Chandraprabhu Gramin Bigar Sheti Sahakari Pat Santha Maryadit, Solapur V. Income-tax Officer, Ward - 1(4), Pandharpur

ITA 2542/PUN/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4717 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 06-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS SHABANA PARVEEN
• Assessee Lawyers: RIYA S SHAH
• Keywords: Business income; Question of law; Condonation of delay
• Section: 143(3); 6; 56; 28

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI ANIL CHATURVEDI, AM . / ITA NOS.2427 & 2542/PUN/2017 / ASSESSMENT YEAR : 2013-14 & 2012-13 CHANDRAPRABHU GRAMIN BIGAR SHETI SAHKARI PAT SANTHA MARYADIT, A/P: NATEPUTE, TAL MALSHIRAS, DIST. SOLAPUR. PAN : AAAAC2702L. . / APPELLANT V/S THE INCOME TAX OFFICER, WARD 1(4), PADHARPUR. . / RESPONDENT ASSESSEE BY : MS. RIYA S. SHAH. REVENUE BY : MRS. SHABANA PARVEEN. / ORDER PER ANIL CHATURVEDI, AM : 1. THESE TWO APPEALS FILED BY THE ASSESSEE ARE EMANATING OUT OF SEPARATE ORDERS OF COMMISSIONER OF INCOME TAX (A) 7, PUNE DT. 05.06.2017 FOR A.Y. 2013-14 AND ORDER DT.04.08.2017 FOR A .Y. 2012-13. 2. BEFORE ME, AT THE OUTSET, BOTH THE PARTIES SUBMITTED THAT THOUGH THE APPEALS FILED BY THE ASSESSEE ARE FOR DIFFEREN T ASSESSMENT YEARS BUT THE FACTS AND ISSUES INVOLVED IN BO TH THE APPEALS ARE IDENTICAL EXCEPT THE ASSESSMENT YEARS AND T HE AMOUNTS INVOLVED AND THEREFORE THE SUBMISSIONS MADE BY T HEM / DATE OF HEARING : 23.10.2018 / DATE OF PRONOUNCEMENT: 26.10.2018 2 ITA NO.2427 & 2542/PUN/2017 WHILE ARGUING ONE APPEAL WOULD BE EQUALLY APPLICABLE TO THE OTHER APPEAL ALSO AND THUS, BOTH THE APPEALS CAN BE HEARD TOGETHER. IN VIEW OF THE AFORESAID SUBMISSIONS OF BOTH THE PARTIES, I , FOR THE SAKE OF CONVENIENCE, PROCEED TO DISPOSE OF BOTH T HE APPEALS BY A CONSOLIDATED ORDER BUT HOWEVER, PROCEED WIT H NARRATING THE FACTS IN ITA NO.2542/PUN/2017 FOR ASSESSM ENT YEAR 2012-13. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- ASSESSEE IS A CO-OPERATIVE CREDIT SOCIETY ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. ASSESS EE ELECTRONICALLY FILED ITS RETURN OF INCOME FOR A.Y. 2012-13 ON 11.09.2012 DECLARING TOTAL TAXABLE INCOME OF RS.NIL. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.21.11.2014 AND THE TOT AL INCOME WAS DETERMINED AT RS.14,44,050/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT (A), WHO VIDE ORDER DT.04.08.2017 (IN APPEAL NO.PN/CIT(A)-7/WD- 1(4)/1112/2014-15) DISMISSED THE APPEAL OF ASSESSEE. AGGR IEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL AND R AISED THE FOLLOWING GROUNDS FOR A.Y. 2012-13 : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN SUSTAINING THE INTEREST OF RS 1 4,44,050/- EARNED ON THE INVESTMENT MADE WITH THE NATIONALIZED BANK AS INCOME FROM OTHER SOURCES AND TAXING THE SAME U/S 5 6 OF THE INCOME TAX A CT, 1961. 3 ITA NO.2427 & 2542/PUN/2017 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, LD. CIT(A) HAS GROSSLY ERRED IN NOT FOLLOWING THE DECISION OF HON'BLE PUNE TRIBUNAL IN THE APPELLANT'S OWN CASE REPORTED IN 47 CCH 704 ON THE SAME SET OF FACTS AND FURTHER ERRED IN RELYI NG THE DECISION OF TOTGARS CO-OPERATIVE SALE SOCIETY LTD - SC - 322 ITR 283 THE FACTS OF WHICH ARE TOTALLY DISTINGUISHABLE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, LD. CIT(A) HAS FURTHER ERRED IN SUSTAINING THAT ADDITION OF SA ID INTEREST INCOME AS TAXABLE DISREGARDING THE FACT THAT APPELL ANT'S ENTIRE INCOME IS EXEMPT U/S 80P(2)(A)(I) OF THE INCOME TAX ACT,1961 AS THE APPELLANT SOCIETY IS A PATSANSTHA AND NOT A CO-OPERATIVE BANK AND PROVIDING CREDIT FACILITIES THE MEMBERS. 4. SIMILAR GROUNDS HAVE BEEN RAISED IN ITA NO.2427/PUN/2017 FOR A.Y. 2013-14. 5. ALL THE GROUNDS BEING INTER-CONNECTED ARE CONSIDERED TOGETHER. 