, IT HAS USED THE EXPRESSION 'DERIVED FROM', AS, FOR INSTANCE, IN SECTION-80J. IN OUR VIEW, SINCE THE E XPRESSION OF WIDER IMPORT, NAMELY, 'ATTRIBUTABLE TO', HAS BEEN USE D, THE LEGISLATURE INTENDED TO COVER RECEIPTS FROM SOURCES OTH ER 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 LEGI SLATURE WANTED TO GIVE A RESTRICTED MEANING, THEY HAVE USED THE EXPR ESSION 'DERIVED FROM'. THE EXPRESSION 'ATTRIBUTABLE TO' BEING OF WIDE R IMPORT, THE SAID EXPRESSION IS USED BY THE LEGISLATURE WHENEVER THEY INT ENDED TO GATHER RECEIPTS FROM SOURCES OTHER THAN THE ACTUAL CONDUCT OF THE BUSINESS. A COOPERATIVE SOCIETY WHICH IS CARRYING ON THE BUSINESS O F PROVIDING 12 ITA NO.1352/PN/2016 CREDIT FACILITIES TO ITS MEMBERS, EARNS PROFITS AND GAIN S OF BUSINESS BY PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE INTERE ST INCOME SO DERIVED OR THE CAPITAL, IF NOT IMMEDIATELY REQUIRED TO BE LENT TO THE MEMBERS, THEY CANNOT KEEP THE SAID AMOUNT IDLE. IF TH EY DEPOSIT THIS AMOUNT IN BANK SO AS TO EARN INTEREST, THE SAID INTERE ST INCOME IS ATTRIBUTABLE TO THE PROFITS AND GAINS OF THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS ONLY. THE SOCIETY IS NOT CARR YING ON ANY SEPARATE BUSINESS FOR EARNING SUCH INTEREST INCOME. THE I NCOME SO DERIVED IS THE AMOUNT OF PROFITS AND GAINS OF BUSINESS A TTRIBUTABLE TO THE ACTIVITY OF CARRYING ON 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 SECTION 8 0P OF THE ACT. 9. IN THIS CONTEXT WHEN WE LOOK AT THE JUDGMENT OF THE APEX COURT IN THE CASE OF M/S. TOTGARS CO-OPERATIVE SALE SOCIETY LTD ., ON WHICH RELIANCE IS PLACED, THE SUPREME COURT WAS DEALING WIT H A CASE WHERE THE ASSESSEE-COOPERATIVE 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 RE CEIVED FROM MARKETING AGRICULTURAL PRODUCE OF ITS MEMBERS WAS RETA INED IN MANY CASES. THE SAID RETAINED AMOUNT WHICH WAS PAYABLE TO I TS MEMBERS FROM WHOM PRODUCE WAS BOUGHT, WAS INVESTED IN A SHORT-T ERM DEPOSIT/SECURITY. SUCH AN AMOUNT WHICH WAS RETAINED BY THE ASSESSEE- SOCIETY WAS A LIABILITY AND IT WAS SHOWN IN THE BALANC E SHEET ON THE LIABILITY SIDE. THEREFORE, TO THAT EXTENT, SUCH INTER EST INCOME CANNOT BE SAID TO BE ATTRIBUTABLE EITHER TO THE ACTIVITY MENTI ONED IN SECTION 80P(2)(A)(I) OF THE ACT OR UNDER SECTION 80P(2)(A)( III) OF THE ACT. THEREFORE IN THE FACTS OF THE SAID CASE, THE APEX COUR T HELD THE ASSESSING OFFICER WAS RIGHT IN TAXING THE INTEREST INCOM E INDICATED ABOVE UNDER SECTION 56 OF THE ACT. FURTHER THEY MAD E IT CLEAR THAT THEY ARE CONFINING THE SAID JUDGMENT TO THE FACTS OF THAT CASE. THEREFORE IT IS CLEAR, SUPREME COURT WAS NOT LAYING DOWN ANY LAW. 10. IN THE INSTANT CASE, THE AMOUNT WHICH WAS INVESTED IN 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 ACCO