Income-tax Officer, V. Loknete Shankarrao Balaji Waje Gramin Bigarsheti Sahakari Patsanstha, Nashik

ITA 1631/PUN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0482 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 10-10-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 27-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 56; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . . , BEFORE SHRI R.K. PANDA, AM . / ITA NO.1631/PN/2016 / ASSESSMENT YEAR : 2012-13 ITO, WARD - 1(5 ), NASHIK . / APPELLANT V/S LOKNETE SHANKARRAO BALAJI WAJE GRAMIN BIGERSHETI SAHAKARI PATSANSTHA, AT POST : DUBERE, TALUKA: SINNAR, DIST. NASHIK-422103 PAN :AAATL4099E . / RESPONDENT / APPELLANT BY : SHRI YOGESH KAMAT / RESPONDENT BY : SHRI SANKET JOSHI / ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE O RDER DATED 17-05-2016 OF THE CIT(A)-I, NASHIK RELATING TO TH E ASSESSMENT YEARS 2012-13. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A)-I, NASHIK HAS ERRED IN DELETING THE ADDITIO N OF RS.43,63,346/-. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD.CIT(A)-I, NASHIK WHILE DELETING THE ADDITION MADE BY THE ASSESSING OFFICER HAS ERRED WHILE RELYING UPON THE DECISION OF THE HONBLE ITAT, PUNE IN THE CASE OF HAL(ND) EMPLOYEES CO-OPERATIVE CR EDIT SOCIETY, ITA NO.306/PN/2013 FOR A.Y. 2009-10 DATED 24-02-2015 AN D CBDTS CIRCULAR NO.18/2015 DATED 01-11-2015 WITHOUT APPREC IATING THE FACT THAT THE SAID CBDTS CIRCULAR IS APPLICABLE ONLY IN TH E CASES OF ASSESSEES WHO COVERED BY THE BANKING REGULATION ACT, 1949. / DATE OF HEARING :10.11.2016 / DATE OF PRONOUNCEMENT:11.11.2016 2 ITA NO.1631/PN/2016 3. THE APPELLANT PRAYS TO ADDUCE SUCH FURTHER EVIDENC E TO SUBSTANTIATE HIS CASE. 4. THE APPELLANT PRAYS LEAVE TO ADD, ALTER, CLARIFY AMEND AND OR WITHDRAW ANY GROUNDS OF APPEAL AS AND WHEN THE OCCASIO N DEMANDS. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND ALSO EARNING INCOME FROM VARIOUS INVESTMENTS MADE IN BANKS. T HE SOCIETY IS REGISTERED UNDER THE MAHARASHTRA COOPERATIVE SOCIETIE S ACT, 1960. IT FILED ITS RETURN OF INCOME ON 20-09-2012 DECLARING TOTAL INCOME OF RS.1,20,020/-. DURING THE COURSE OF ASSESSMENT PROCEEDING S THE AO NOTED THAT THE ASSESSEE SOCIETY HAS SHOWN GROSS RECE IPTS OF RS.4,61,85,994/- WHICH INCLUDES INTEREST ON LOAN GIVEN TO MEM BERS, INTEREST OF INVESTMENT MADE WITH BANKS, INTEREST ON RECURRING DEPO SITS ETC., AFTER CLAIMING VARIOUS EXPENSES AT RS.4,41,22,922/- TH E ASSESSEE HAS SHOWN NET SURPLUS OF RS.20,63,072/- WHICH HA S BEEN CLAIMED TO BE EXEMPT U/S.80P OF THE ACT. FROM THE VARIOU S DETAILS FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER NOTED THA T THE INTEREST RECEIVED AT RS.1,18,82,928/- SHOWN BY THE ASSESS EE ON ACCOUNT OF FIXED DEPOSITS KEPT WITH BANKS INCLUDE INTEREST OF RS.43,63,346/-, INTEREST ON