Sahyadri Gramin Biger Sheti Sahakari Pat. Ltd., Raigad V. Income-tax Officer,

ITA 1574/PUN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1069 (ITAT-PUNE)
• Duration Of Justice: 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 21-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• 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.1574/PN/2016 / ASSESSMENT YEAR : 2010-11 SAHYADRI GRAMIN BIGE R SHETI SAHAKARI PATSANTHA LTD., SABLE NIWAS, MORBA ROAD, AGT & PO : MANGAON, DIST :RAIGAD PAN :AACAS9027J . / APPELLANT V/S ITO, WARD - (4), PAN VEL . / RESPONDENT / APPELLANT BY : SHRI NIKHIL PATHAK / RESPONDENT BY : SHRI SUHAS KULKARNI / ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 27-05-2016 OF THE CIT(A)-2, THANE RELATING TO THE ASSESSMENT YEAR 2010-11. 2. ALTHOUGH A NUMBER OF GROUNDS HAVE BEEN RAISED BY TH E ASSESSEE THEY ALL RELATE TO THE ORDER OF THE CIT(A) IN HO LDING THAT ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S.80P(2)(A)(I) ON THE INTEREST INCOME OF RS.12,17,026/- EARNED FROM DEPOSITS KEPT WITH BAN KS OTHER THAN COOPERATIVE BANKS/SOCIETIES. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A COOPERATIVE CREDIT SOCIETY ENGAGED IN THE BUSINESS OF PRO VIDING CREDIT FACILITIES TO ITS MEMBERS. IT IS REGISTERED UNDER THE MAHAR ASHTRA / DATE OF HEARING :25.08.2016 / DATE OF PRONOUNCEMENT:26.08.2016 2 ITA NO.1574/PN/2016 COOPERATIVE SOCIETIES ACT, 1960. IT FILED ITS RETURN OF INCOM E ON 04- 10-2010 DECLARING TOTAL INCOME OF RS.7,25,770/-. IN THE SAI D RETURN, DEDUCTION U/S.80P(2)(A)(I) OF THE I.T. ACT WAS NOT CLAIMED. SUBSEQUENTLY, THE ASSESSEE FILED RECTIFICATION PETITION STATIN G THAT DEDUCTION U/S.80P(2)(A)(I) WAS REMAINED TO BE CLAIMED. 3.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE ASSESSEE SOCIETY HAS RECEIVED INTEREST ON THE INVESTMENTS WITH THE BANKS OTHER THAN COOPERATIVE SOCIETIES, THE DET AILS OF WHICH ARE AS UNDER : SR.NO. NAME OF BANK FROM WHERE INTEREST RECEIVED AMOUNT OF INTEREST RECEIVED/CREDITED (RS.) 1 IDBI 1,13,375/ - 2 UNION BANK OF INDIA 2,74,293/ - 3 BANK OF INDIA 8,25,538/ - 4 ICICI BANK 3,820/ - TOTAL 12,17,026/ - HE ANALYSED THE PROVISIONS OF SECTION 80P(2) AND CAME TO THE CONCLUSION THAT DEDUCTION U/S.80P(2)(A)(I) OF THE ACT IS ALLOWABLE UNDER THE BUSINESS OF BANKING OR FOR THE BUSINESS OF PROV IDING CREDIT FACILITIES TO ITS MEMBERS. THE ASSESSEE SOCIETY WAS NEITHER ENGAGED IN THE BUSINESS OF BANKING NOR ENGAGED IN THE BUSINESS OF PR OVIDING CREDIT FACILITIES TO ITS MEMBERS. THEREFORE, IT IS NOT ELIGIBLE T O CLAIM DEDUCTION U/S.80P(2)(A)(I) OF THE I.T. ACT. HE FURTHER OBSERV ED THAT INTEREST INCOME OF RS.12,17,026/- RECEIVED AGAINST DEPOSITS MADE WITH THE BANKS WAS NEITHER BUSINESS INCOME EARNED IN THE COURSE OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS NOR FROM INVESTMEN TS WITH OTHER COOPERATIVE SOCIETIES. THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S.80P(2)(D) OF THE I.T. ACT. THE AO, THEREFORE, A SKED THE ASSESSEE TO EXPLAIN AS TO WHY THE AMOUNT OF RS.12,17,026/ - SHOULD NOT BE BROUGHT TO TAX AND THE CLAIM OF DEDUCTION U/S.80P (2)(A)(I) SHOULD NOT BE DISALLOWED. REJECTING THE VARIOUS EXPLANATIO NS GIVEN BY 3 ITA NO.1574/PN/2016 THE ASSESSEE AND FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY VS. ITO RE PORTED IN 322 ITR 283 THE AO HELD THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S.80P(2)(A)(I) OR U/S.80P(2)(D) OF THE INCOME TAX ACT, 1961 ON THE INTEREST INCOME OF RS.12,17,026/-. 