6. BEFORE US, LD.A.R. SUBMITTED THAT AS FAR AS THE APPEAL FOR A.Y. 2013-14 IS CONCERNED, THERE IS DELAY OF 3 DAYS IN FILING THE APPEAL. SHE SUBMITTED SWORN AFFIDAVIT OF SECRETARY OF THE ASSESSEE WHEREIN THE REASONS FOR DELAY IS EXPLAINED AND SUBMITTED THAT THE DELAY IS NOT INTENTIONAL AND THEREFORE PRAYED THAT THE DELAY OF 3 DAYS BE CONDONED. LD.D.R. DID NOT SE RIOUSLY OBJECT TO THE PRAYER OF CONDONATION. 7. ON THE ISSUE OF CONDONATION OF DELAY OF APPEAL FOR A.Y. 2013-14, I HAVE GONE THROUGH THE SWORN AFFIDAVIT FILED BY T HE SECRETARY OF ASSESSEE AND HEARD THE LD.D.R. AFTER CO NSIDERING THE REASONS STATED IN THE AFFIDAVIT, I AM OF THE VIEW THAT THE DELAY IN FILING THE APPEAL HAS BEEN SATISFACTORILY EXPLAINED. IN V IEW OF THESE FACTS, I CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING. 4 ITA NO.2427 & 2542/PUN/2017 8. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTICE D THAT ASSESSEE HAS EARNED AGGREGATE INTEREST OF RS.14,44 ,054/- ON FDRS MAINTAINED WITH NATIONALIZED BANKS PRIVATE SECTOR BA NKS, (THE DETAILS OF INTEREST ARE LISTED AT PARA 6.4 OF THE ASS ESSMENT ORDER). AO WAS OF THE VIEW THAT THE INTEREST INCOME OF RS.14,44,054/- WAS NOT FROM ASSESSEES BUSINESS ACTIVITY O F PROVIDING CREDIT FACILITIES TO ITS MEMBERS, IT WAS IN THE NAT URE OF INCOME FROM OTHER SOURCES WHICH WAS REQUIRED TO BE TA XED U/S 56 OF THE ACT AND IT WAS ALSO INELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. THE ASSESSEE WAS SHOW CAUSED AND A SKED TO EXPLAIN AS TO WHY DEDUCTION CLAIMED ON SUCH INTEREST IN COME NOT BE DISALLOWED. THE SUBMISSIONS MADE BY THE ASSESSEE WERE NOT FOUND ACCEPTABLE TO THE AO. HE THEREAFTER CONSIDERE D THE INTEREST INCOME EARNED AGGREGATING TO RS.14,44,054/- AS INCOME FROM OTHER SOURCES U/S 56 OF THE ACT AND DENIED THE C LAIM OF DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. AGGRIEVED BY THE ORDE R OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO UPHE LD THE ORDER OF AO BY OBSERVING AS UNDER : 6.2 THE IDENTICAL ISSUE HAS BEEN DECIDED BY THE ITA T BANGALORE IN CASE OF SRI BASAVESHWARA CREDIT CO-OPERATIVE SOC IETY LTD. (SUPRA.) AND THE DELHI HIGH COURT IN CASE OF MANTOL A CO-OPERATIVE THRIFT & CREDIT SOCIETY LTD. (SUPRA.) AND THE HON'B LE SUPREME COURT IN THE CASE OF TOTGAR CO-OPERATIVE SALE SOCIETY LT D. (SUPRA.). THESE DECISIONS ARE SQUARELY APPLICABLE TO THE CASE OF TH E APPELLANT. THE DECISION OF LAXMI NARAYAN NAGAR SAHAKARI PAT SANSTH A VIDE ITA NO.604/PN/2014, ORDER DATED 19/08/2015 WHEREIN THE DECISION OF THE KARNATAKA HIGH COURT IN CASE OF TUMKUR MERCHANT S SOUTHARDA CREDIT COOPERATIVE LTD. VS. ITO, REPORTED IN 55 TAX MANN.COM 447 AND DELHI HIGH COURT IN CASE OF MANTOLA CO-OPERATIV E THRIFT & CREDIT SOCIETY LTD. VS. CIT REPORTED IN 50 TAXMANN. COM 278 WERE CONSIDERED BY THE ITAT AND DECIDED THE ISSUE IN FAV OUR OF THE ASSESSEE FOLLOWING THE DECISION OF THE HON'BLE SUPR EME COURT IN CASE OF CIT VS VEGETABLE PRODUCTS LTD, REPORTED IN 88 ITR 192. LATER ON SLP HAS BEEN ADMITTED IN CASE OF MANTOLA CO-OPER ATIVE THRIFT & CREDIT SOCIETY LTD REPORTED IN 70 TAXMANN.COM 296 (SC). LATER ON SLP HAS BEEN ADMITTED IN CASE OF MANTOLA CO-OPERATI VE THRIFT & 5 ITA NO.2427 & 2542/PUN/2017 CREDIT SOCIETY LTD REPORTED IN 70 TAXMANN.COM 296 (SC). THE DECISION OF MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD(SUPRA) PERTAINED TO AY 2009-10 WHEREAS HONBLE KARNATAKA HIGH COURT RELIED ON THE DECISION OF THE ANDHRA PRA DESH HIGH COURT IN THE CASE OF CIT V. ANDHRA PRADESH STATE CO-OPERA TIVE BANK LTD., [2011] 200 TAXMAN 220/12 TAXMANN.COM 66 PERTAINED T O AY 97- 98. THE EFFECT OF AMENDMENT FROM AY 2007-08 HAS NOT BEEN CONSIDERED. HONBLE ITAT PUNE DECIDED THE ISSUE ON THE BASIS OF DECISION OF VEGETABLE PRODUCTS LTD(SUPRA) AND CONTR OVERSY REMAINED UNRESOLVED. THE JUDGMENT PROCEEDS ON CONCESSION AND NOT ON ANY ANALYSIS OR EXAMINATION OF THE RELEVANT PROVISIONS DOES NOT SET BINDING PRECEDENT HAS BEEN HELD BY THE HONBLE SUPR EME COURT IN