FIXED DEPOSIT KEPT WITH NATIONALIS ED BANKS, I.E. BANK OF BARODA AND BANK OF MAHARASHTRA. ACCOR DING TO THE ASSESSING OFFICER AS PER THE PROVISIONS OF SECTION 80P(2 )(D) THE INCOME DERIVED BY WAY OF INTEREST AND DIVIDENDS DERIVED BY THE COOPERATIVE SOCIETY AS PER ITS INVESTMENT WITH ANY OTHER COOPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME IS DEDUCTIBLE UNDER THE SAID SECTION. HOWEVER, THE INTEREST RECEIVED FROM FIXED DEPOSITS KEPT W ITH NATIONALIZED BANKS CANNOT BE ALLOWED AS DEDUCTION UNDER T HE PROVISIONS OF SECTION 80P(2)(D) OF THE I.T. ACT. ACCORDING TO HIM, THE ASSESSEE IS EXISTING TO PROVIDE CREDIT FACILITY TO ITS MEMBER S. 3 ITA NO.1631/PN/2016 THEREFORE, INTEREST EARNED FROM THE SUMS LEND TO ITS MEMB ERS CONSTITUTE ITS OPERATIONAL INCOME. SINCE THE INTEREST INCOM E OF RS.43,63,346/- HAS BEEN RECEIVED ON FIXED DEPOSITS KEPT W ITH NATIONALIZED BANKS THE AO HELD THAT THE SAID INTEREST INCO ME IS NOT ALLOWABLE AS A DEDUCTION U/S.80P(2)(A)(I) OF THE I.T. ACT. HE ACCORDINGLY BROUGHT TO TAX THE AMOUNT OF RS.43,63,346/- BEING INTEREST RECEIVED ON INVESTMENT MADE IN OTHER COOPERATIVE BANKS. 4. IN APPEAL HE LD.CIT(A) FOLLOWING VARIOUS DECISIONS INCLUDING TH E CBDT CIRCULAR NO.18/2015 DATED 02-11-2015 ALLOWED THE CLA IM OF THE ASSESSEE BY OBSERVING AS UNDER : 4.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, THE ASSESSMENT ORDER, AND THE SUBMISSIONS FILED BY THE APPELLANT. AS R EGARDS GROUND NO.1 & 2, THE AO HAS MADE ADDITION OF RS.43,63,346/- ON AC COUNT OF DISALLOWANCE OF INTEREST WHICH THE APPELLANT HAD RECE IVED ON INVESTMENTS MADE IN NATIONALIZED BANKS. THE AO HAS DENIED EXEMPT ION U/S.80P(2)(A)(I). THE HONBLE ITAT PUNE IN THE CASE OF HAL (ND) EMPLOYEES CO-OPERATIVE CREDIT SOCIETY, ITAT NO.306/P N/2013 FOR A.Y. 2009-10 DATED 24-02-2014 HAS ALLOWED THE APPELLANT S APPEAL AND DELETED THE ADDITION OF RS.39,42,138/- MADE BY THE A O ON ACCOUNT OF INTEREST INCOME RECEIVED FROM STATE BANK OF INDIA AN D BANK OF MAHARASHTRA ON WHICH THE APPELLANT HAD CLAIMED DEDUC TION U/S.80P(2)(A)(I) HOLDING AS UNDER : THE ISSUE INVOLVED IN THESE APPEALS WAS COVERED IN FAVO UR OF THE ASSESSEE BY THE DECISIONS OF ITAT PUNE, IN THE FOLLOWING CASES: I. THE MSRTC (M) EMPLOYEES CO-OPERATIVE CREDIT SOCIE TY LTD., AURANGABAD AND OTHERS IN ITAT NO.795 /PN/2004 FOR A Y 1997-98, ETC. DATED 21.10.2005. II. SHRI SAHASTRARJUN NAGARI SAH. PAT SANSTHA LTD., S OLAPUR IN ITAT NO.1161/PN/01 FOR A.Y 1995-96 DATED 23 02.2005. III. SHRI MAHAVIR NAGARI SAHAKARI PAT SANSTHA LTD. V S DCIT (2002) 74 TTJ (PUNE) 793. IV. NEMINATH NAGARI SAHAKARI PAT SANSTHA MARYADIT IN ITAT NO.421/PN/2002 FOR A.Y 1998-99 DATED 23.02.2005 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION IN THE LIGH T OF MATERIAL ON RECORD. WE FIND THAT THE ISSUE INVOLVED I N THESE APPEALS IS COVERED IN FAVOUR OF THE ASSESSEE-SOCIETY BY T HE DECISION OF THE I.T.A.T. PUNE IN THE CASES MENTIONED ABOVE. 