4. IN APPEAL THE LD.CIT(A) DISTINGUISHING THE VARIOUS DECISIO NS CITED BEFORE HIM UPHELD THE ACTION OF THE AO. WHILE DOING S O, HE OBSERVED THAT THE COORDINATE BENCHES OF THE TRIBUNAL HA VE HELD THAT INTEREST INCOME EARNED AGAINST DEPOSIT OF SURPLUS FUNDS IN VESTED WITH THE COOPERATIVE BANKS WILL ONLY BE ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I) OF THE ACT AND NOT THE INTEREST INCOME EARNED FROM DEPOSITS MADE WITH THE OTHER BANKS, I.E. NATIONALISED BANKS AND PRIVATE BANKS. HE ACCORDINGLY HELD THAT ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I) OF THE ACT IN RESPECT OF INTEREST INCO ME EARNED FROM BANKS OTHER THAN COOPERATIVE BANKS. THE A SSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I) OF THE ACT ON THE INTEREST INCOME EARNED FROM DEPOSITS MADE WITH THE COOPERATIVE BANKS ONLY. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEA L BEFORE THE TRIBUNAL. 6. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET FILED A COPY OF ORDER OF THE TRIBUNAL IN THE CASE OF ITO VS. M/S. KUNDALIK A NAGARI SAHAKARI PATSANSTHA MARYADIT VIDE ITA NO.900/PN/2014 AND CO NO.34/PN/2015 ORDER DATED 29-01-2016 FOR A.Y. 2010-11 A ND SUBMITTED THAT ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/ S.80P(2)(A)(I) ON THE INTEREST INCOME EARNED ON THE INVESTMENTS/DEPOS ITS MADE WITH BANKS OTHER THAN COOPERATIVE BANKS/SOCIETIES AND IT IS N OT CONFINED TO ONLY INTEREST ON DEPOSITS WITH COOPERATIVE BANKS OR COO PERATIVE 4 ITA NO.1574/PN/2016 SOCIETIES. THEREFORE, THE CIT(A) IS NOT JUSTIFIED IN HOLDING THA T AS PER THE ORDER OF THE TRIBUNAL AN ASSESSEE IS ENTITLED TO DEDU CTION U/S.80P(2)(A)(I) ON THE INTEREST INCOME ON DEPOSITS MADE WITH ONLY COOPERATIVE BANKS/SOCIETIES. HE ACCORDINGLY SUBMITTED THAT THIS B EING A COVERED MATTER IN FAVOUR OF THE ASSESSEE THE GROUNDS RAISED BY THE ASSESSEE SHOULD BE ALLOWED. HE ALSO RELIED ON VARIOUS OT HER DECISIONS OF THE TRIBUNAL ON THIS ISSUE. 7. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAN D HEAVILY RELIED ON THE ORDER OF THE CIT(A). 8. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH T HE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. I HAVE ALSO CONSIDERED THE VARIOU S DECISIONS CITED BEFORE ME. I FIND THE ONLY ISSUE IN THE INSTANT CASE TO BE DECIDED IS REGARDING ALLOWABILITY OF DEDUCTION U/S.80P(2)(A)(I) ON THE INTERE ST INCOME OF RS.12,17,026/- RECEIVED BY THE ASSESSEE COOPER ATIVE SOCIETY ON INVESTMENTS MADE WITH VARIOUS BANKS OTHER THAN COOP ERATIVE BANKS/SOCIETIES. I FIND IDENTICAL ISSUE HAD COME UP BEFORE T HE TRIBUNAL IN THE CASE OF CHANDRAPRABHU GRAMIN BIGAR SHETI S AHKARI PATSANTHA MARYADIT VS. ITO, PANDHARPUR VIDE ITA NO.1352/ PN/2016 ORDER DATED 29-07-2016 FOR A.Y. 2010-11. IN THE SAID C ASE, I HAVE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THA T THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80P(2)(A)(I) ON THE INTER EST INCOME KEPT WITH VARIOUS BANKS OTHER THAN COOPERATIVE BANKS/SOCIETIES BY OBSERVING AS UNDER : 8. 