Income-tax Officer, V. Shri Laxmi Narayan Nagari Sahakari Pat Sanstha, Kolhapur

ITA 257/PUN/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1535 (ITAT-PUNE)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 19-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Assessee Lawyers: AJINKYA J JAGOJE
• Keywords: Business income; Question of law
• Section: 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . . , BEFORE SHRI R.K. PANDA, AM . / ITA NO.257/PN/2016 / ASSESSMENT YEAR : 2012-13 ITO, WARD1(3), KOLHAPUR . / APPELLANT V/S SHRI LAXMI NARAYAN NAGARI SAHAKARI PAT SANSTHA MARYADIT, A/P. MURGUD, TALUK :KAGAL, DIST. :KOLHAPUR PAN NO. AAAAS1174N . / RESPONDENT / APPELLANT BY : SHRI HITENDRA NINAWE / RESPONDENT BY : SHRI AJINKYA J. JAGOJE / ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE O RDER DATED 03-12-2015 OF THE CIT(A)-I, KOLHAPUR RELATING TO TH E ASSESSMENT YEAR 2012-13. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN THE ACTIVITIES OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS OUT OF THE CONTRIBUTIONS FROM MEMBERS OF THE SOC IETY AND ALSO INTEREST EARNED FROM THE DEPOSITS KEPT WITH OTHER C OOPERATIVE SOCIETIES. IT HAS BEEN REGISTERED UNDER THE MAHARASHTR A COOPERATIVE SOCIETY ACT, 1950. IT FILED ITS RETURN OF INCOME ON 29-09- 2012 DECLARING NIL INCOME AFTER CLAIMING DEDUCTION U/S.80P(2)(B)(I) AND 80P(2)(D). / DATE OF HEARING :21.07.2016 / DATE OF PRONOUNCEMENT: 22.07.2016 2 ITA NO.257/PN/2016 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT THE ASSESSEE HAS RECEIVED INTEREST OF RS.49,22,747/- FROM DEPOSITS WITH SCHEDULED AND NATIONALIZED BANKS WHICH WAS CLAIMED A S DEDUCTION U/S.80P(2)(A)(I) OF THE ACT. HOWEVER, THE AO WAS OF THE OPINION THAT THE INTEREST INCOME WAS NOT THE ASSESSEES BUSINESS INCOME SINCE THE SAME WAS EARNED OUT OF DEPOSITS MADE W ITH BANKS OTHER THAN COOPERATIVE SOCIETY/COOPERATIVE BANK. IN TH IS CONNECTION, THE ASSESSEES SUBMISSIONS ALONG WITH SEVERAL JUDGMENTS OF VARIOUS ITATS IN ITS FAVOUR WERE REJECTED BY THE AO. RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TOTGARS COOPERAT IVE SALE SOCIETY LTD. VS. ITO REPORTED IN 229 CTR 209 (SC) THE AO HELD THAT THE ASSESSEE EARNED INTEREST INCOME OUT OF THE TRANSAC TIONS WITH OTHER THAN MEMBERS OF THE ASSESSEE COOPERATIVE CREDIT SOCIETY AND DID NOT FALL U/S. 80P(2)(A)(I) OF THE ACT. THE AO FURTHER OBSERVED THAT SUCH INTEREST INCOME ON DEPOSITS KEPT WITH BANKS OTHER THAN CO-OPERATIVE CREDIT SOCIETY LIKE AN ORDINARY INVESTOR WOULD BE INCOME FRO M OTHER SOURCES TAXABLE U/S. 56. IN VIEW OF THESE OBSERVATIONS THE AO ASSESSED THE INCOME FROM INTEREST AS INCOME FROM OTHER S OURCES U/S.56 OF THE ACT. 4. BEFORE CIT(A) IT WAS SUBMITTED THAT AN IDENTICAL CLAIM OF DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT IN ITS OWN CASE FOR A.Y. 2010-11 WAS DECIDED IN ITS FAVOUR BY THE TRIBUNAL. IT WAS ACCORD INGLY ARGUED THAT THE SAID CLAIM BE ALLOWED IN FULL. 5. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) ALLOWED THE CLAIM OF DEDUCTION U/S.80P(2)(A)(I) BY OBSERVIN G AS UNDER : 3 ITA NO.257/PN/2016 7. I HAVE PERUSED THE ORDER OF THE ITAT, B BENCH, P UNE'S ORDER. WHILE DECIDING THE ISSUE, THE HONBLE TRIBUNAL RELIED ON THE JUDGMENT OF HON 'BLE SUPREME COURT IN THE CASE OF CIT VS. VEGETAB LE PRODUCTS REPORTED IN 88 ITR 192 AND HELD THAT THE INTEREST IN COME EARNED ON SHORT TERM DEPOSITS KEPT WITH BANKS BY THE ASSESSEE IN THAT CASE HAS TO BE ALLOWED AS DEDUCTION UNDER SECTION 80P(2)(A)(I). THER EFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL TRIBUNAL , I HOLD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DENYING THE APPEL LANT'S CLAIM OF DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. IN THE RESULT, THE CLAIM OF THE APPELLANT U/S 80P(2)(A)(I) OF THE ACT FOR THE YEAR U NDER CONSIDERATION IS ALLOWED. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD . CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE S OCIETY WAS ELIGIBLE FOR DEDUCTION U/ S 80P(2)(A)(I) OF THE INCOME TAX ACT, 1961, IN RESPECT OF INTEREST INCOME ON BANK DEPOSIT S WITH BANKS OTHER THAN CO-OPERATIVE BANKS/SOCIETIES, IGNORING T HE PROVISIONS OF SECTION 80P(2)(D) OF THE INCOME T A X ACT , 1961? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT (A) WAS JUSTIFIED IN DISTINGUIS HING THE HON'BLE APEX COURT'S DECISION. IN TOTGARS CO - OP SALE SOCIETY LTD VS ITA REPORTED AS 322 ITR 283 (SC), IGNORING THE CLEAR PROVISIONS OF SECTION 80P(2)(D) OF THE INCOME TAX ACT, 1961, WHEREIN INCOME BY WAY OF INTEREST OR DIVIDEND DERIVED BY CO-OPERATIVE SOCIETY FROM ITS I NVESTMENT WITH ANY OTHER CO-OPERATIVE SOCIETY IS ELIGIBLE FOR DEDU CTION AND NOT INCOME BY WAY OF INTEREST FROM BANKS OTHER THAN CO- OPERATIVE BANKS/ SOCIETIES? 3 . THE LD . CIT(A) WAS FAILED TO APPRECIATE THAT ON SIMILAR ISS UE THE HON,BLE ITAT, 'B ' BENCH, PUNE HAS VIDE ITA NO . 646/PN/2014 FOR A.Y. 2010-11 IN A1-FATATH URBAN CO-OP. CREDIT SOCIETY LT D. HELD THAT INTEREST INCOME ON BANK DEPOSITS WITH BANKS OTHER T HAN CO-OPERATIVE BANKS/SOCI E TIES WAS ASSESSABLE AS INCOME FROM OTHER SOURCES IN VIEW OF THE HON'BLE SUPREME COURT'S DECISION IN TOTAGARS CO-OP SALE SOCIETY LTD VS. ITD REPORTED AS 322 ITR 283 (SC) AND NOT ELIGIBLE FOR DEDUCT I ON U/S 80P(2)(A)(I) OF THE ACT. 7. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET FILED A COPY OF T HE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2010 -11 VIDE ITA NO.604/PN/2014 ORDER DATED 19-08-2015 AND SUBMITTED T HAT UNDER IDENTICAL CIRCUMSTANCES THE TRIBUNAL AFTER CONSIDERING THE D ECISION OF HONBLE SUPREME COURT IN THE CASE OF TOTGARS COOPERAT IVE SALE SOCIETY LTD. AND VARIOUS OTHER DECISIONS HAS ALLOWED THE C LAIM OF 4 ITA NO.257/PN/2016 DEDUCTION U/S.80P(2)(A)(I) ON ACCOUNT OF INTEREST INCOME EARNE D BY THE ASSESSEE ON SHORT TERM DEPOSITS KEPT WITH BANKS OTHER THAN COOPERATIVE BANKS. SINCE THE FACTS OF THE IMPUGNED ASSE SSMENT YEAR ARE IDENTICAL, THEREFORE, THIS BEING A COVERED MATTER IN FAVO UR OF THE ASSESSEE THE GROUNDS RAISED BY THE REVENUE SHOULD BE DISMISSED. 8. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND FAIRLY CONCEDED THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF TH E ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN A.Y. 2010-11. 9. AFTER HEARING BOTH THE SIDES, I FIND THE ONLY ISSUE THA T HAS TO BE DECIDED IN THE GROUNDS RAISED BY THE REVENUE IS REGARDIN G ALLOWABILITY OF DEDUCTION U/S.80P(2)(A)(I) IN RESPECT OF INTEREST INCOME ON B ANK DEPOSITS WITH VARIOUS BANKS OTHER THAN COOPERATIVE BANK S/SOCIETIES. I FIND IDENTICAL ISSUE HAD COME UP BEFORE THE COORDINATE BENC H OF THE TRIBUNAL IN ASSESSEES OWN CASE. THE TRIBUNAL IN ITA NO.604/PN/2014 ORDER DATED 19-08-2015 HAS ELABORATELY DISCUSSED THE ISSUE AND HELD THAT INTEREST INCOME EARNED BY THE A SSESSEE ON SHORT TERM DEPOSITS KEPT WITH BANKS HAS TO BE ALLOWED A S DEDUCTION U/S.80P(2)(A)(I) OF THE ACT. THE RELEVANT OBSERVATION OF THE TR IBUNAL AT PARA 9 ONWARDS READ 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 5 ITA NO.257/PN/2016 HONBLE HIGH COURT OF KARNATAKA AFTER CONSIDERING TH E DECISION OF HONBLE SUPREME COURT IN THE CASE OF TOTGARS COOPERATIVE SA LE SOCIETY LTD. (SUPRA) HELD THAT THE INTEREST EARNED BY SUCH COOPERA TIVE SOCIETIES ON SHORT TERM DEPOSITS WITH SCHEDULED BANKS IS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I). THE RELEVANT OBSERVATION OF THE HO NBLE HIGH COURT FROM PARA 6 ONWARDS READ AS UNDER : 6. FROM THE AFORESAID FACTS AND RIVAL CONTENTIONS, TH E UNDISPUTED FACTS WHICH EMERGES IS, THE SUM OF RS. 1,77,305/- REPRESENTS TH E INTEREST EARNED FROM SHORT-TERM DEPOSITS AND FROM SAVINGS BANK AC COUNT. THE ASSESSEE IS A COOPERATIVE SOCIETY PROVIDING CREDIT FACI LITIES TO ITS MEMBERS. IT IS NOT CARRYING ON ANY OTHER BUSINESS. THE INTEREST INCOME EARNED BY THE ASSESSEE BY PROVIDING CREDIT FACILITIES TO ITS MEMBERS IS DEPOSITED IN THE BANKS FOR A SHORT DURATION WHICH HA S EARNED INTEREST. THEREFORE, WHETHER THIS INTEREST IS ATTRIBUTABLE TO TH E BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS, IS THE QUEST ION. IN THIS REGARD, IT IS NECESSARY TO NOTICE THE RELEVANT PROVISION OF LAW I. E., SECTION 80P(2)(A)(I): 'DEDUCTION IN RESPECT OF INCOME