4 ITA NO.1631/PN/2016 6. IN THE CASE OF SHRI MAHAVIR NAGARI SAHAKARI PAT SANSTHA LTD. (SUPRA), IT WAS NOTED BY THE TRIBUNAL THAT THE A SSESSEE WAS A CO-OPERATIVE CREDIT SOCIETY REGISTERED UNDER THE MAHA RASHTRA STATE CO-OPERATIVE SOCIETIES ACT,1960 AND WAS ENGAGED IN C ARRYING ON THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBE RS AND ALSO OF BANKING, THAT THE ASSESSEE-SOCIETY GAVE LOANS TO ITS M EMBERS, THAT THE MEMBERS INCLUDED NOMINAL MEMBERS ALSO WHO WER E ADMITTED AS PER THE BYE-LAWS OF THE SOCIETY, THAT THE ASSESSEE- SOCIETY SATISFIED THE CONDITIONS LAID DOWN U/S 80P(2)(A) (I) OF THE ACT AND WAS ENTITLED TO DEDUCTION U/S 80P. 7. IN THE CASE OF NEMINATH NAGARI SAHAKARI PAT SANS THA MARYADIT (SUPRA), THE INCOME FROM INVESTMENTS IN GOVER NMENT SECURITIES, FIXED DEPOSITS, KVPS, IVPS ETC., WAS HELD TO BE EXEMPT U/S 80P(2) OF THE ACT. 8. THEREFORE, WE FOLLOW PRECEDENTS AND UPHOLD THE O RDERS OF THE CIT(A). 9. IN THE RESULT, THE APPEALS FILED BY THE DEPARTMEN T FOR A.Y. 1997- 98 AND 1998-999 ARE DISMISSED. 5. FOLLOWING THE AFORESAID PRECEDENT, WE AFFIRM THE ORDER OF THE CIT(A), AS IT HAS NOT BEEN SHOWN THAT THE PRECEDEN T RENDERED IN ASSESSEE'S OWN CASE HAS BEEN ALTERED BY ANY HIGHER AUTH ORITY. THUS, REVENUE FAILS ON THIS ASPECT. THE CBDT HAS ISSUED CIRCULAR NO.18/2015 DATED 2 ND NOVEMBER, 2015 CLARIFYING THAT INVESTMENTS MADE BY BANKING CONCERN ARE PART OF THE BUSINESS OF BANKING. THEREFORE, THE INCOME ARISING FRO M SUCH INVESTMENTS IS ATTRIBUTABLE TO THE BUSINESS. THEREFORE, THE INCOME ARISING FROM SUCH INVESTMENTS IS ATTRIBUTABLE TO THE BUSINESS OF B ANKING FACILITIES UNDER THE HEAD PROFITS AND GAINS OF BUSINESS AND PROFES SION. RESPECTFULLY FOLLOWING CBDT CIRCULAR SUPRA, AND ORDER OF THE HONBLE ITAT PUNE SUPRA THE FACT REMAINING THE SAME THE AO IS DIRECTED TO DELETION THE ADDITION OF RS.43,53,346/-. GROUNDS ARE ALLOWED. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT SECTION 80P(2)(D) OF THE ACT, CLEARLY STIPULATES THAT WHERE ANY INCOM E IS DERIVED BY CREDIT SOCIE T Y IS BY WAY OF INTEREST/ DIVIDEND FROM ITS INVESTMENTS WITH ANY OTHER CO-OPERATIV E SOCIETY, THEN THE WHOLE OF SUCH INCOME IS EXEMPTED. HOWEVER, IN THE INSTANT CASE, TH E ASSESSEE HAS DERIVED INTEREST INCOME FROM ITS FIXED DEPOSITS KEPT W ITH SBI AND 5 ITA NO.1631/PN/2016 OTHER BANK . FURTHER, THE DECISION OF THE ITAT IN THE CASE OF NIPHAD NAGARI S A H. PATSANSTHA, WHICH HAS BEEN RELIED ON BY THE CIT(A) HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND FURTHER APPE AL HAS BEEN FILED BEFOR E HON'BLE HIGH COURT AND THE DECISION OF HON ' BLE COURT IS AWAITED. HE SUBMITTED THAT THE HON ' BLE SUPREME COURT IN THE CASE OF CIT VS NAWANSHAHAR CENTRAL COOPERATIV E BANK