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 VARIO US DECISIONS CITED BEFORE ME. I FIND THE ASSESSEE IN THE INSTANT CASE IS A COOPERATIVE SOCIETY AND HAS EARNED INTEREST INCOME OF RS.15,36,248/- FROM ITS INVESTMENT WITH DIFFERENT BANKS WHICH IT CLAIMED AS DEDUCTION U/ S.80P(2)(A)(I) OF THE 5 ITA NO.1574/PN/2016 I.T. ACT, 1961. THE AO, FOLLOWING THE DECISION OF H ONBLE SUPREME COURT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LTD. (S UPRA), DISALLOWED THE ABOVE 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 ASSESSEE THAT IN VIEW OF THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL AS WELL AS VARIOUS OTHER DECISIONS THE ISSUE STANDS COVERED IN FAVOUR 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 CASE OF SWA ASHOKRAO BANKAR NA GARI SAHAKARI PATSANSTHA MARYADIT VIDE ITA NO.1394/PN/2015 ORDER DA TED 22-07-2016 FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF NIPHAD NAGARI SAHAKARI PATSANSTHA LTD. (SUPRA) AND THE DECISION OF T HE HONBLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. (SUPRA) HAS HELD THAT ASSESSEE IS ENTITL ED TO DEDUCTION U/S.80P(2)(A)(I) ON THE INTEREST INCOME ON DEPOSITS WIT H BANKS OTHER THAN COOPERATIVE BANKS/COOPERATIVE SOCIETIES. THE REL EVANT 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 VARIO US 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 COOPERATIVE SOCIETIES. THE AO FOLLOWING THE DECISION OF HONBLE S UPREME COURT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LTD. DISALLO WED 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 INT EREST IS ITS BUSINESS INCOME ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I) OF TH E I.T. ACT. I FIND THE TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECED ING ASSESSMENT YEAR HAS ALSO DECIDED IDENTICAL ISSUE AND THE APPEAL FI LED BY THE REVENUE HAS BEEN DISMISSED. THE RELEVANT OBSERVATION OF THE TRI BUNAL FROM 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 FA VOUR OF THE ASSESSEE AFTER CONSIDERING SIMILAR OBJECTION, WHICH HAS B EEN RAISED BY THE ASSESSING OFFICER IN THE PRESENT CASE. THE LEARNED REPRESE NTATIVE FOR THE ASSESSEE HAS FURNISHED A COPY OF THE SAID ORDER OF THE TRI BUNAL DATED 31.07.2013 (SUPRA) AND HAS ALSO POINTED OUT THAT THE T RIBUNAL HAS DULY CONSIDERED THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TOTGARS CO-OPERATIVE SALE SOCIETY LTD. (SUPRA), WHIC H HAS BEEN RELIED UPON BY THE ASSESSING OFFICER IN THE PRESENT CASE. THE LE ARNED DEPARTMENTAL REPRESENTATIVE HAS NEITHER CONTROVERTED THE ABOVE MATRIX AND NOR REFERRED TO ANY CONTRARY DECISION AND THEREF ORE 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, BEFORE PARTING, WE MA Y REPRODUCE HEREINAFTER THE FOLLOWING PORTION OF THE ORDER OF T HE TRIBUNAL DATED 6 ITA NO.1574/PN/2016 31.07.2013 (SUPRA) WHICH BRINGS OUT THE REASONING PREV AILING 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. IN THE INSTA NT CASE THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE IS A COOPERAT IVE SOCIETY