ITO, Nashik V. Ashokrao Bankar Gramin Bigarsheti, Nashik

ITA 1584/PUN/2012

• Counselvise Citation: 158424514 RSA 2012
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 26-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Business income
• Section: 143(3); 56; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHE A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.1584/PN/2012 (ASSESSMENT YEAR : 2009-10) INCOME TAX OFFICER, WARD 1 (1), NASHIK. . APPELLANT VS. ASHOKRAO BANKAR GRAMIN BIGARSHETI SAHAKARI PATSANSTHA LTD., OPP. POLICE STATION, PIMPALGAON (B), TAL. NIPHAD, DIST. NASHIK 422 209. PAN : AAAAA2084K . RESPONDENT DEPARTMENT BY : MR. P. L. PATHADE ASSESSEE BY : MR. PRAMOD SHINGTE ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGA INST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, NASHIK DATED 24.05.2012 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 30.12.2011 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2009-10. 2. THE SOLITARY ISSUE IN THE APPEAL OF THE REVENUE RELATES TO THE ACTION OF THE CIT(A) IN ALLOWING EXEMPTION U/S 80P(2)(A)(I) O F THE ACT IN RELATION TO A SUM OF RS.75,36,432/-, WHICH WAS DENIED BY THE ASSESSIN G OFFICER IN THE ASSESSMENT. 3. THE ASSESSEE BEFORE US IS A CO-OPERATIVE SOCIETY REGISTERED UNDER THE MAHARASHTRA CO-OPERATIVE SOCIETIES ACT, 1960 AND IS , INTER-ALIA, ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. FOR THE ASSESSMENT ITA NO.1584/PN/2012 A.Y. : 2009-10 YEAR UNDER CONSIDERATION, IT FILED A RETURN OF INCO ME DECLARING TOTAL INCOME AT RS. NIL WHICH, INTER-ALIA, INCLUDED A CLAIM OF EXEM PTION U/S 80P(2)(A)(I) OF THE ACT WITH RESPECT TO THE SURPLUS DECLARED BY IT IN I TS PROFIT & LOSS ACCOUNT. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAD EARNED INTEREST INCOME (NET OF EXPENSE S) OF RS.75,36,432/- FROM FIXED DEPOSITS WITH STATE BANK OF INDIA AND BA NK OF MAHARASHTRA. AS PER THE ASSESSING OFFICER, THE AFORESAID INCOME DECLARE D BY THE ASSESSEE WAS DIRECTLY ATTRIBUTABLE TO INVESTMENTS MADE WITH NON- MEMBERS, NAMELY, BANKS AND THEREFORE ACCORDING TO HIM ASSESSEE WAS NOT ELI GIBLE FOR EXEMPTION U/S 80P OF THE ACT IN RELATION TO SUCH INCOME. AS PER THE ASSESSING OFFICER SUCH INCOME COULD NOT BE SAID TO BE ATTRIBUTABLE TO THE ACTIVITY OF PROVIDING CREDIT FACILITIES TO THE MEMBERS. THE ASSESSING OFFICER R ELIED ON THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF TOTGARS C O-OPERATIVE SALE SOCIETY LTD. VS. ITO (2010) 322 ITR 283 (SC) AND ULTIMATELY HELD THAT SUCH INTEREST INCOME, WHICH WAS EARNED ON THE FIXED DEPOSITS WITH THE ABOVESTATED BANKS COULD NOT BE SAID TO BE ATTRIBUTABLE TO THE ACTIVIT IES OF THE ASSESSEE SOCIETY, NAMELY, THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND THEREFORE HE DENIED EXEMPTION U/S 80P(2)(A)(I) OF THE ACT. A CCORDINGLY, THE TOTAL INCOME WAS ASSESSED AT RS.75,36,432/-, AFTER REJECTING THE ASSESSEES CLAIM FOR EXEMPTION U/S 80P(2)(A)(I) OF THE ACT WITH RESPECT TO THE AFORESAID AMOUNT. 4. THE AFORESAID MATTER WAS CARRIED IN APPEAL BEFOR E THE CIT(A). THE CIT(A) HAS CONCURRED WITH THE ASSESSEE AND NEGATED THE ACTION OF THE ASSESSING OFFICER IN DENYING EXEMPTION U/S 80P(2)(A )(I) OF THE ACT WITH RESPECT TO A SUM OF RS.75,36,432/- REPRESENTING INTEREST IN COME EARNED ON FIXED DEPOSITS MADE WITH THE TWO ABOVESTATED BANKS. THE CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO ALLOW EXEMPTION U/S 80P(2)(I) OF THE ACT IN RELATION TO THE AFORESAID INCOME, AS ACCORDING TO HIM THE SAID INCO ME WAS ATTRIBUTABLE TO ASSESSEES BUSINESS OF PROVIDING CREDIT FACILITIES TO THE MEMBERS. ITA NO.1584/PN/2012 A.Y. : 2009-10 5. AGGRIEVED WITH THE ORDER OF CIT(A), REVENUE IS I N APPEAL BEFORE US CHALLENGING THE DECISION OF THE CIT(A) OF NEGATING THE ACTION OF THE ASSESSING OFFICER IN DENYING EXEMPTION U/S 80P(2)(A)(I) OF TH E ACT AMOUNTING TO RS.75,36,432/-. IN THE ABOVE BACKGROUND, THE RIVAL COUNSELS HAVE BEEN HEARD. 