CASE OF LAKSHMI SHANKAR SRIVASTAVA REPORTED IN AIR 1979 SC 451. THE DELHI HIGH COURT IN CASE OF MANTOLA CO- OPERATIVE THRIFT & CREDIT SOCIETY LTD. (SUPRA) HAS CONSIDERED THE AM ENDED PROVISION OF SECTION 80P AND HON'BLE SUPREME COURT'S DECISION IN CASE OF TOTQERS' CO-OPERATIVE SALE SOCIETY LTD(SUPRA). WHETHER A CO- OPERATIVE SOCIETY IS IN NATURE OF COOPERATIVE BANK OR PRIMARY AGRICULTURAL CREDIT SOCIETY CAN BE DECIDED BY RBI I N TERMS OF EXPLANATION TO SECTION 5(CCVI). THE APPELLANT HAS N OT BROUGHT ANYTHING ON RECORD CERTIFYING BY THE RBI THAT APPEL LANT IS PRIMARY AGRICULTURAL CREDIT SOCIETY AS DEFINED IN PART V OF BANKING REGULATION ACT, 1949 IN SECTION 5(CCIV) OR PRIMARY CREDIT SOCIETY U/S. 5(CCVI). FURTHER, THE ISSUE IS UNDER CONSIDERA TION BEFORE THE HONORABLE SUPREME COURT IN CASE OF MANTOLA CO-OPERA TIVE THRIFT & CREDIT SOCIETY LTD. AND THERE IS NO STAY TO THE ORD ER OF THE DELHI HIGH COURT. 6.3 IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING TH E DELHI HIGH COURT DECISION AND SUPREME COURT DECISION WHICH IS DIRECT LY ON THE ISSUE INVOLVED ON INTEREST FROM THE BANK IS TO BE TREATED AS INCOME FROM OTHER SOURCES AND APPELLANT IS NOT ELIGIBLE FOR 80P THE APPELLANT HAS RECEIVED INTEREST OF RS.14,44,054/- FROM THE BANKS WHICH CANNOT BE CHARACTERIZED AS INCOME FROM BUSINESS OF PROVIDING CREDIT FACILITY TO MEMBERS OF THE SOCIETY. THEREFORE, ACTION OF THE A SSESSING OFFICER IN TREATING RS.14,44,054/- AS INCOME FROM OTHER SOU RCES IS UPHELD AND GROUND NO.1, 2 AND 3 OF THE APPEAL IS DISMISSED . AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL. 9. BEFORE ME, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A). LD.A.R. FURTHER SUBMITTED THAT THE ISSUE IN THE PRESENT CASE IS DIRECTLY COVERED BY THE DECISION OF PUNE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2008-09 (ITA NO.1576/PN /2016 DT.26.08.2016.) SHE PLACED ON RECORD THE COPY OF THE AFOR ESAID DECISION. SHE FURTHER SUBMITTED THAT THERE ARE NO CHANG E IN THE FACTS OF THE APPEAL FOR THE YEAR UNDER CONSIDERATION AND TO THAT OF 6 ITA NO.2427 & 2542/PUN/2017 EARLIER YEAR AND THEREFORE FOLLOWING THE ORDER OF EARLIER YE AR, THE ISSUE BE DECIDED IN ASSESSEES FAVOUR. LD.D.R. ON THE OTHE R HAND, POINTING TO THE FINDINGS OF LD.CIT(A), SUBMITTED THAT LD.CIT(A) FOLLOWING THE ORDER OF HONBLE DELHI HIGH COURT IN THE CASE OF MANTOLA CO-OPERATIVE THRIFT & CREDIT SOCIETY LTD., VS. CIT REPORTED IN [2014] 50 TAXMANN.COM 278 AND THE HONBLE AP EX COURTS DECISION IN THE CASE OF TOTGARS CO-OPERATIVE SALE SOCIETY LTD., VS. ITO REPORTED IN [2010] 188 TAXMAN 282, HAS DECIDE D THE ISSUE AGAINST THE ASSESSEE. SHE FURTHER SUBMITTED THAT ITAT WHILE DECIDING THE ISSUE IN ASSESSEES OWN CASE IN EARLIER YEAR HAD NOT CONSIDERED THE AMENDMENT MADE TO SEC.80P W.E.F FOR A. Y. 2007-08 AND THE CASE LAWS RELIED UPON BY THE TRIBUNAL W HILE DECIDING THE APPEAL FOR A.Y. 2008-09 WERE PRIOR TO AMENDME NT AND THEREFORE THE DECISION IN ASSESSEES OWN CASE CANNO T BE RELIED UPON. SHE THUS SUPPORTED THE ORDER OF LD.CIT(A). 10. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS W ITH RESPECT TO DENIAL OF CLAIM OF DEDUCTION U/S 80P(2)(A)(I) OF THE A CT ON THE INTEREST EARNED ON FIXED DEPOSITS PLACED WITH BAN KS I FIND THAT IDENTICAL ISSUE AROSE IN ASSESSEES OWN CASE IN A.Y. 2 008-09 WHEREIN THE CO-ORDINATE BENCH OF THE TRIBUNAL AFTER CON SIDERING THE DECISIONS OF HONBLE APEX COURT IN THE CASE OF TOTGA RS CO-OPERATIVE SALE SOCIETY LTD., (SUPRA) AND THE DECISION OF H ONBLE DELHI HIGH COURT IN THE CASE OF MANTOLA CO-OPERATIVE THRIFT & CREDIT SOCIETY LTD., (SUPRA) AND OTHER DECISIONS HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER : 7 ITA NO.2427 & 2542/PUN/2017 8. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. I HAVE ALSO CONSI DERED THE VARIOUS DECISIONS CITED BEFORE ME. I FIND THE ONLY DISPUTE IN THE INSTANT APPEAL IS REGARDING THE ALLOWABILITY OF THE CLAIM OF DEDUCTION U/S.80P(2)(A)(I) ON THE INTEREST INCOME OF RS.10,77 ,0656/- RECEIVED FROM THE FIXED DEPOSITS KEPT WITH NATIONALISED BANK S, I.E. BANK OF INDIA AND IDBI. ACCORDING TO THE REVENUE SUCH INTE REST INCOME HAS TO BE TREATED AS INCOME FROM OTHER SOURCES AND THER EBY ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S.80P(2)(A)(I). ACC ORDING TO THE ASSESSEE SUCH INTEREST INCOME HAS TO BE TREATED AS INCOME FROM BUSINESS IN VIEW OF THE PLETHORA DECISIONS OF THE C OORDINATE BENCHES OF THE TRIBUNAL. 9. I FIND AN IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN THE CASE OF CHANDRAPRABHU GRAMIN BIGAR SHETI SAHKAR I PATSANTHA MARYADIT VS. ITO, PANDHARPUR VIDE ITA NO.1352/PN/20 16 ORDER DATED 29-07-2016 FOR A.Y. 2010-11. AFTER CONSIDERI NG THE VARIOUS DECISIONS MADE BY BOTH THE SIDES, I HAVE DECIDED TH E ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80P(2)(A)(I) ON THE INTEREST INCOME K EPT WITH VARIOUS BANKS OTHER THAN COOPERATIVE BANKS/SOCIETIES. THE RELEVANT OBSERVATION OF THE TRIBUNAL FROM PARA 8 ONWARDS REA D AS UNDER : 8. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH 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 CONSIDERED THE VARIOUS DECISIONS CITED BEFORE ME. I FIND THE ASSESSEE IN THE INSTANT CAS E IS A COOPERATIVE SOCIETY AND HAS EARNED INTEREST INCOME OF RS.15,36,248/- FROM I TS INVESTMENT WITH DIFFERENT BANKS WHICH IT CLAIMED AS DEDUCTION U/S.8 0P(2)(A)(I) OF THE I.T. ACT, 1961. THE AO, FOLLOWING THE DECISION OF HONBLE SU PREME COURT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA), DIS ALLOWED 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 H IM 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 W ELL 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 FOLLOWING THE DECISION OF T HE TRIBUNAL IN THE CASE OF NIPHAD NAGARI SAHAKARI PATSANSTHA LTD. (SUPRA) AND THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. (SUPRA) HAS HELD THAT ASSES SEE IS ENTITLED TO DEDUCTION U/S.80P(2)(A)(I) ON THE INTEREST INCOME O N DEPOSITS WITH BANKS OTHER THAN COOPERATIVE BANKS/COOPERATIVE SOCIETIES. THE RELEVANT OBSERVATION OF THE TRIBUNAL FROM PARA 9 ONWARDS REA D AS UNDER : 9. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH 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 CONSIDERED THE VARIOUS DECISIONS CITED BEFORE ME. I FIND THE ASSESSEE IN THE INSTANT CAS E IS A COOPERATIVE SOCIETY AND HAS RECEIVED INTEREST OF RS.48,16,346/- FROM ITS IN VESTMENTS WITH DIFFERENT 8 ITA NO.2427 & 2542/PUN/2017 BANKS. THE ASSESSEE CLAIMED DEDUCTION U/S.80P(2)(A )(I) OF ITS INCOME ON ACCOUNT OF INTEREST FROM BANKS OTHER THAN COOPERATI VE SOCIETIES. THE AO FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LTD. DISALLOWED AN AMOUNT OF RS.44,52,781/- AFTER ALLOWING DEDUCTION OF RS.3,63,565/- AS PROPORTIONAT E EXPENSES FOR EARNING SUCH INTEREST INCOME. I FIND THE LD.CIT(A) FOLLOWI NG THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF NIPHAD NAGARI PATSANSTHA LTD. (SUPRA) HELD THAT THE SAID INTEREST IS ITS BUSINESS INCOME ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I) OF THE I.T. ACT. I FIND THE TRIBU NAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR HAS ALSO DECIDED IDENTICAL ISSUE AND THE APPEAL FILED BY THE REVENUE HAS BEEN DISMIS SED. THE RELEVANT OBSERVATION OF THE TRIBUNAL FROM PARA 6 ONWARDS REA D AS UNDER : 6. AT THE TIME OF HEARING, IT WAS A COMMON POINT B ETWEEN 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.1336/PN/2011 D ATED 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 AS SESSEE 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 O F OUR CO-ORDINATE BENCH IN THE CASE OF NIPHAD NAGARI SAHAKARI PATSANSTHA LTD. (SUPRA) AND UPHOLD THE PLEA OF THE ASSESSEE. HOWEVER, BEFORE PARTING, WE M AY REPRODUCE HEREINAFTER THE