ENGAGED IN THE BUSINESS ACTIVITY OF CREDIT COOPERATIVE SOCI ETY, I.E. PROVIDING CREDIT FACILITY TO ITS MEMBERS. ACCORDING TO THE RE VENUE THE INCOME OF THE SOCIETY ON ACCOUNT OF INTEREST FROM BANKS OTHER THAN COOPERATIVE BANKS, INTEREST ON MUTUAL FUNDS, LONG TERM AND SHOR T TERM CAPITAL GAIN ON SALE OF MUTUAL FUNDS ETC. ARE NOT COVERED BY THE ACTIVITY OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND HENC E 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 TO TAGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA). WE FIND THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE AS SESSEE IS ENTITLED TO DEDUCTION U/S.80P(2)(A)(I) ON ACCOUNT OF INTERES T FROM 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 COOPERATIVE SALE SOCIETY LTD. (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE PRESE NT CASE SINCE IN THAT 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 MEM BERS MARKETED BY THE SOCIETY. FURTHER, THE HONBLE APEX COURT HAS CO NSIDERED ONLY THE LATTER PART OF SECTION 80P(2)(A)(I), I.E. INCOME OF A COOPERATIVE 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 COOPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF BANKING IS ELIGIBLE FOR DEDUCTIO N. 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 I N THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA) HAS OBSERVED AS UNDER : 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 CASE. 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 SHORT TERM BANK DEPOSITS AND SECURITIES INCLUDED IN THE TOTAL INCOM E 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 HON'BLE SUPREME COURT IN THE CASE OF TO TGARS CO- OP. SALE SOCIETY LTD V. ITO (SUPRA). THE ISSUE BEFO RE THE HON'BLE COURT FOR DETERMINATION WAS WHETHER INTERES T INCOME ON SHORT 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 COU RT IN THE CASE OF TOTGARS (SUPRA) IS EXTRACTED, FOR APPRECIAT ION OF FACTS, AS UNDER: 7 ITA NO.1574/PN/2016 '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 REQUI RED FOR BUSINESS PURPOSES? THE ASSESSEE(S) MARKETS THE PROD UCE OF ITS MEMBERS WHOSE SALE PROCEEDS AT TIMES WERE RETAI NED BY IT. IN THIS CASE, WE ARE CONCERNED WITH THE TAX TREATME NT 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, BEF ORE 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 INTEREST INCOME WOULD COME IN THE CATEGORY OF 'INCOME FROM OTHER SOURCES', HENCE, SUCH INTEREST INCOME WO ULD BE TAXABLE UNDER SECTION 56 OF THE ACT, AS RIGHTLY HEL D 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. THE ARGUMENT WAS REJECTED BY THE ASSESSING OFFICER AS ALSO BY THE TR IBUNAL AND THE HIGH COURT, HENCE, THESE CIVIL APPEALS HAVE BEE N 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, 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 AND THER E 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, NAMELY: 8 ITA NO.1574/PN/2016 (1) IN THE CASE OF THE ASSESSEE, THE ENTIRE FUNDS W ERE 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 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 ONLY 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 NOT 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 FUNDS . THAT WAS WHY, IT WAS SUBMITTED BY THE ASSESSEE THAT IT H AD INVESTED IN SHORT-TERM DEPOSITS. FURTHERMORE, THE ASSESSEE H AD MAINTAINED OVERDRAFT FACILITY WITH DENA BANK AND TH E 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 EIT HER 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 JUST IFIED 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 ACCORDING LY. 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 SOCIETY LTD 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 (S UPRA) AFTER CONSIDERING THE DECISION OF HONBLE SUPREME COURT I N 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-OPERATIVE 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 LTD VS ITO (SUPRA), THE ASSESSEE CO-OPERATIVE SOCIETY WAS TO PROVIDE CR EDIT FACILITY TO ITS MEMBERS AND MARKET THE AGRICULTURAL PRODUCE. THE ASSESSEE IS NOT IN THE BUSINESS OF BANKING. THEREFO RE, THIS TRIBUNAL IS OF THE OPINION THAT THE JUDGMENT OF THE APEX COURT IN TOTGAR'S CO-OPERATIVE SALE SOCIETY LTD (SUPRA) IS N OT 9 ITA NO.1574/PN/2016 APPLICABLE IN RESPECT OF THE CO-OPERATIVE SOCIETY W HOSE BUSINESS IS BANKING. ADMITTEDLY, THE ASSESSEE HAS I NVESTED FUNDS IN STATE PROMOTED TREASURY SMALL SAVINGS FIXE D DEPOSIT SCHEME. SINCE GOVERNMENT OF INDIA HAS WITHDRAWN IND IA VIKAS PATRA, AS A SMALL SAVINGS INSTRUMENT, FUNDS INVESTE D 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, THEREFORE , THE INTEREST ACCRUED ON SUCH INVESTMENT HAS TO BE TREATED AS BUS INESS INCOME IN THE COURSE OF ITS BANKING ACTIVITY. ONCE IT IS A BUSINESS INCOME, THE, ASSESSEE IS ENTITLED FOR DEDU CTION 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 K ARNATAKA STATE CO- OPERATIVE APEX BANK (SUPRA) IS APPLICABLE TO THE FACTS OF THIS CASE. BY RESPECTFULLY FOLLOWING THE J UDGMENT OF THE APEX COURT IN KARNATAKA STATE CO-OPERATIVE BANK (SU PRA), THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A) IS UPHEL D. 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 R EGISTRAR 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 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 BANKIN G ACTIVITY AND PROVIDING CREDIT FACILITY TO ITS MEMBERS IS ELIGIBL E FOR DEDUCTION U/S.80P(2)(A)(I). IN VIEW OF THE ABOVE DISCUSSION A ND FOLLOWING THE DECISIONS OF THE AHMEDABAD BENCH OF THE TRIBUNAL AN D COCHIN BENCH OF THE TRIBUNAL WHICH IN TURN HAVE CONSIDERED THE D ECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TOTAGARS COOP ERATIVE SALE SOCIETY LTD. (SUPRA) WE FIND NO INFIRMITY IN THE OR DER OF THE LD.CIT(A). 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. 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 CLAIM 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 V IDE 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 TAXMA NN.