OF CO-OPERATIVE SOC IETIES: 80P (1) WHERE, IN THE CASE OF AN ASSESSEE BEING A CO-OPE RATIVE SOCIETY, THE GROSS TOTAL INCOME INCLUDES ANY INCOME REFERRED TO IN SUB-SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE WITH AND SUBJE CT TO THE PROVISIONS OF THIS SECTION, THE SUMS SPECIFIED IN SUB-SECTION (2), IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. (2) THE SUMS REFERRED TO IN SUB-SECTION (1) SHALL BE THE FOLLOWING, NAMELY: (A) IN THE CASE OF CO-OPERATIVE SOCIETY ENGAGED IN (I) CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS, OR (II) TO (VII) XX XX XX THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUSI NESS ATTRIBUTABLE TO ANY ONE OR MORE OF SUCH ACTIVITIES.' 7. THE WORD 'ATTRIBUTABLE' USED IN THE SAID SECTION IS OF GREAT IMPORTANCE. THE APEX COURT HAD AN OCCASION TO CONSIDER THE MEANIN G OF THE WORD 'ATTRIBUTABLE' AS SUPPOSED TO DERIVE FROM ITS USE IN VAR IOUS OTHER PROVISIONS OF THE STATUTE IN THE CASE OF CAMBAY ELECTRIC SUPPLY INDUSTRIAL CO. LTD. V. CIT [1978] 113 ITR 84 (SC) AS UNDER: 'AS REGARDS THE ASPECT EMERGING FROM THE EXPRESSION 'ATT RIBUTABLE TO' OCCURRING IN THE PHRASE 'PROFITS AND GAINS ATTRIB UTABLE TO THE BUSINESS OF THE SPECIFIED INDUSTRY (HERE GENERATION AND DISTRIBUTION OF ELECTRICITY) ON WHICH THE LEARNED SO LICITOR-GENERAL RELIED, IT WILL BE PERTINENT TO OBSERVE THAT THE LE GISLATURE, HAS DELIBERATELY USED THE EXPRESSION 'ATTRIBUTABLE TO' AND NOT THE EXPRESSION 'DERIVED FROM'. IT CANNOT BE DISPUTED THAT THE EXPRESSION 'ATTRIBUTABLE TO' IS CERTAINLY WIDER IN IMP ORT THAN THE EXPRESSION 'DERIVED FROM'. HAD THE EXPRESSION 'DERIVED FROM' BEEN USED, IT COULD HAVE WITH SOME FORCE BEEN CONTEND ED THAT A BALANCING CHARGE ARISING FROM THE SALE OF OLD MACHINE RY AND BUILDINGS CANNOT BE REGARDED AS PROFITS AND GAINS DERI VED FROM THE 6 ITA NO.257/PN/2016 CONDUCT OF THE BUSINESS OF GENERATION AND DISTRIBUTION OF ELECTRICITY. IN THIS CONNECTION, IT MAY BE POINTED O UT THAT WHENEVER THE LEGISLATURE WANTED TO GIVE A RESTRICTED MEANING I N THE MANNER SUGGESTED BY THE LEARNED SOLICITOR-GENERAL, IT HAS USED THE EXPRESSION 'DERIVED FROM', AS, FOR INSTANCE, IN SECTION- 80J. IN OUR VIEW, SINCE THE EXPRESSION OF WIDER IMPORT, NAMELY, ' ATTRIBUTABLE TO', HAS BEEN USED, THE LEGISLATURE INTENDED TO COVER RECEIPTS FROM SOURCES OTHER THAN THE ACTUAL CONDUCT OF THE BUSINESS OF GENERATION AND DISTRIBUTION OF ELECTRICITY. 