FOLLOWING PORTION OF THE ORDER OF THE TRIBUNAL DATED 31.07.2013 (SUPRA) WHICH BRINGS OUT THE REASONING PREVAILING WITH THE TRIBUNAL TO UPHOLD THE PLEA OF THE ASSESSEE :- 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY 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 SOCIETY , I.E. PROVIDING CREDIT FACILITY TO ITS MEMBERS. ACCORDING TO THE REVENUE T HE INCOME OF THE SOCIETY ON ACCOUNT OF INTEREST FROM BANKS OTHER THA N COOPERATIVE BANKS, INTEREST ON MUTUAL FUNDS, LONG TERM AND SHORT TERM CAPITAL GAIN ON SALE OF MUTUAL FUNDS ETC. ARE NOT COVERED BY THE ACTIVIT Y OF 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 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 TE RM AND SHORT TERM CAPITAL GAIN ON MUTUAL FUNDS ETC. WHILE DOING SO, H E 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 INVESTED IN SHORT TERM DEPOSITS AND SECURITI ES WAS NOT OUT OF INTEREST BEARING DEPOSITS COLLECTED FROM MEMBERS BU T OUT OF SALE PROCEEDS OF AGRICULTURAL PRODUCE OF FARMER MEMBERS MARKETED BY THE SOCIETY. FURTHER, THE HONBLE APEX COURT HAS CONSID ERED ONLY THE LATTER PART OF SECTION 80P(2)(A)(I), I.E. INCOME OF A COOP ERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBE RS IS ELIGIBLE FOR 9 ITA NO.2427 & 2542/PUN/2017 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: '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 RETAINED BY IT. IN THIS CASE, WE ARE CONCERNED WITH THE TAX TREATMENT 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...' 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 MAINTAIN LIQUI DITY AND THAT THERE WAS NO SURPLUS FUNDS WITH THE ASSESSEE AS ATT RIBUTED 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 OF IN VESTMENT CONSTITUTED A BUSINESS ACTIVITY BY A PRUDENT BUSINE SSMAN; 10 ITA NO.2427 & 2542/PUN/2017 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 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 SUR PLUS 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 HAD I NVESTED IN SHORT-TERM DEPOSITS. FURTHERMORE, THE ASSESSEE HAD MAINTAINED OVERDRAFT FACILITY WITH DENA BANK AND THE BALANCE A S AT 31.3.2009 WAS RS.13,69,955/- [SOURCE: BALANCE SHEET OF THE ASSESSEE AVAILABLE ON RECORD] 11 ITA NO.2427 & 2542/PUN/2017 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 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 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 H AVE ALSO CAREFULLY GONE THROUGH THE ORDER OF THE LOWER AUTHO RITY. 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 P ROVIDE CREDIT FACILITY TO ITS MEMBERS AND MARKET THE AGRICULTURAL PRODUCE. THE ASSESSEE IS NOT IN THE BUSINESS OF BANKING. THE REFORE, THIS TRIBUNAL IS OF THE OPINION THAT THE JUDGMENT OF THE APEX COURT IN TOTGAR'S CO-OPERATIVE SALE SOCIETY LTD (SUPRA) I S NOT 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 DEP OSIT 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 REGI STRAR OF COOPERATIVE 12 ITA NO.2427 & 2542/PUN/2017 SOCIETIES FOR ACCEPTING DEPOSITS AND LENDING 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 FAC ILITY 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 CRE DIT SOCIETY WHICH IS CARRYING ON THE BUSINESS OF BANKING ACTIVITY AND PR OVIDING CREDIT FACILITY TO ITS MEMBERS IS ELIGIBLE FOR DEDUCTION U /S.80P(2)(A)(I). IN VIEW OF THE ABOVE DISCUSSION AND FOLLOWING THE DECISIONS 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 COURT IN THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA) WE FIND NO INFIRMITY IN THE ORDER OF THE LD.CIT(A). ACCORDINGLY, THE SAM E 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. 10. I FIND THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF FOLLOWING THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO REPORTED IN 55 TAXMANN.COM 447 (TO WHICH I AM A PARTY) HAS OBSERV ED AS UNDER : 9. 