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 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 AMOUNT ING TO RS.25,01,774/- EARNED BY THE ASSESSEE ON SHORT TERM DEPOSI TS WITH BANKS 10 ITA NO.1574/PN/2016 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 I NTEREST EARNED FROM SUCH SHORT TERM DEPOSITS AS INCOME FROM OTHER SOURCES AN D 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 DE CISION 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 SA LE 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 TH E INTEREST EARNED FROM SHORT-TERM DEPOSITS AND FROM SAVINGS BANK AC COUNT. THE ASSESSEE IS A COOPERATIVE SOCIETY PROVIDING CREDIT FACI LITIES TO ITS MEMBERS. IT IS NOT CARRYING ON ANY OTHER BUSINESS. THE INTEREST INCOME EARNED 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 TH E BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS, IS THE QUEST ION. IN THIS REGARD, IT IS NECESSARY 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), 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 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 VAR IOUS OTHER PROVISIONS OF THE STATUTE IN THE CASE OF CAMBAY ELECTRIC SUPPLY INDUSTRIAL CO. LTD. V. CIT [1978] 113 ITR 84 (SC) AS UNDER: 11 ITA NO.1574/PN/2016 'AS REGARDS THE ASPECT EMERGING FROM THE EXPRESSION 'ATT RIBUTABLE TO' OCCURRING IN THE PHRASE 'PROFITS AND GAINS ATTRIB UTABLE TO THE BUSINESS OF THE SPECIFIED INDUSTRY (HERE GENERATION AND DISTRIBUTION OF ELECTRICITY) ON WHICH THE LEARNED SO LICITOR-GENERAL RELIED, IT WILL BE PERTINENT TO OBSERVE THAT THE LE GISLATURE, HAS DELIBERATELY USED THE EXPRESSION 'ATTRIBUTABLE TO' AND NOT THE EXPRESSION 'DERIVED FROM'. IT CANNOT BE DISPUTED THAT THE EXPRESSION 'ATTRIBUTABLE TO' IS CERTAINLY WIDER IN IMP ORT THAN THE EXPRESSION 'DERIVED FROM'. HAD THE EXPRESSION 'DERIVED FROM' BEEN USED, IT COULD HAVE WITH SOME FORCE BEEN CONTEND ED THAT A BALANCING CHARGE ARISING FROM THE SALE OF OLD MACHINE RY AND BUILDINGS CANNOT BE REGARDED AS PROFITS AND GAINS DERI VED FROM THE CONDUCT OF THE BUSINESS OF GENERATION AND DISTRIBUTION OF ELECTRICITY. IN THIS CONNECTION, IT MAY BE POINTED O UT THAT WHENEVER THE LEGISLATURE WANTED TO GIVE A RESTRICTED MEANING I N THE MANNER SUGGESTED BY THE LEARNED SOLICITOR-GENERAL, IT HAS USED THE EXPRESSION 'DERIVED FROM', AS, FOR INSTANCE, IN SECTION- 80J. IN OUR VIEW, SINCE THE EXPRESSION OF WIDER IMPORT, NAMELY, ' ATTRIBUTABLE TO', HAS BEEN USED, THE LEGISLATURE INTENDED 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 CERTAIN LY 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 GA THER 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 PROVID ING CREDIT FACILITIES TO ITS MEMBERS. THE INTEREST INCOME SO DERIVE D OR THE CAPITAL, 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 MEMBE RS ONLY. THE SOCIETY IS NOT CARRYING ON ANY SEPARATE BUSINESS FOR EARNING SUC H INTEREST INCOME. THE INCOME SO DERIVED IS THE AMOUNT OF PROFITS AND GAI NS OF 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 THE 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 AGRICUL TURAL PRODUCE GROWN BY ITS MEMBERS. THE SALE CONSIDERATION RECEIVED F ROM MARKETING AGRICULTURAL PRODUCE OF ITS MEMBERS WAS RETAINED IN MA NY CASES. THE SAID RETAINED AMOUNT WHICH WAS PAYABLE TO ITS MEMBERS FROM WHOM PRODUCE WAS BOUGHT, WAS INVESTED IN A SHORT-TERM DEPOSIT/SECURITY . SUCH AN AMOUNT WHICH WAS RETAINED BY THE ASSESSEE-SOCIETY WAS A L IABILITY AND IT WAS SHOWN IN THE BALANCE SHEET ON THE LIABILITY SIDE. T HEREFORE, TO THAT EXTENT, SUCH INTEREST INCOME CANNOT BE SAID TO BE ATTR IBUTABLE EITHER TO THE ACTIVITY MENTIONED IN SECTION 80P(2)(A)(I) OF THE A CT OR UNDER SECTION 80P(2)(A)(III) OF THE ACT. THEREFORE IN THE FACTS O F THE SAID CASE, THE APEX COURT HELD THE ASSESSING OFFICER WAS RIGHT IN TAXING THE INTEREST INCOME 12 ITA NO.1574/PN/2016 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 I N TERMS OF SECTION 80P(1) OF THE ACT. IN FACT SIMILAR VIEW IS TAKEN BY T HE 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 I N LAW. ACCORDINGLY IT IS HEREBY SET ASIDE. THE SUBSTANTIAL QUESTION OF LAW I S ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. HENCE, W E PASS THE FOLLOWING ORDER: 11. NO DOUBT, A CONTRARY DECISION TO THIS EFFECT WAS ALSO CITED BY THE LD. DEPARTMENTAL REPRESENTATIVE WHERE THE HONBLE DE LHI HIGH COURT IN THE CASE OF MANTOLA COOPERATIVE THRIFT & CREDIT SOCI ETY LTD. (SUPRA) HAS HELD THAT WHERE THE ASSESSEE COOPERATIVE SOCIETY WAS ENGA GED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS EARNS INTER EST INCOME ON SURPLUS FUNDS DEPOSITED AS FIXED DEPOSITS, SUCH INTEREST INC OME WOULD BE ASSESSABLE AS INCOME FROM OTHER SOURCES AND THUS NOT ELIG IBLE FOR DEDUCTION U/S.80P(2)(A)(I). HOWEVER, IT IS ALSO THE SETTLED PROPOSITION OF LAW THAT WHEN TWO VIEWS ARE POSSIBLE, THE VIEW WHICH I S IN FAVOUR OF THE ASSESSEE HAS TO BE FOLLOWED. SINCE IN THE INSTANT CASE, T WO DIVERGENT DECISIONS WERE CITED BEFORE US AND NO DECISION OF THE H ONBLE JURISDICTIONAL HIGH COURT IS AVAILABLE, THEREFORE, FO LLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. VEGE TABLE 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 COURT HAS TO BE FOLLOWED. ACCORDINGLY, WE HOLD THAT THE INTEREST INCOME EARNED BY THE ASSESSEE ON SHORT TERM DEPOSITS KEPT WITH BANKS HAS TO BE ALLOWED AS DEDUCTION U/S.80P(2)(A)(I) OF THE I.T. ACT. THE ORDER OF THE CIT(A) IS ACCORDINGLY SET ASIDE AND THE GROUNDS 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 INTE REST INCOME. ACCORDINGLY, THE SAME IS UPHELD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 10. SINCE I AM A PARTY TO THE ABOVE DECISION, THEREF ORE, FOLLOWING MY OWN DECISION IN THE CASE OF SWA ASHOKRAO BANKAR NAGARI SAHAKARI PATSANSTHA MARYADIT (SUPRA) I HOLD THAT THE ASSESSEE IS EN TITLED TO DEDUCTION U/S.80P(2)(A)(I) ON THE INTEREST INCOME KEP T WITH BANKS OTHER THAN COOPERATIVE BANKS/COOPERATIVE SOCIETIES. THEREFO RE, THE ORDER OF THE CIT(A) IS SET ASIDE AND THE GROUNDS RAISED BY THE ASSESSEE A RE ALLOWED. 13 ITA NO.1574/PN/2016 9. FOLLOWING THE ABOVE ORDER, I SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO ALLOW THE CLAIM OF THE ASSESSEE ON THE INTEREST INCOME OF RS.12,17,026/- EARNED FROM DEPOSITS KEPT WITH VARIOUS BA NKS OTHER THAN COOPERATIVE BANKS/SOCIETIES AS BUSINESS INCOME AND THEREBY ALLOW DEDUCTION U/S.80P(2)(A)(I) TO THE ASSESSEE. GROUNDS RAISE D BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26-08-2016. SD/- ( R.K. PANDA ) ACCOUNTANT MEMBER PUNE ; DATED : 26 TH AUGUST, 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) - 2 , THANE 4. THE CIT-2, THANE 5. $ %%* , * , SMC BENCH / DR, ITAT, SMC BENCH PUNE; 6. 2 / GUARD FILE.