UNT. IN FACT THIS AMOUNT WHICH IS IN THE NATURE OF PROFITS AND GAINS, WA S NOT IMMEDIATELY REQUIRED 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 AS TO EARN INTEREST. THE SAID INTERE ST INCOME IS ATTRIBUTABLE TO CARRYING ON THE BUSINESS OF BANKING AN D 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., [2011 ] 200 TAXMAN 220/12 TAXMANN.COM 66. IN THAT VIEW OF THE MATTER, THE ORDER PASSED BY THE APPELLATE AUTHORITIES DENYING THE BENEFIT 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 FOLLO WING ORDER: 11. NO DOUBT, A CONTRARY DECISION TO THIS EFFECT WAS A LSO CITED BY THE LD. DEPARTMENTAL REPRESENTATIVE WHERE THE HONBLE DE LHI HIGH COURT IN THE CASE OF MANTOLA COOPERATIVE THRIFT & CREDIT S OCIETY LTD. (SUPRA) HAS HELD THAT WHERE THE ASSESSEE COOPERATIVE SOCIETY WAS E NGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS EARNS INTERE ST INCOME ON SURPLUS FUNDS DEPOSITED AS FIXED DEPOSITS, SUCH INTEREST INC OME WOULD BE ASSESSABLE AS INCOME FROM OTHER SOURCES AND THUS NOT E LIGIBLE FOR 13 ITA NO.1352/PN/2016 DEDUCTION U/S.80P(2)(A)(I). HOWEVER, IT IS ALSO THE SE TTLED PROPOSITION OF LAW THAT WHEN TWO VIEWS ARE POSSIBLE, THE VIEW WHIC H IS IN FAVOUR OF THE ASSESSEE HAS TO BE FOLLOWED. SINCE IN THE INSTANT CA SE, TWO DIVERGENT DECISIONS WERE CITED BEFORE US AND NO DECISIO N OF THE HONBLE JURISDICTIONAL HIGH COURT IS AVAILABLE, THEREFORE, FO LLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. V EGETABLE PRODUCTS REPORTED IN 88 ITR 192 WE HOLD THAT THE VIEW IN FAV OUR OF THE ASSESSEE, I.E. THE DECISION OF THE HONBLE KARNATAKA HIGH COUR T HAS TO BE FOLLOWED. ACCORDINGLY, WE HOLD THAT THE INTEREST IN COME EARNED BY THE ASSESSEE ON SHORT TERM DEPOSITS KEPT WITH BANKS HAS TO BE AL LOWED AS DEDUCTION U/S.80P(2)(A)(I) OF THE I.T. ACT. THE ORD ER OF THE CIT(A) IS ACCORDINGLY SET ASIDE AND THE GROUNDS RAISED BY THE ASSESS EE 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 MARY ADIT CITED (SUPRA), I DO NOT FIND ANY INFIRMITY IN THE ORDER O F THE CIT(A) HOLDING THAT ASSESSEE IS ENTITLED TO DEDUCTION U/S.80P(2)(A)(I) O N THE INTEREST INCOME. ACCORDINGLY, THE SAME IS UPHELD AND THE GRO UNDS RAISED BY THE REVENUE 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 NAGA RI SAHAKARI PATSANSTHA MARYADIT (SUPRA) I HOLD THAT THE AS SESSEE IS ENTITLED TO DEDUCTION U/S.80P(2)(A)(I) ON THE INTEREST INCOME KE PT WITH BANKS OTHER THAN COOPERATIVE BANKS/COOPERATIVE SO CIETIES. THEREFORE, THE ORDER OF THE CIT(A) IS SET ASIDE AND THE GR OUNDS RAISED BY THE ASSESSEE 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. 14 ITA NO.1352/PN/2016 '# $# / COPY OF THE ORDER FORWARDED TO : / BY ORDER , // TRUE COPY // // 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. 2 / GUARD FILE.