8. THEREFORE, THE WORD 'ATTRIBUTABLE TO' IS CERTAIN LY WIDER IN IMPORT THAN THE EXPRESSION 'DERIVED FROM'. WHENEVER THE LEGISLATUR E WANTED TO GIVE A RESTRICTED MEANING, THEY HAVE USED THE EXPRESSION 'DERI VED FROM'. THE EXPRESSION 'ATTRIBUTABLE TO' BEING OF WIDER IMPORT, T HE SAID EXPRESSION IS USED BY THE LEGISLATURE WHENEVER THEY INTENDED TO GAT HER RECEIPTS FROM SOURCES OTHER THAN THE ACTUAL CONDUCT OF THE BUSINESS. A COOPERATIVE SOCIETY WHICH IS CARRYING ON THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS, EARNS PROFITS AND GAINS OF BUSINESS BY PROVID ING CREDIT FACILITIES TO ITS MEMBERS. THE INTEREST INCOME SO DERIVE D OR THE CAPITAL, IF NOT IMMEDIATELY REQUIRED TO BE LENT TO THE MEMBERS, THEY CANNOT KEEP THE SAID AMOUNT IDLE. IF THEY DEPOSIT THIS AMOUNT IN BANK SO AS TO EARN INTEREST, THE SAID INTEREST INCOME IS ATTRIBUTABLE TO T HE PROFITS AND GAINS OF THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBE RS ONLY. THE SOCIETY IS NOT CARRYING ON ANY SEPARATE BUSINESS FOR EARNING SUC H INTEREST INCOME. THE INCOME SO DERIVED IS THE AMOUNT OF PROFITS AND GAI NS OF BUSINESS ATTRIBUTABLE TO THE ACTIVITY OF CARRYING ON THE BUSI NESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS BY A CO-OPE RATIVE SOCIETY AND IS LIABLE TO BE DEDUCTED FROM THE GROSS TOTAL INCOME UND ER SECTION 80P OF THE ACT. 9. IN THIS CONTEXT WHEN WE LOOK AT THE JUDGMENT OF T HE APEX COURT IN THE CASE OF M/S. TOTGARS CO-OPERATIVE SALE SOCIETY LTD., O N WHICH RELIANCE IS PLACED, THE SUPREME COURT WAS DEALING WITH A CASE WHE RE THE ASSESSEE- COOPERATIVE SOCIETY, APART FROM PROVIDING CREDIT FA CILITIES TO THE MEMBERS, WAS ALSO IN THE BUSINESS OF MARKETING OF AGRICUL TURAL PRODUCE GROWN BY ITS MEMBERS. THE SALE CONSIDERATION RECEIVED F ROM MARKETING AGRICULTURAL PRODUCE OF ITS MEMBERS WAS RETAINED IN MA NY CASES. THE SAID RETAINED AMOUNT WHICH WAS PAYABLE TO ITS MEMBERS FROM WHOM PRODUCE WAS BOUGHT, WAS INVESTED IN A SHORT-TERM DEPOSIT/SECURITY . SUCH AN AMOUNT WHICH WAS RETAINED BY THE ASSESSEE-SOCIETY WAS A L IABILITY AND IT WAS SHOWN IN THE BALANCE SHEET ON THE LIABILITY SIDE. T HEREFORE, TO THAT EXTENT, SUCH INTEREST INCOME CANNOT BE SAID TO BE ATTR IBUTABLE EITHER TO THE ACTIVITY MENTIONED IN SECTION 80P(2)(A)(I) OF THE A CT OR UNDER SECTION 80P(2)(A)(III) OF THE ACT. THEREFORE IN THE FACTS O F THE SAID CASE, THE APEX COURT HELD THE ASSESSING OFFICER WAS RIGHT IN TAXING THE INTEREST INCOME INDICATED ABOVE UNDER SECTION 56 OF THE ACT. FURTHE R THEY MADE IT CLEAR THAT THEY ARE CONFINING THE SAID JUDGMENT TO THE FAC TS OF THAT CASE. THEREFORE IT IS CLEAR, SUPREME COURT WAS NOT LAYING D OWN ANY LAW. 10. IN THE INSTANT CASE, THE AMOUNT WHICH WAS INVESTED IN B ANKS TO EARN INTEREST WAS NOT AN AMOUNT DUE TO ANY MEMBERS. IT WAS N OT THE LIABILITY. IT WAS NOT SHOWN AS LIABILITY IN THEIR ACCOUNT. IN FACT T HIS AMOUNT WHICH IS IN THE NATURE OF PROFITS AND GAINS, WAS NOT IMMEDIATELY R EQUIRED BY THE ASSESSEE FOR LENDING MONEY TO THE MEMBER'S, AS THERE WERE NO TAKERS. THEREFORE THEY HAD DEPOSITED THE