6. AT THE TIME OF HEARING, IT WAS A COMMON POINT BE TWEEN THE PARTIES THAT AN IDENTICAL CONTROVERSY HAS BEEN CONSIDERED BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ANOTHER CO-OPERATIVE SOCIET Y, 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 FAVOUR OF THE AS SESSEE AFTER CONSIDERING SIMILAR OBJECTION, WHICH HAS BEEN RAISED BY THE ASS ESSING OFFICER IN THE PRESENT CASE. THE LEARNED REPRESENTATIVE FOR THE A SSESSEE 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 T HE 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 CON TROVERTED THE ABOVE MATRIX AND NOR REFERRED TO ANY CONTRARY DECISION AN D THEREFORE FOR THE SAKE OF MAINTAINING CONSISTENCY WE FOLLOW THE DECISION OF O UR CO-ORDINATE BENCH IN THE CASE OF NIPHAD NAGARI SAHAKARI PATSANSTHA LTD. (SUP RA) AND UPHOLD THE PLEA OF THE ASSESSEE. HOWEVER, BEFORE PARTING, WE MAY R EPRODUCE HEREINAFTER THE FOLLOWING PORTION OF THE ORDER OF THE TRIBUNAL DATE D 31.07.2013 (SUPRA) WHICH BRINGS OUT THE REASONING PREVAILING WITH THE TRIBUN AL 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 HAV E ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. IN THE INSTANT CASE THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE IS A COOPERATIVE SOCIETY ENG AGED IN THE BUSINESS ACTIVITY OF CREDIT COOPERATIVE SOCIETY, I.E. PROVID ING CREDIT FACILITY TO ITS MEMBERS. ACCORDING TO THE REVENUE THE INCOME OF TH E 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 MU TUAL FUNDS ETC. ARE NOT COVERED BY THE ACTIVITY OF PROVIDING CREDIT FACILIT IES TO ITS MEMBERS AND HENCE ITA NO.1584/PN/2012 A.Y. : 2009-10 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) ALLOW ED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE IS ENTITLE D TO DEDUCTION U/S.80P(2)(A)(I) ON ACCOUNT OF INTEREST FROM BANKS OTHER THAN COOPERATIVE BANKS, INTEREST ON MUTUAL FUNDS LONG TERM AND SHORT TERM CAPITAL GAIN ON MUTUAL FUNDS ETC. WHILE DOING SO, HE HELD THAT THE DECISION IN THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE SINCE IN THAT CASE THE AMOUNT I NVESTED IN SHORT TERM DEPOSITS AND SECURITIES WAS NOT OUT OF INTEREST BEA RING DEPOSITS COLLECTED FROM MEMBERS BUT OUT OF SALE PROCEEDS OF AGRICULTURAL PR ODUCE OF FARMER MEMBERS MARKETED BY THE SOCIETY. FURTHER, THE HONBLE APEX COURT HAS CONSIDERED ONLY THE LATTER PART OF SECTION 80P(2)(A)(I), I.E. INCOM E OF A COOPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBE RS 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 COURT I N THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA) HAS OBSERVED AS UNDER : 17. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE EITHER PARTY, PERUSED THE RELEVANT RECORDS AND ALSO THE CASE LAW ON WHICH THE LEARNED AR HAD RESERVATION IN ITS APPLIC ABLY IN THE CIRCUMSTANCES OF THE ASSESSEE'S CASE. 18. IT WAS THE STAND OF THE LEARNED CIT (A) THAT T HE 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 BAN K DEPOSITS AND SECURITIES INCLUDED IN THE TOTAL INCOME OF THIS SOC IETY WHICH HAS BEEN CLAIMED AS EXEMPT. ACCORDING TO THE CIT (A), A SIMI LAR ISSUE TO THAT OF THE PRESENT ONE WAS DEALT WITH BY THE HON'BLE SUPRE ME COURT IN THE CASE OF TOTGARS CO-OP. SALE SOCIETY LTD V. ITO (SUP RA). THE ISSUE BEFORE THE HON'BLE COURT FOR DETERMINATION WAS WHET HER INTEREST INCOME ON SHORT TERM BANK DEPOSITS AND SECURITIES W OULD BE QUALIFIED AS BUSINESS INCOME U/S 80P (2)(A)(I) OF THE ACT. 19. THE ISSUE DEALT WITH BY THE HON'BLE SUPREME CO URT IN THE CASE OF TOTGARS (SUPRA) IS EXTRACTED, FOR 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 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, BEFORE US, I S-WHETHER INTEREST ON SUCH DEPOSITS/SECURITIES, WHICH STRICTL Y SPEAKING ACCRUES TO THE MEMBERS' ACCOUNT, COULD BE TAXED AS BUSINESS INCOME UNDER SECTION 28 OF THE ACT? IN OUR VIEW, SU CH INTEREST 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 ASSES SING OFFICER...' ITA NO.1584/PN/2012 A.Y. : 2009-10 19.1 HOWEVER, IN THE PRESENT CASE, ON VERIFICATION OF THE BALANCE SHEET OF THE ASSESSEE AS ON 31.3.2009, IT WAS OBSER VED THAT THE FIXED DEPOSITS MADE WERE TO MAINTAIN LIQUIDITY AND THAT T HERE WAS NO SURPLUS FUNDS WITH THE ASSESSEE AS ATTRIBUTED BY THE REVENU E. 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 OF IN VESTMENT CONSTITUTED A BUSINESS ACTIVITY BY A PRUDENT BUSINE SSMAN; THEREFORE, SUCH INTEREST INCOME WAS LIABLE TO BE TA XED UNDER SECTION 28 AND NOT UNDER SECTION 56 OF THE ACT AND, CONSEQUENTLY, THE ASSESSEE(S) WAS ENTITLED TO DEDUC TION UNDER SECTION 80P(2)(A)(I) OF THE ACT. THE ARGUMENT WAS R EJECTED BY THE ASSESSING OFFICER AS ALSO BY THE TRIBUNAL AND T HE HIGH COURT, HENCE, THESE CIVIL APPEALS HAVE BEEN FILED B Y THE ASSESSEE(S).' 19.2 FROM THE ABOVE, IT EMERGES THAT (A) THAT ASSESSEE (ISSUE BEFORE THE SUPREME COURT) HAD ADMITTED BEFORE THE AO THAT IT HAD INVESTED SURPLUS FUNDS, WHICH 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 ENTIRE FUNDS WERE UTILIZED FOR THE PURPOSES OF BUSINESS AND THERE WER E NO SURPLUS FUNDS. 19.4 WHILE COMPARING THE STATE OF AFFAIRS OF THE P RESENT ASSESSEE WITH THAT ASSESSEE (BEFORE THE SUPREME COURT), THE FOLLOWING CLINCHING DISSIMILARITIES EMERGE, NAMELY: (1) IN THE CASE OF THE ASSESSEE, THE ENTIRE FUNDS WERE UTILIZED FOR THE PURPOSES OF BUSINESS AND THAT 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 CA RRY 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 F UNDS; 19.5 CONSIDERING THE ABOVE FACTS, WE FIND THAT THE RE IS FORCE IN THE ARGUMENT OF THE ASSESSEE THAT THE ASSESSEE NOT A CO -OPERATIVE BANK, BUT ITS NATURE OF BUSINESS WAS COUPLED WITH BANKING WITH ITS MEMBERS, AS IT ACCEPTS DEPOSITS FROM AND LENDS THE SAME TO I TS MEMBERS. TO ITA NO.1584/PN/2012 A.Y. : 2009-10 MEET ANY EVENTUALITY, THE ASSESSEE WAS REQUIRED TO MAINTAIN SOME LIQUID FUNDS. THAT WAS WHY, IT WAS SUBMITTED BY THE ASSESSEE THAT IT HAD INVESTED IN SHORT-TERM DEPOSITS. FURTHERMORE, T HE ASSESSEE HAD 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, WE ARE OF THE CONSIDERED VIEW THAT THE RATIO LAID DOWN BY THE HON 'BLE SUPREME COURT IN THE CASE OF TOTGARS CO-OP SALE SOCIETY LTD (SUPR A) 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 TH AT THE LEARNED CIT (A) WAS NOT JUSTIFIED IN COMING TO A CONCLUSION THA T THE SUM OF RS.9,40,639/- WAS TO BE TAXED U/S 56 OF THE ACT. IT IS ORDERED ACCORDINGLY. 