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. THE ONLY DISPUTE TO BE DECIDED IN THE GROUNDS RAISED BY THE ASSESSEE IS THAT WHETHER THE INTEREST AMOUNTING TO RS.25,01,774/- EARNED BY THE ASSESSEE ON SHORT TERM DEPOSITS 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 THE AO FOL LOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF THE TOTGARS C OOPERATIVE SALE SOCIETY LTD. (SUPRA) TREATED THE INTEREST EARNED FROM SUCH SHORT TERM DEPOSITS AS INCOME FROM OTHER SOURCES AND BROUGHT THE SAME TO TAX WHICH HAS BEEN UPHELD BY THE CIT(A). 10. IT IS THE CASE OF THE ASSESSEE THAT IN VIEW OF THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF TUMKUR MERCHANT S SOUHARDS CREDIT COOPERATIVE LTD. (SUPRA) THE INTEREST EARNED FROM S UCH 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 THE DECISION O F HONBLE SUPREME COURT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LT D. (SUPRA) HELD THAT THE INTEREST EARNED BY SUCH COOPERATIVE SOCIETIES ON SH ORT TERM DEPOSITS WITH SCHEDULED BANKS IS ELIGIBLE FOR DEDUCTION U/S.80P(2 )(A)(I). THE RELEVANT OBSERVATION OF THE HONBLE HIGH COURT FROM PARA 6 O NWARDS READ AS UNDER : 6. FROM THE AFORESAID FACTS AND RIVAL CONTENTIONS, THE 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 ACCOUNT. THE ASSESSEE IS A COOPERATIVE SOCIETY PROVIDING CREDIT FACILITIES 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 DE POSITED IN THE BANKS FOR A SHORT DURATION WHICH HAS EARNED INTEREST. THEREFORE , WHETHER THIS INTEREST IS ATTRIBUTABLE TO THE BUSINESS OF PROVIDING CREDIT FA CILITIES TO ITS MEMBERS, IS THE 13 ITA NO.2427 & 2542/PUN/2017 QUESTION. 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 C O-OPERATIVE SOCIETY, THE GROSS TOTAL INCOME INCLUDES ANY INCOME REFERRED TO IN SUB-SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE WITH AND SUBJECT T O 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 B E THE FOLLOWING, NAMELY: (A) IN THE CASE OF CO-OPERATIVE SOCIETY ENGAGED I N (I) CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS, OR (II) TO (VII) XX XX XX THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUS INESS 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 MEANING OF THE WORD 'ATTRIBUTABLE' AS SUPPOSED TO DERIVE FROM ITS USE I N VARIOUS OTHER PROVISIONS OF THE STATUTE IN THE CASE OF CAMBAY ELECTRIC SUPPLY I NDUSTRIAL 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 AND GAINS ATTR IBUTABLE TO THE BUSINESS OF THE SPECIFIED INDUSTRY (HERE GENERATION AND DISTRIBUTION OF ELECTRICITY) ON WHICH THE LEARNED SOLICITOR-GENE RAL RELIED, IT WILL BE PERTINENT TO OBSERVE THAT THE LEGISLATURE, HAS DELI BERATELY USED THE EXPRESSION 'ATTRIBUTABLE TO' AND NOT THE EXPRESSION 'DERIVED FROM'. IT CANNOT BE DISPUTED THAT THE EXPRESSION 'ATTRIBUTABL E TO' IS CERTAINLY WIDER IN IMPORT THAN THE EXPRESSION 'DERIVED FROM'. HAD THE EXPRESSION 'DERIVED FROM' BEEN USED, IT COULD HAVE WITH SOME FORCE BEEN CONTENDED THAT A BALANCING CHARGE ARISING FROM THE SALE OF OLD MACHINERY AND BUILDINGS CANNOT BE REGARDED AS PROFI TS AND GAINS DERIVED FROM THE CONDUCT OF THE BUSINESS OF GENERAT ION AND DISTRIBUTION OF ELECTRICITY. IN THIS CONNECTION, IT MAY BE POINTED OUT THAT WHENEVER THE LEGISLATURE WANTED TO GIVE A REST RICTED MEANING IN THE MANNER SUGGESTED BY THE LEARNED SOLICITOR-GENER AL, 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 RE CEIPTS FROM SOURCES OTHER THAN THE ACTUAL CONDUCT OF THE BUSINESS OF GE NERATION AND DISTRIBUTION OF ELECTRICITY. 8. THEREFORE, THE WORD 'ATTRIBUTABLE TO' IS CERTAIN LY WIDER IN IMPORT THAN THE EXPRESSION 'DERIVED FROM'. WHENEVER THE LEGISLATURE WANTED TO GIVE A RESTRICTED MEANING, THEY HAVE USED THE EXPRESSION ' DERIVED FROM'. THE EXPRESSION 'ATTRIBUTABLE TO' BEING OF WIDER IMPORT, THE SAID EXPRESSION IS USED BY THE LEGISLATURE WHENEVER THEY INTENDED TO G ATHER RECEIPTS FROM SOURCES OTHER THAN THE ACTUAL CONDUCT OF THE BUSINE SS. A COOPERATIVE SOCIETY WHICH IS CARRYING ON THE BUSINESS OF PROVIDING CRED IT FACILITIES TO ITS MEMBERS, 14 ITA NO.2427 & 2542/PUN/2017 EARNS PROFITS AND GAINS OF BUSINESS BY PROVIDING CR EDIT FACILITIES TO ITS MEMBERS. THE INTEREST INCOME SO DERIVED OR THE CAPI TAL, IF NOT IMMEDIATELY REQUIRED TO BE LENT TO THE MEMBERS, THEY CANNOT KEE P THE SAID AMOUNT IDLE. IF THEY DEPOSIT THIS AMOUNT IN BANK SO AS TO EARN INTE REST, THE SAID INTEREST INCOME IS ATTRIBUTABLE TO THE PROFITS AND GAINS OF THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS ONLY. THE SOCIETY IS NOT CARRYING ON ANY SEPARATE BUSINESS FOR EARNING SUCH INTEREST INCOME. THE INCOME SO DERIVED IS THE AMOUNT OF PROFITS AND GAINS OF BUSINESS ATTRIBU TABLE TO THE ACTIVITY OF CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CR EDIT FACILITIES TO ITS MEMBERS BY A CO-OPERATIVE SOCIETY AND IS LIABLE TO BE DEDUCTED FROM THE GROSS TOTAL INCOME UNDER 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., ON WHICH RELIANCE IS PLACED, THE SUPREME COURT WAS DEALING WITH 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 RECEIVED FROM MARKETING AGRICULT URAL PRODUCE OF ITS MEMBERS WAS RETAINED IN MANY CASES. THE SAID RETAIN ED AMOUNT WHICH WAS PAYABLE TO ITS MEMBERS FROM WHOM PRODUCE WAS BOUGHT , WAS INVESTED IN A SHORT-TERM DEPOSIT/SECURITY. SUCH AN AMOUNT WHICH W AS RETAINED BY THE ASSESSEE-SOCIETY WAS A LIABILITY AND IT WAS SHOWN I N THE BALANCE SHEET ON THE LIABILITY SIDE. THEREFORE, TO THAT EXTENT, SUCH INT EREST INCOME CANNOT BE SAID TO BE ATTRIBUTABLE EITHER TO THE ACTIVITY MENTIONED IN SECTION 80P(2)(A)(I) OF THE ACT OR UNDER SECTION 80P(2)(A)(III) OF THE ACT. THE REFORE IN THE FACTS OF THE SAID CASE, THE APEX COURT HELD THE ASSESSING OFFICE R WAS RIGHT IN TAXING THE INTEREST INCOME INDICATED ABOVE UNDER SECTION 56 OF THE ACT. FURTHER THEY MADE IT CLEAR THAT THEY ARE CONFINING THE SAID JUDG MENT 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 BANKS TO EARN INTEREST WAS NOT AN AMOUNT DUE TO ANY MEMBERS. IT W AS NOT THE LIABILITY. IT WAS NOT SHOWN AS LIABILITY IN THEIR ACCOUNT. IN FAC T THIS AMOUNT WHICH IS IN THE NATURE OF PROFITS AND GAINS, WAS NOT IMMEDIATELY RE QUIRED BY THE ASSESSEE FOR LENDING MONEY TO THE MEMBER'S, AS THERE WERE NO TAK ERS. THEREFORE THEY HAD DEPOSITED THE MONEY IN A BANK SO AS TO EARN INTERES T. THE SAID INTEREST INCOME IS ATTRIBUTABLE TO CARRYING ON THE BUSINESS OF BANKING AND THEREFORE IT IS LIABLE TO BE DEDUCTED IN TERMS OF SECTION 80P(1) OF THE ACT. IN FACT SIMILAR VIEW IS TAKEN BY THE ANDHRA PRADESH HIGH COURT IN T HE CASE OF CIT V. ANDHRA PRADESH STATE CO-OPERATIVE BANK LTD., [2011] 200 T AXMAN 220/12 TAXMANN.COM 66. IN THAT VIEW OF THE MATTER, THE ORD ER PASSED BY THE APPELLATE AUTHORITIES DENYING THE BENEFIT OF DEDUCT ION OF THE AFORESAID AMOUNT IS UNSUSTAINABLE IN LAW. ACCORDINGLY IT IS H EREBY SET ASIDE. THE SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN FAVOUR O F THE ASSESSEE AND AGAINST THE REVENUE. HENCE, WE PASS THE FOLLOWING ORDER: 11. NO DOUBT, A CONTRARY DECISION TO THIS EFFECT WA S ALSO CITED BY THE LD. DEPARTMENTAL REPRESENTATIVE WHERE THE HONBLE DELHI HIGH COURT IN THE CASE OF MANTOLA COOPERATIVE THRIFT & CREDIT SOCIETY LTD. (SUPRA) HAS HELD THAT WHERE THE ASSESSEE COOPERATIVE SOCIETY WAS ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS EARNS INTEREST INCOME ON SURPLUS FUNDS DEPOSITED AS FIXED DEPOSITS, SUCH INTEREST INCOME WOULD BE ASSES SABLE AS INCOME FROM OTHER SOURCES AND THUS NOT ELIGIBLE 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 IS IN FAVOUR OF THE ASSESSEE HAS TO BE F OLLOWED. SINCE IN THE INSTANT CASE, TWO DIVERGENT DECISIONS WERE CITED BEFORE US AND NO DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IS AVAILABLE, THE REFORE, FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS. VEGETABLE 