MONEY IN A BANK SO A S TO EARN INTEREST. THE SAID INTEREST INCOME IS ATTRIBUTABLE TO CARRYING O N THE BUSINESS OF BANKING AND THEREFORE IT IS LIABLE TO BE DEDUCTED I N TERMS OF SECTION 7 ITA NO.257/PN/2016 80P(1) OF THE ACT. IN FACT SIMILAR VIEW IS TAKEN BY T HE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT V. ANDHRA PRADESH STATE CO-OPERATIVE BANK LTD., [2011] 200 TAXMAN 220/12 TAXMANN.COM 66. IN THAT VIEW OF THE MATTER, THE ORDER PASSED BY THE APPELLATE AUTHORITIES DENYING THE BENEFIT OF DEDUCTION OF THE AFORESAID AMOUNT IS UNSUSTAINABLE I N LAW. ACCORDINGLY IT IS HEREBY SET ASIDE. THE SUBSTANTIAL QUESTION OF LAW I S ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. HENCE, W E PASS THE FOLLOWING ORDER: 11. NO DOUBT, A CONTRARY DECISION TO THIS EFFECT WAS ALSO CITED BY THE LD. DEPARTMENTAL REPRESENTATIVE WHERE THE HONBLE DE LHI HIGH COURT IN THE CASE OF MANTOLA COOPERATIVE THRIFT & CREDIT SOCI ETY LTD. (SUPRA) HAS HELD THAT WHERE THE ASSESSEE COOPERATIVE SOCIETY WAS ENGA GED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS EARNS INTER EST INCOME ON SURPLUS FUNDS DEPOSITED AS FIXED DEPOSITS, SUCH INTEREST INC OME WOULD BE ASSESSABLE AS INCOME FROM OTHER SOURCES AND THUS NOT ELIG IBLE FOR DEDUCTION U/S.80P(2)(A)(I). HOWEVER, IT IS ALSO THE SETTLED PROPOSITION OF LAW THAT WHEN TWO VIEWS ARE POSSIBLE, THE VIEW WHICH I S IN FAVOUR OF THE ASSESSEE HAS TO BE FOLLOWED. SINCE IN THE INSTANT CASE, T WO DIVERGENT DECISIONS WERE CITED BEFORE US AND NO DECISION OF THE H ONBLE JURISDICTIONAL HIGH COURT IS AVAILABLE, THEREFORE, FO LLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. VEGE TABLE PRODUCTS REPORTED IN 88 ITR 192 WE HOLD THAT THE VIEW IN FAV OUR OF THE ASSESSEE, I.E. THE DECISION OF THE HONBLE KARNATAKA HIGH COURT HAS TO BE FOLLOWED. ACCORDINGLY, WE HOLD THAT THE INTEREST INCOME EARNED BY THE ASSESSEE ON SHORT TERM DEPOSITS KEPT WITH BANKS HAS TO BE ALLOWED AS DEDUCTION U/S.80P(2)(A)(I) OF THE I.T. ACT. THE ORDER OF THE CIT(A) IS ACCORDINGLY SET ASIDE AND THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 10. SINCE THE FACTS OF THE IMPUGNED ASSESSMENT YEAR ARE IDENTICAL T O THE FACTS IN A.Y. 2010-11, THEREFORE, FOLLOWING THE DECISION O F THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO MY NOTICE I UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22-07-2016. SD/- ( R.K. PANDA ) ACCOUNTANT MEMBER PUNE ; DATED :22 ND JULY, 2016. 8 ITA NO.257/PN/2016 '# $# / COPY OF THE ORDER FORWARDED TO : / BY ORDER , // TRUE COPY // // $ % //TRUE &' % * / SR. PRIVATE SECRETARY *, / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT (A) - I, KOLHAPUR 4. 5. 6. THE CIT-I, KOLHAPUR $ %%*, *, SMC BENCH / DR, ITAT, SMC BENCH PUNE; 2 / GUARD FILE.