19.7 BEFORE PARTING WITH, WE WOULD, WITH DUE REGAR DS, LIKE TO RECORD THAT THE RULING OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. MANEKBANG CO-OP HOUSING SOCIETY LTD REPORTED IN (2012) 22 TAXMANN.COM 220(GUJ) HAS BEEN KEPT IN VIEW WHILE DE CIDING 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 IN THE CASE O F TOTAGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA) AND VARIOUS OTHER DECISIO NS HAS OBSERVED AS UNDER : 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE H AVE ALSO CAREFULLY GONE THROUGH THE ORDER OF THE LOWER AUTHORITY. NO D OUBT, 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-OPERATIVE SOCIETY IS NOT ELIGIBLE FOR DEDUCTION U/S 80P(2). I N THE CASE BEFORE THE APEX COURT IN TOTGAR'S CO-OPERATIVE SALE SOCIETY LT D VS ITO (SUPRA), THE ASSESSEE CO-OPERATIVE SOCIETY WAS TO PROVIDE CR EDIT FACILITY TO ITS MEMBERS AND MARKET THE AGRICULTURAL PRODUCE. THE AS SESSEE IS NOT IN THE BUSINESS OF BANKING. THEREFORE, THIS TRIBUNAL I S OF THE OPINION THAT THE JUDGMENT OF THE APEX COURT IN TOTGAR'S CO-OPERA TIVE SALE SOCIETY LTD (SUPRA) IS NOT APPLICABLE IN RESPECT OF THE CO- OPERATIVE SOCIETY WHOSE BUSINESS IS BANKING. ADMITTEDLY, THE ASSESSEE HAS INVESTED FUNDS IN STATE PROMOTED TREASURY SMALL SAVINGS FIXE D DEPOSIT SCHEME. SINCE GOVERNMENT OF INDIA HAS WITHDRAWN INDIA VIKAS PATRA, AS A SMALL SAVINGS INSTRUMENT, FUNDS INVESTED AT THE DISCRETIO N 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 B USINESS OF BANKING THE INVESTMENT IN THE STATE PROMOTED TREASURY SMALL SAVINGS FIXED DEPOSIT CERTIFICATE SCHEME IS A BANKING ACTIVITY, T HEREFORE, 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 BU SINESS INCOME, 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 THE APEX COURT IN KARNATAKA STATE CO- OPERATIVE APEX BA NK (SUPRA) IS APPLICABLE TO THE FACTS OF THIS CASE. BY RESPECTFUL LY FOLLOWING THE JUDGMENT OF THE APEX COURT IN KARNATAKA STATE CO-OP ERATIVE BANK (SUPRA), THE ORDER OF THE COMMISSIONER OF INCOME-TA X(A) IS UPHELD. 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 11.3 IN THE INSTANT CASE THERE IS NO DISPUTE TO THE FACT THAT THE SOCIETY IS A CREDIT COOPERATIVE SOCIETY AUTHORISED BY THE REGIST RAR OF COOPERATIVE SOCIETIES ITA NO.1584/PN/2012 A.Y. : 2009-10 FOR ACCEPTING DEPOSITS AND LENDING MONEY TO ITS MEM BERS AS PER LICENSE GRANTED BY THE REGISTRAR OF COOPERATIVE SOCIETIES A ND THE MAIN OBJECT OF THE SOCIETY IS TO PROVIDE CREDIT FACILITY TO MEMBERS WH O 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 (P UNE) HAS HELD THAT THE CREDIT SOCIETY WHICH IS CARRYING ON THE BUSINESS OF BANKING 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 AND FOLLOWING THE D ECISIONS OF THE AHMEDABAD BENCH OF THE TRIBUNAL AND COCHIN BENCH OF THE TRIBU NAL WHICH IN TURN HAVE CONSIDERED THE DECISION OF THE HONBLE SUPREME COUR T IN THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA) WE FIND NO IN FIRMITY IN THE ORDER OF THE LD.CIT(A). ACCORDINGLY, THE SAME IS UPHELD 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 BEE N RENDERED IN IDENTICAL CIRCUMSTANCES AND FOR THE SAKE OF MAINTAINING CONSI STENCY, WE AFFIRM THE ACTION OF THE CIT(A) ALLOWING THE CLAIM OF THE ASSE SSEE 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. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ABOVE DECISION WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF BOTH THE PARTIES AT THE CONCLUSION OF THE HEARING O N 30 TH APRIL, 2014. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 30 TH APRIL, 2014. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, NASHIK; 4) THE CIT-I, NASHIK; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE