Catholic Urban Co.op. Credit Society Ltd., Sindhudurg V. Income-tax Officer,

ITA 32/PUN/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8553 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 06-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V G GINDE; SUSHIL V MODAK
• Keywords: Business income
• Section: 56; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE: SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO . 32 /PN/20 1 4 ASSESSMENT YEAR : 20 10 - 11 CATHOLIC URBAN CO - OPERATIVE CREDIT SO CIETY LIMITED, VASANT PLAZA, GANDHI CHOWK, SAWANTWADI, DISTT. - S INDHUDURG VS. THE INCOME TAX OFFICER, WARD 2(4), KUDAL (APPELLANT) (RESPONDENT) PAN NO. AAAAC2496F REVENUE BY: SHRI RAJESH DAMOR ASSESSEE BY: SHRI V.G. GINDE & SUSHIL V MODAK DATE OF HEARING : 1 6 - 1 2 - 2014 DATE OF PRONOUNCEMENT : 29 - 1 2 - 2014 ORDER PER R.S . PADVEKAR , JM : - IN T H IS APPEAL, THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER OF THE LD. CIT(A), KOLHAPUR DATED 06 - 12 - 2013 FOR THE A.Y. 2010 - 11. 2. THE FIRST ISSUE IS IN RESPECT OF TREATMENT THE INTEREST INCOME OF RS.30,84,097/ - AND RS. 32,077/ - RECEIVED BY THE ASSESSEE CO - OPERATIVE SOCIETY TREATING THE SAME AS AN INCOME FROM OTHER SOURCES AS AGAINST THE BUSINESS INCOME AND THIS ISSUE ARISES FROM GROUND NOS. 1, 2 AND 3. THE FACTS WHICH REVEALED FROM THE RECORD ARE AS UNDER. THE ASSESSEE SOCIETY IS A CO - OPERATIVE CREDIT SOCIETY REGISTERED UNDER MAHARASHTRA CO - OPERATIVE SOCIETIES ACT, 1960. THE MAIN OBJECT OF THE ASSESSEE SOCIETY IS TO PROVIDE CREDIT FACILITY TO ITS MEMB ERS. IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS CLAIMED THE DEDUCTION U/S . SEC. 80P(2)(A)(I) OF THE INCOME - TAX ACT IN RESPECT OF THE INTEREST RECEIVED FROM THE SBI TO THE EXTENT OF RS.30,84,097/ - AS WELL AS SAVING BANK INTEREST OF 2 ITA NO . 32 /PN/2014, CATHOLIC URBAN CO - OPERATIVE CREDIT SOCIETY LIMITED, SINDHUDURG RS.32 ,077/ - FROM SINDHUDURG DISTRICT CENTRAL CO - OPERATIVE BANK LTD. (SDCC L). IN THE OPINION OF THE ASSESSING OFFICER THE INTEREST INCOME RECEIVED BY THE ASSESSEE CANNOT BE TREATED AS A PART OF ITS BUSINESS ACTIVITIES WITHIN THE MEANING OF SEC. 80P(2(A)(I) OF THE INCOME - TAX ACT. THE ASSESSING OFFICER RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF TOTGARS CO - OPERATIVE SALE SOCIETY VS. ITO 322 ITR 283 (SC) AND HELD THAT THE INTEREST EARNED BY THE ASSESSEE CO - OPERATIVE SOCIETY CANNOT BE TREAT ED AS A PART OF ITS BUSINESS ACTIVIT Y OF PROVIDING THE CREDIT FACILITIES TO THE MEMBERS AND THEREFORE, THE SAID INTEREST INCOME HAS TO BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES. IN CONSEQUENCE THE ASSESSEE LOST THE BENEFIT OF SEC. 80P(2)(A)(I) OF THE ACT AS THE ENTIRE AMOUNT WAS TREATED AS NOT QUALIFY FOR THE SAID DEDUCTION. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSING OFFICER BEFORE THE LD. CIT(A) BUT WITHOUT SUCCESSES. THE ASSESSEE PLACED HIS RELIANCE ON THE FOLLOWING DECISIONS: I. CIT VS. NAVNESHWAR CENTRAL CO - OPERATIVE BANK LTD. 289 ITR 6 (SC). II. BIHAR STATE CO - OPERATIVE BANK LTD. VS. CIT 39 ITR 114 (SC). III. CIT VS. KARNATAKA STATE CO - OPERATIVE APEX BANK LTD. 251 ITR 194 (SC). IV. CIT VS. RAMANATHAPURAM DISTRICT CENTRAL CO - OPERATIVE BANK LTD. 255 I TR 423 (SC). 2.1. THE LD. CIT(A) WAS OF THE OPINION THAT THE ASSESSEE SOCIETY CANNOT BE EQUATED WITH CO - OPERATIVE BANK AND HE, ACCORDINGLY, CONFIRMED THE ORDER OF THE ASSESSING OFFICER TREATING THE SAID INCOME NOT AS A BUSINESS INCOME OF THE ASSESSEE SOCI ETY BUT INCOME FROM THE OTHER SOURCES. NOW, THE ASSESSEE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. THE LD. COUNSEL SUBMITS THAT THE ASSESSEE SOCIETY IS A CO - 3 ITA NO . 32 /PN/2014, CATHOLIC URBAN CO - OPERATIVE CREDIT SOCIETY LIMITED, SINDHUDURG OPERATIVE CREDIT SOCIETY ENGAGED I N PROVIDING CREDIT FACILITY TO ITS MEMBERS AND SAID INCOME IS EXEMPTED U/S. 80P(2)(A)(I) OF THE ACT. HE SUBMITS THAT IT IS TRUE THAT SUB - SEC. ( 4 ) TO SEC. 80P(2)(A)(I) IS NOT APPLICABLE TO THE ASSESSEE AS THE ASSESSEE IS NOT A CO - OPERATIVE BANK BUT OTHERWI SE ALSO IT HAS A TRAPPING OF BUSINESS OF THE BANKING. HE SUBMITS THAT THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF TOTGARS CO - OPERATIVE SALE SOCIETY (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE AS IN THE SAID CASE THE ASSESSE E SOCIETY WAS RETAINING THE SALE PROCEEDS ON THE SALE OF THE AGRICULTURAL PRODUCE AND MAKING THE SHORT TERM DEPOSITS BUT IN THE PRESENT CASE THE ASSESSEE SOCIETY IS ONLY ENGAGED IN PROVIDING THE CREDIT FACILITIES WHICH IS HAVING THE TRAPPING OF THE BANKING BUSINESS. HE SUBMITS THAT DECISION IN THE CASE OF TOTGARS CO - OPERATIVE SALE SOCIETY (SUPRA) HAS BEEN CONSIDERED BY THE ITAT, B BENCH, PUNE IN THE CASE OF ITO, WARD - 1(4), NASHIK VS. NIPHAD NAGARI SAHAKARI PATSHANSHTA LTD., NASHIK ITA NO. 1336/PN/2011 ORD ER DATED 31 - 07 - 2013. THE LD. COUNSEL ALSO FILED THE COPY OF THE SAID DECISION WHICH IS PLACED ON RECORD. HE PLEADED FOR ALLOWING THE GROUNDS TAKEN BY THE ASSESSEE. THE LD. DR SUPPORTED THE ORDER OF THE LD. CIT(A). 4. IN THIS CASE IT IS NOT IN DISPUTE THAT THE ASSESSE IS A CO - OPERATIVE CREDIT SOCIETY WHICH IS ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS. WE FIND THAT THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF TOTGARS CO - OPERATIVE SALE SOCIETY (SUPRA) HAS BEEN CONSIDERED IN THE CASE OF ANOTHER CREDIT SOCIETY I.E. NIPHAD NAGARI SAHAKARI PATSHANSHTA LTD., NASHIK (SUPRA) BY THE ITAT, PUNE AND IT IS HELD AS UNDER: 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CI T(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. IN THE INSTANT CASE THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS ACTIVITY OF CRE DIT COOPERATIVE SOCIETY, 4 ITA NO . 32 /PN/2014, CATHOLIC URBAN CO - OPERATIVE CREDIT SOCIETY LIMITED, SINDHUDURG I.E. PROVIDING CREDIT FACILITY TO ITS MEMBERS. ACCORDING TO THE REVENUE THE INCOME OF THE SOCIETY ON ACCOUNT OF INTEREST FROM BANKS OTHER THAN COOPERATIVE BANKS, INTEREST ON MUTUAL FUNDS, LONG TERM AND SHORT TERM CAPITAL GAIN ON S ALE OF MUTUAL FUNDS ETC. ARE NOT COVERED BY THE ACTIVITY OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND HENCE 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 TOTAGARS COO PERATIVE SALE SOCIETY LTD. (SUPRA). WE FIND THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80P(2)(A)(I) ON ACCOUNT OF INTEREST FROM BANKS OTHER THAN COOPERATIVE BANKS, INTEREST ON MUTUAL FUNDS LONG TERM AND SHORT TERM CAPITAL GAIN ON MUTUAL FUNDS ETC. WHILE DOING SO, HE HELD THAT THE DECISION IN THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE SINCE IN THAT CASE THE AMOUNT 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 MEMBERS MARKETED BY THE SOCIETY. FURTHER, THE HONBLE APEX COURT HAS CONSIDERED ONLY THE LATTE R PART OF SECTION 80P(2)(A)(I), I.E. INCOME OF A COOPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS IS ELIGIBLE FOR DEDUCTION AND HAS NOT CONSIDERED THE EARLIER PART OF SECTION 80P(2)(A)(I), I.E. INCOME OF A COOPERATIVE SOCIETY ENGAG ED IN CARRYING ON THE BUSINESS OF BANKING IS ELIGIBLE FOR DEDUCTION. 11.1 WE FIND THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF M/S. JAFARI MOMIN VIKAS COOPERATIVE CREDIT SOCIETY LTD. (SUPRA) AFTER CONSIDERING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TOTAGARS COOPERATIVE SALE SOCIETY LTD. (SUPRA) HAS OBSERVED AS UNDER : 17. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE EITHER PARTY, PERUSED THE RELEVANT RECORDS AND ALSO THE CASE LAW ON WHICH THE LEARNED AR HAD RESERVATION IN ITS APPLICABLY IN THE CIRCUMSTANCES OF THE ASSESSEE'S CASE. 18. IT WAS THE STAND OF THE LEARNED CIT (A) THAT THE ENTIRE INCOME WAS NOT EXEMPT AND THAT IT WAS TO BE EXAMINED AS TO WHETHER THERE WAS ANY INTEREST INCOME ON THE SHORT TERM BANK DEPOSITS AND SECURI TIES INCLUDED IN THE TOTAL INCOME OF THIS SOCIETY WHICH HAS BEEN CLAIMED AS EXEMPT. ACCORDING TO 5 ITA NO . 32 /PN/2014, CATHOLIC URBAN CO - OPERATIVE CREDIT SOCIETY LIMITED, SINDHUDURG 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 TOTGARS CO - OP. SALE SOCIETY LTD V. ITO (SUPR A). THE ISSUE BEFORE THE HON'BLE COURT FOR DETERMINATION WAS WHETHER INTEREST 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 COURT IN TH E CASE OF TOTGARS (SUPRA) IS EXTRACTED, FOR APPRECIATION 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 REQUIRED FOR BUSINESS PURPOSES? THE ASSESSEE(S) MARKETS THE PRODUCE 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 RETENTION WAS NOT REQU IRED IMMEDIATELY FOR BUSINESS PURPOSES, IT WAS INVESTED IN SPECIFIED SECURITIES. THE QUESTION, BEFORE US, IS - WHETHER INTEREST ON SUCH DEPOSITS/SECURITIES, WHICH STRICTLY SPEAKING ACCRUES TO THE MEMBERS' ACCOUNT, COULD BE TAXED AS BUSINESS INCOME UNDER SECT ION 28 OF THE ACT? IN OUR VIEW, SUCH INTEREST INCOME WOULD COME IN THE CATEGORY OF 'INCOME FROM OTHER SOURCES', HENCE, SUCH INTEREST INCOME WOULD BE TAXABLE UNDER SECTION 56 OF THE ACT, AS RIGHTLY HELD BY THE ASSESSING OFFICER...' 19.1 HOWEVER, IN THE PRE SENT CASE, ON VERIFICATION OF THE BALANCE SHEET OF THE ASSESSEE AS ON 31.3.2009, IT WAS OBSERVED THAT THE FIXED DEPOSITS MADE WERE TO MAINTAIN 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 OFFICER, IT WAS ARGUED BY THE ASSESSEE(S) THAT IT HAD INVESTED THE FUNDS ON SHORT TERM BASIS AS THE FUNDS WERE NOT REQUIRED IMMEDIATELY FOR BUSINESS PURPOSES AN D, CONSEQUENTLY, SUCH ACT OF INVESTMENT CONSTITUTED A 6 ITA NO . 32 /PN/2014, CATHOLIC URBAN CO - OPERATIVE CREDIT SOCIETY LIMITED, SINDHUDURG BUSINESS ACTIVITY BY A PRUDENT BUSINESSMAN; THEREFORE, SUCH INTEREST INCOME WAS LIABLE 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 TRIBUNAL AND THE HIGH COURT, HENCE, THESE CIVIL APPEALS HAVE BEEN FILED BY THE ASSESSEE(S).' 19.2 FROM THE ABOVE, IT EMERGES THAT (A) T HAT 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 RE TAINED FROM MARKETING THE AGRICULTURAL PRODUCE OF THE MEMBERS; (C) THAT ASSESSEE CARRIED ON TWO ACTIVITIES, NAMELY, (I) ACCEPTANCE OF DEPOSIT AND LENDING BY WAY OF DEPOSITS TO THE MEMBERS; AND (II) MARKETING THE AGRICULTURAL PRODUCE; AND (D) THAT THE SUR PLUS HAD ARISEN EMPHATICALLY FROM MARKETING OF AGRICULTURAL PRODUCES. 19.3 IN THE PRESENT CASE UNDER CONSIDERATION, THE ENTIRE FUNDS WERE UTILIZED FOR THE PURPOSES OF BUSINESS AND THERE WERE NO SURPLUS FUNDS. 19.4 WHILE COMPARING THE STATE OF AFFAIRS OF THE PRESENT ASSESSEE WITH THAT ASSESSEE (BEFORE THE SUPREME COURT), THE FOLLOWING CLINCHING DISSIMILARITIES EMERGE, NAMELY: (1) IN THE CASE OF THE ASSESSEE, THE ENTIRE FUNDS WERE UTILIZED FOR THE PURPOSES OF BUSINESS AND THAT THERE WERE NO SURPLUS FUNDS; - IN THE CASE OF TOTGARS, IT HAD SURPLUS FUNDS, AS ADMITTED BEFORE THE AO, OUT OF RETAINED AMOUNTS 7 ITA NO . 32 /PN/2014, CATHOLIC URBAN CO - OPERATIVE CREDIT SOCIETY LIMITED, SINDHUDURG ON MARKETING OF AGRICULTURAL PRODUCE OF ITS MEMBERS; (2) IN THE CASE OF PRESENT ASSESSEE, IT DID NOT CARRY OUT ANY ACTIVITY EXCEPT IN PROVIDING CREDIT FACI LITIES TO ITS MEMBERS AND THAT THE FUNDS WERE OF OPERATIONAL FUNDS. THE ONLY FUND AVAILABLE WITH THE ASSESSEE WAS DEPOSITS FROM ITS MEMBERS 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 THERE IS FORCE IN THE ARGUMENT OF THE ASSESSEE THAT THE ASSESSEE NOT A CO - OPERATIVE BANK, BUT ITS NATURE OF BUSINESS WAS COUPLED WITH BANKING WITH ITS MEMBERS, AS I T ACCEPTS DEPOSITS FROM AND LENDS THE SAME TO ITS MEMBERS. TO MEET ANY EVENTUALITY, THE ASSESSEE WAS REQUIRED TO MAINTAIN SOME LIQUID FUNDS. THAT WAS WHY, IT WAS SUBMITTED BY THE ASSESSEE THAT IT HAD INVESTED IN SHORT - TERM DEPOSITS. FURTHERMORE, THE ASSESS EE HAD MAINTAINED OVERDRAFT FACILITY WITH DENA BANK AND THE BALANCE AS AT 31.3.2009 WAS RS.13,69,955/ - [SOURCE: BALANCE SHEET OF THE ASSESSEE AVAILABLE ON RECORD] 19.6 IN OVERALL CONSIDERATION OF ALL THE ASPECTS, WE ARE OF THE CONSIDERED VIEW THAT THE RAT IO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF TOTGARS CO - OP SALE SOCIETY LTD (SUPRA) CANNOT IN ANY WAY COME TO THE RESCUE OF EITHER THE LD. CIT (A) OR THE REVENUE. IN VIEW OF THE ABOVE FACTS, WE ARE OF THE FIRM VIEW THAT THE LEARNED CIT (A) WAS NOT JUSTIFIED 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 REGARDS, LIKE TO RECORD THAT THE RULING OF THE HON'BLE JURISDICTIONAL HIGH COU RT 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. 8 ITA NO . 32 /PN/2014, CATHOLIC URBAN CO - OPERATIVE CREDIT SOCIETY LIMITED, SINDHUDURG 11.2 WE FIND THE COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF MUTTOM SERVICE COOPERATIVE APLAPPUZHA BANK LTD. VS. ITO (SUPRA) AFTER CONSIDERING THE DECISION OF HONBLE SUPREME COURT IN 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 EITHER 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 THAT THE DEPOSIT OF SURPLUS F UNDS BY THE CO - OPERATIVE SOCIETY IS NOT ELIGIBLE FOR DEDUCTION U/S 80P(2). IN THE CASE BEFORE THE APEX COURT IN TOTGAR'S CO - OPERATIVE SALE SOCIETY LTD VS ITO (SUPRA), THE ASSESSEE CO - OPERATIVE SOCIETY WAS TO PROVIDE CREDIT FACILITY TO ITS MEMBERS AND MARKE T THE AGRICULTURAL PRODUCE. THE ASSESSEE IS NOT IN THE BUSINESS OF BANKING. THEREFORE, THIS TRIBUNAL IS OF THE OPINION THAT THE JUDGMENT OF THE APEX COURT IN TOTGAR'S CO - OPERATIVE SALE SOCIETY LTD (SUPRA) IS NOT APPLICABLE IN RESPECT OF THE CO - OPERATIVE SO CIETY WHOSE BUSINESS IS BANKING. ADMITTEDLY, THE ASSESSEE HAS INVESTED FUNDS IN STATE PROMOTED TREASURY SMALL SAVINGS FIXED DEPOSIT SCHEME. SINCE GOVERNMENT OF INDIA HAS WITHDRAWN INDIA VIKAS PATRA, AS A SMALL SAVINGS INSTRUMENT, FUNDS INVESTED AT THE DISC RETION 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 BUSINESS INCOME IN THE COURSE OF ITS BANKING ACTIVITY. ONCE IT IS A BUSINESS INCOME, THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80P(2)((A)(I). THEREFORE, THIS T RIBUNAL IS OF THE OPINION THAT THE JUDGMENT OF THE LARGER BENCH OF THE APEX COURT IN KARNATAKA STATE CO - OPERATIVE APEX BANK (SUPRA) IS APPLICABLE TO THE FACTS OF THIS CASE. BY RESPECTFULLY FOLLOWING THE JUDGMENT OF THE APEX COURT IN KARNATAKA STATE CO - OPE RATIVE BANK (SUPRA), THE ORDER OF THE COMMISSIONER OF INCOME - TAX(A) IS UPHELD. 9 ITA NO . 32 /PN/2014, CATHOLIC URBAN CO - OPERATIVE CREDIT SOCIETY LIMITED, SINDHUDURG 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 AUTHORI SED BY THE REGISTRAR OF COOPERATIVE 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 FACILITY TO MEMBERS WHO CAN BE AN Y 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 BANKING ACTIVITY AND PROVIDING CRE DIT 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 TRIBUNAL WHICH IN TURN HAVE CONSIDERED THE DECISION OF THE H ONBLE 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 SAME IS UPHELD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 5. WE FIND THAT IN THE CASE OF NI PHAD NAGARI SAHAKARI PATSHANSHTA LTD., NASHIK (SUPRA) THE TRIBUNAL HAS FOLLOWED THE DECISION OF THE ITAT, AHMEDABAD IN THE CASE OF ITO VS. M/S. JAFARI MOMIN VIKAS CO - OP. CREDIT SOCIETY LTD. ITA NO. 1491/AHD/2012 AND CO NO. 138/AHD/2012 ORDER DATED 31 - 10 - 20 12 AS WELL AS THE DECISION OF THE ITAT, COCHIN IN THE CASE OF MUTTON SERVICE CO - OPERATIVE BANK LTD. VS. ITO ITA NO. 372/COCH/2010 ORDER DATED 20 - 01 - 2012. AS THE FACTS OF PRESENT CASE ARE IDENTICAL AS IN THE CASE OF NIPHAD NAGARI SAHAKARI PATSHANSHTA LTD., NASHIK (SUPRA) THERE IS NO NEED TO TAKE DIFFERENT VIEW. WE, ACCORDINGLY, FOLLOWING THE DECISION IN THE CASE OF NIPHAD NAGARI SAHAKARI PATSHANSHTA LTD., NASHIK (SUPRA) H O LD THAT THE INTEREST INCOME EARNED BY THE ASSESSEE CREDIT SOCIETY ON THE FIXED DEPOSI TS FROM THE BANK OTHER THAN CO - OPERATIVE SOCIETY IS A PART OF ITS BUSINESS INCOME. SAME WAY THE INTEREST EARNED ON SAVING BANK A/C. WITH THE SINDHUDURG DISTRICT CENTRAL CO - 10 ITA NO . 32 /PN/2014, CATHOLIC URBAN CO - OPERATIVE CREDIT SOCIETY LIMITED, SINDHUDURG OPERATIVE BANK LTD. IS ALSO PART OF ITS BUSINESS INCOME. ACCORDINGLY, GROUND NOS. 1 , 2 AND 3 ARE ALLOWED. 6 . THE NEXT ISSUE IS THE DIVIDEND RECEIVED ON THE SHARES OF S INDHUDURG DISTRICT CENTRAL CO - OPERATIVE BANK LTD. AND THIS ISSUE ARISES FROM GROUND NO. 5. WE HAVE CONSIDERED THE IDENTICAL ISSUE IN THE CASE OF VEEJMANDALS WORKERS FE DERATION SAHAKARI PATSANSTHA MARYADIT, SINDHUDURG BEING ITA NO. 29/PN/2014 AND HELD THAT THE DIVIDEND INCOME IS DEDUCTIBLE U/S. 80P(2)(D) OF THE ACT. WE, THEREFORE, FOLLOWING THE REASONS IN VEEJMANDALS WORKERS FEDERATION SAHAKARI PATSANSTHA MARYADIT, SIN DHUDURG (SUPRA) ALLOW THE RESPECTIVE GROUND AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 7 . IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 29 - 1 2 - 201 4 SD/ - SD/ - ( G.S. PANNU ) ( R.S. PADVEKAR ) ACCOUNTANT M EMBER JUDICIAL MEMBER PUNE, DATED : 29 TH DECEMBER, 201 4 RK/PS COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) , KOLHAPUR 4 THE CIT - I I , KOLHAPUR 5 6 THE DR, ITAT, A BENCH, PUNE. GUARD FILE. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR , INCOME TAX APPELLATE TRIBUNAL , PUNE