LTD. REPORTED IN (2007) 160 TAXMAN 48(SC) HAS HELD THAT THE PRINCIPAL INCOM E ARISING FROM INVESTMENT MADE B Y A B A N K ING CONCERN AS PART OF THE BUSINESS OF BANKING WOULD EQUALLY APPLY TO A CO-OPERATIVE BANK CARRYING ON THE BUSINESS OF BANKING WHICH IS STATUTORILY REQUIRED TO PLACE A PART OF ITS FUNDS IN APPROVED SECURITIES. HE SUBMITTED THAT THE ABO VE DECISION OF THE HONBLE SUPREME COURT APPLIES TO COOPERATIVE BANK S. THE BOARD SUBSEQUENTLY ISSUED A CIRCULAR DATED 2 ND NOVEMBER, 2015 CLARIFYING THAT THE DECISION IS APPLICABLE TO ALL BANKS/ COMME RCIAL BANKS, TO WHICH THE BANKING REGULATION ACT, 1949 APPLIES. T HE ASSESSEE IN THE INSTANT CASE IS A COOPERATIVE SOCIETY AN D NOT A BANK , ALTHOUGH IT MAY BE CARRYING ON THE BUSINESS PROVIDING CRE DIT FACILITIES TO ITS MEMBERS AND THUS NOT ELIGIBLE FOR DEDUCTION U/S.80 P(2) (A)(I) . HE ACCORDINGLY SUBMITTED THAT THE ORDER OF LD.CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 7. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND FILE D A COPY OF THE DECISION OF THE TRIBUNAL IN THE CASE OF DHANASHREE M AHILA GRAMIN BIGARSHETI SAHAKARI PATSANSTHA MARYADIT VS. ITO VID E ITA NOS. 1567 & 1568/PN/2016 DATED 26-08-2016 FOR A.YRS. 20 10-11 AND 2012-13 AND SUBMITTED THAT IDENTICAL ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE. THEREFORE, THE ISSU E BEING A COVERED MATTER, THE GROUNDS RAISED BY THE REVENUE SHO ULD BE DISMISSED. 6 ITA NO.1631/PN/2016 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. THE ONLY DISPUTE IN THE IMPUGNED APPEAL IS REGARDING ALLOWABILITY OF DEDUCTION U/S.80P(2)(A)(I) ON THE INTEREST INCOME OF RS.43,63,346/- BEING INTEREST ON FIXED DEPOSITS K EPT WITH VARIOUS NATIONALIZED BANKS. I FIND THE ASSESSING OFFICER DISALLOWE D THE CLAIM OF DEDUCTION ON THE GROUND THAT SUCH INTEREST INCOM E HAS TO BE TREATED AS INCOME FROM OTHER SOURCES AND THEREFORE T HE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S.80P(2)(A)(I). I FIND THE LD.CIT(A) FOLLOWING VARIOUS DECISION OF THE PUNE BENCH OF THE TRIBUNAL A S WELL AS THE CBDT CIRCULAR NO.18/2015 DATED 02-11-2015 ALLOWED THE CLAIM OF DEDUCTION MADE BY THE ASSESSEE U/S.80P(2)(A)(I) OF THE I.T. ACT. I FIND NO INFIRMITY IN THE ORDER OF THE CIT(A). I FIND IDE NTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN THE CASE OF DHANASHREE MAHILA GRAMIN BIGARSHETI SAHAKARI PATSANSTHA MARYADIT (SUPR A) WHEREIN THE TRIBUNAL DECIDED THE ISSUE IN FAVOUR OF THE AS SESSEE BY OBSERVING AS UNDER : 7. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE 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 VARIO US DECISIONS CITED BEFORE ME. THE ONLY DISPUTE IN THE IMPUGNED APPEAL I S REGARDING ALLOWABILITY OF DEDUCTION U/S.80P(2)(A)(I) ON THE IN TEREST INCOME OF RS.8,07,379/- BEING INTEREST ON SURPLUS FUNDS KEPT AS FIX ED DEPOSITS WITH BANK OF INDIA, MANGALWEDA BRANCH. ACCORDING TO THE REVENUE, SUCH INTEREST INCOME HAS TO BE TREATED AS INCOME FROM OTHE R SOURCES AND THEREBY ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S.80P(2)( A)(I). ACCORDING TO THE ASSESSEE SUCH INTEREST INCOME HAS TO BE TREATED AS B USINESS INCOME OF THE SOCIETY AND ASSESSEE IS ENTITLED TO DEDUCTION U/S.8 0P(2)(A)(I) OF THE I.T ACT. 8. I FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIB UNAL IN THE CASE OF CHANDRAPRABHU GRAMIN BIGAR SHETI SAHKARI PATSANTHA M ARYADIT VS. ITO, PANDHARPUR VIDE ITA NO.1352/PN/2016 ORDER DATED 29- 07-2016 FOR A.Y. 2010-11. IN THE SAID CASE, I HAVE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE ASSESSEE IS ENTITLED TO DEDUCTI ON U/S.80P(2)(A)(I) ON THE INTEREST INCOME KEPT WITH VAR IOUS BANKS OTHER THAN COOPERATIVE BANKS/SOCIETIES BY OBSERVING AS UNDER : 7 ITA NO.1631/PN/2016 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 PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. I HAVE ALSO CONSID ERED THE VARIOUS DECISIONS CITED BEFORE ME. I FIND THE ASSESSEE I N THE INSTANT CASE IS A COOPERATIVE SOCIETY AND HAS EARNED IN TEREST INCOME OF RS.15,36,248/- FROM ITS INVESTMENT WITH DIFF ERENT BANKS WHICH IT CLAIMED AS DEDUCTION U/S.80P(2)(A)(I) OF THE I.T. ACT, 1961. THE AO, FOLLOWING THE DECISION OF HONBLE SUP REME COURT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LTD. (S UPRA), DISALLOWED THE ABOVE AMOUNT BY REJECTING THE CLAIM O F 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 TRI BUNAL AS WELL AS VARIOUS OTHER DECISIONS THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE. I FIND MERIT IN THE ARGUMENT OF THE LD. COUN SEL FOR THE ASSESSEE. I FIND THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SWA ASHOKRAO BANKAR NAGARI SAHAKARI PATSANSTHA MARYADIT VI DE ITA NO.1394/PN/2015 ORDER DATED 22-07-2016 FOLLOWING TH E DECISION OF THE TRIBUNAL IN THE CASE OF NIPHAD NAGARI SAHAKAR I PATSANSTHA LTD. (SUPRA) AND THE DECISION OF THE HONBLE KARNATA KA HIGH COURT IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPE RATIVE LTD. (SUPRA) HAS HELD THAT ASSESSEE IS ENTITLED TO DEDUCTION U/S.80P(2)(A)(I) ON THE INTEREST INCOME ON DEPOSITS WIT H BANKS OTHER THAN COOPERATIVE BANKS/COOPERATIVE SOCIETIES. T HE 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 PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. I HAVE ALSO CONSID ERED THE VARIOUS DECISIONS CITED BEFORE ME. I FIND THE ASSESSEE I N THE INSTANT CASE IS A COOPERATIVE SOCIETY AND HAS RECEIVED I NTEREST OF RS.48,16,346/- FROM ITS INVESTMENTS WITH DIFFERENT BANK S. 