15 ITA NO.2427 & 2542/PUN/2017 PRODUCTS REPORTED IN 88 ITR 192 WE HOLD THAT THE VI EW IN FAVOUR OF THE ASSESSEE, I.E. THE DECISION OF THE HONBLE KARNATAK A HIGH COURT HAS TO BE FOLLOWED. ACCORDINGLY, WE HOLD THAT THE INTEREST I NCOME 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 OR DER 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 ASSE SSEES OWN CASE AS WELL AS THE DECISION OF THE COORDINATE BENCH OF THE TRIB UNAL IN THE CASE OF SHRI LAXMI NARAYAN NAGARI SAHAKARI PATSANSTHA MARYADIT C ITED (SUPRA), I DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) HOLDI NG THAT ASSESSEE IS ENTITLED TO DEDUCTION U/S.80P(2)(A)(I) ON THE INTEREST INCOM E. ACCORDINGLY, THE SAME IS UPHELD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 10. SINCE I AM A PARTY TO THE ABOVE DECISION, THERE FORE, FOLLOWING MY OWN DECISION IN THE CASE OF SWA ASHOKRAO BANKAR NAGARI SAHAKARI PATSANSTHA MARYADIT (SUPRA) I HOLD THAT THE ASSESSEE IS ENTITL ED TO DEDUCTION U/S.80P(2)(A)(I) ON THE INTEREST INCOME KEPT WITH B ANKS OTHER THAN COOPERATIVE BANKS/COOPERATIVE SOCIETIES. THEREFORE , THE ORDER OF THE CIT(A) IS SET ASIDE AND THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 10. IN VIEW OF THE ABOVE DECISION, I HOLD THAT THE ASSESSEE COOPERATIVE SOCIETY IS ENTITLED TO DEDUCTION U/S.80P(2)(A)(I) O N THE INTEREST INCOME OF FIXED DEPOSITS KEPT WITH BANKS OTHER THAN COOPERATI VE BANKS/SOCIETIES. GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLO WED. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 11. BEFORE ME, IT IS REVENUES CONTENTION THAT WHILE DECIDING THE ASSESSEES APPEAL FOR A.Y. 2008-09, THE AMENDMENT M ADE TO THE SECTION W.E.F. A.Y. 2007-08 HAS NOT BEEN CONSIDERED BY THE TRIBUNAL. BEFORE ME, NO MATERIAL HAS BEEN PLACED BY REVENU E TO DEMONSTRATE THAT REVENUE HAS PREFERRED APPEAL AGAINST THE ORDER OF TRIBUNAL FOR A.Y. 2008-09 AND THAT THE HIGHER JUDICIAL FOR UM HAS SET ASIDE / STAYED THE ORDER FOR A.Y. 2008-09. FURT HER, REVENUE HAS NEITHER POINTED OUT ANY DISTINGUISHING FEATURE IN THE FACTS OF THE PRESENT CASE AND THAT OF EARLIER YEAR. I T HEREFORE, RELYING ON THE DECISION OF THE TRIBUNAL IN ASSESSEES OW N CASE FOR A.Y. 2008-09 AND FOR SIMILAR REASONS HOLD THAT ASSESSEE IS ENTITLED TO DEDUCTION U/S 80P(2)(A)(I) OF THE ACT ON THE INTE REST INCOME ON FIXED DEPOSITS KEPT WITH NATIONALIZED BANKS AND 16 ITA NO.2427 & 2542/PUN/2017 PRIVATE SECTOR BANKS. THUS, THE GROUND OF THE ASSESSEE IS ALLOWED. 12. IN THE RESULT, THE APPEAL OF ASSESSEE IN ITA NO.2542/PUN/2017 FOR A.Y. 2012-13 IS ALLOWED. 13. AS FAR AS THE GROUNDS RAISED IN APPEAL IN ITA NO.2427/PUN/2015 FOR A.Y. 2013-14 IS CONCERNED, IN VIEW OF THE SUBMISSIONS OF BOTH THE PARTIES THAT THE FACTS OF THE CA SE IN THE YEAR BEING IDENTICAL TO THE FACTS AND ISSUE OF THE CASE IN ITA NO.2542/PUN/2017 FOR A.Y. 2012-13, I THEREFORE FOR THE R EASONS STATED HEREIN WHILE DISPOSING OF THE APPEAL IN ITA NO.2542/PUN/2017 FOR A.Y. 2012-13, AND FOR SIMILAR REASONS, HOLD THAT ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT ON THE INTEREST EARNED FROM FIXED DEPOSITS PLACED WIT H BANKS AND THUS I ALLOW THE GROUNDS OF ASSESSEE IN ITA NO.2427/PUN/2017 FOR A.Y. 2013-14. THUS, THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 14. IN THE RESULT, THE APPEAL OF ASSESSEE IN ITA NO.2427/PUN/2017 FOR A.Y. 2013-14 IS ALLOWED. 15. TO SUM UP, BOTH THE APPEALS OF ASSESSEE ARE ALLOWE D. ORDER PRONOUNCED ON 26 TH DAY OF OCTOBER, 2018. SD/- ( ANIL CHATURVEDI ) ' / ACCOUNTANT MEMBER PUNE; DATED : 26 TH OCTOBER, 2018. YAMINI 17 ITA NO.2427 & 2542/PUN/2017 !#$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. THE CIT(A)-7, PUNE. THE PR.CIT-6, PUNE. '#$ %%&',) &', *+ / DR, ITAT, SMC PUNE; $-.// GUARD FILE. / BY ORDER // TRUE COPY // 012%3&4 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.