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 SUPREME COU RT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LTD. DISALLO WED AN AMOUNT OF RS.44,52,781/- AFTER ALLOWING DEDUCTION OF RS.3,63,565/- 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 THE CASE OF NIPHAD NAGARI P ATSANSTHA LTD. (SUPRA) HELD THAT THE SAID INTEREST IS ITS BUSINESS INCO ME ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I) OF THE I.T. ACT. I F IND THE TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING ASSESSMENT Y EAR HAS ALSO DECIDED IDENTICAL ISSUE AND THE APPEAL FILED B Y THE REVENUE HAS BEEN DISMISSED. THE RELEVANT OBSERVATION O F THE TRIBUNAL 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 CONSIDE RED BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ANOTHER CO -OPERATIVE SOCIETY, NAMELY, ITO VS. NIPHAD NAGARI SAHAKARI PATSAN STHA LTD. VIDE ITA NO.1336/PN/2011 DATED 31.07.2013 WHEREIN T HE ISSUE 8 ITA NO.1631/PN/2016 HAS BEEN HELD IN FAVOUR OF THE ASSESSEE AFTER CONSIDERING SIMILAR OBJECTION, WHICH HAS BEEN RAISED BY THE ASSESSING OFFICER IN THE PRESENT CASE. THE LEARNED REPRESENTATIVE FOR THE ASSESSE E HAS FURNISHED A COPY OF THE SAID ORDER OF THE TRIBUNAL DA TED 31.07.2013 (SUPRA) AND HAS ALSO POINTED OUT THAT THE T RIBUNAL HAS DULY CONSIDERED THE DECISION OF THE HONBLE SUPREME C OURT 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 CONTR OVERTED THE ABOVE MATRIX AND NOR REFERRED TO ANY CONTRARY D ECISION AND THEREFORE FOR THE SAKE OF MAINTAINING CONSISTENCY WE F OLLOW THE DECISION OF OUR CO-ORDINATE BENCH IN THE CASE OF NIP HAD NAGARI SAHAKARI PATSANSTHA LTD. (SUPRA) AND UPHOLD THE PLEAOF THE ASSESSEE. HOWEVER, BEFORE PARTING, WE MAY REPRODUCE HER EINAFTER THE FOLLOWING PORTION OF THE ORDER OF THE TRIBUNAL DATED 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 9 ITA NO.1631/PN/2016 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: '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 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; 10 ITA NO.1631/PN/2016 (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: (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 : 11 ITA NO.1631/PN/2016 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 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. 12 ITA NO.1631/PN/2016 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 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 : 9. SINCE THE ORDER OF THE CIT(A) IS IN CONSONANCE WITH THE CONSISTENT VIEW OF THE TRIBUNAL ON IDENTICAL ISSUE, THEREFORE, IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO MY NOTICE, I FIND NO INFIRMITY IN THE ORDER OF THE CIT(A). ACCORDINGLY, THE ORDER OF CIT(A) IS UPHELD AND GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11-11-2016. SD/- ( R.K. PANDA ) ACCOUNTANT MEMBER PUNE ; DATED : 11 TH NOVEMBER, 2016. 13 ITA NO.1631/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) - 1, NASHIK 4. THE PR. CIT - 1, NASHIK 5. $ %%* , * , SMC BENCH / DR, ITAT, SMC BENCH PUNE; 6. 2 / GUARD FILE.