The ITO, Kottayam V. M/s.Sahyadri Co-op Credit Society Ltd, Kottayam

ITA 340/COCH/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3922 (ITAT-COCHIN)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 24-05-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 08-08-2016
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: SHYJO JOSEPH
• Keywords: Business income
• Section: 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI ABRAHAM P. GEORGE, AM & GEORGE GEORGE K., JM I.T.A. NO. 340 /COCH/2 01 6 ASSESSMENT YEAR : 2012 - 13 THE I NCOME T AX OFFICER , WARD-4, KOTTAYAM. VS. M/S. SAHYADRI CO - OPERATIVE CREDIT SOCIETY LTD., 1 ST FLOOR, AMAL JYOTHI BUILDING, CATHEDRAL ROAD, KANJIRAPALLY, KOTTAYAM. (REVENUE - APPELLANT) (ASSESSEE - R ESPONDENT) C.O. NO.26/COCH/2016 (ARSG. OUT OF I.T.A. NO.340/COCH/2016) ASSESSMENT YEAR : M/S. SAHYADRI CO - OPERATIVE CREDIT SOCIETY LTD., 1 ST FLOOR, AMAL JYOTHI BUILDING, CATHEDRAL ROAD, KANJIRAPALLY, KOTTAYAM. [PAN:ABAFS 0052P] VS. THE INCOME TAX OFFICER, WARD-4, KOTTAYAM. (ASSESSEE - APPELLANT) (REVENUE - RESPONDENT) REVENUE BY SHRI A. DHANARAJ, SR. DR ASSESSEE BY SHRI SHYJO JOSEPH, DATE OF HEARING 24 / 0 5 / 201 7 DATE OF PRONOUNCEMENT 26 / 0 5 /201 7 O R D E R PER ABRAHAM P.GEORGE, ACCOUNTANT MEMBER: THESE ARE CROSS OBJECTIONS FILED BY REVENUE AN D ASSESSEE RESPECTIVELY AGAINST AN ORDER DATED 31/05/2016 OF CIT(A), KOTTAY AM. I.T.A. NO.340/COCH/2016 & CO NO.26/COCH/2016 2 2. APPEAL OF THE REVENUE IS FIRST TAKEN UP FOR DI SPOSAL. REVENUE IS AGGRIEVED ON THE DELETION OF DISALLOWANCE OF A DEDUCTION OF RS.9 0,29,958/- CLAIMED BY THE ASSESSEE U/S. 80P(2) OF THE INCOME TAX ACT, 1961 (I N SHORT THE ACT). 3. LD. COUNSEL FOR THE REVENUE SUBMITTED THAT CIT( A) HAD PLACED RELIANCE ON THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF CHIRAKKAL SERVICE CO- OPERATIVE BANK LTD. VS. CIT 384 ITR 0490 WHILE GIVI NG THE DEDUCTION TO THE ASSESSEE. AS PER THE LD. DR, THE SAID JUDGMENT WAS IN RELATION TO PRIMARY AGRICULTURAL CREDIT SOCIETIES REGISTERED UNDER THE KERALA CO-OPERATIVE SOCIETIES ACT, WHEREAS ASSESSEE HERE WAS NOT SUCH A SOCIETY. ACCORDING TO THE LD. DR, ASSESSEE WAS A MULTI STATE CO-OPERATIVE SOCIETY AND DID NOT HAVE ANY INCOME WHICH WAS ELIGIBLE FOR DEDUCTION U/S. 80P OF THE AC T. CONTENTION OF THE LD. DR WAS THAT ASSESSEE WAS FUNCTIONING LIKE A COMMERCIAL BANK AND THEY ALSO PROVIDED NON AGRICULTURAL CREDIT. HENCE ACCORDING T O HIM IT WAS NOT ELIGIBLE FOR DEDUCTION U/S. 80P OF THE ACT. AS PER THE LD. DR, THERE WAS NOTHING IN THE BYE- LAW OF THE ASSESSEE-SOCIETY WHICH LIMITED ITS POWER TO GIVE LOANS TO ONLY MEMBERS WHO WERE AGRICULTURISTS. FURTHER AS PER TH E LD. DR BY VIRTUE OF SECTION 80P(4) OF THE ACT, DEDUCTION U/S. 80P(1) OF THE ACT COULD NOT BE GIVEN TO ANY CO- OPERATIVE BANK. 4. PER CONTRA, THE LD. AR STRONGLY SUPPORTING THE ORDER OF THE CIT(A), SUBMITTED THAT ASSESSEE WAS NOT A CO-OPERATIVE BANK AS PER PART V OF THE I.T.A. NO.340/COCH/2016 & CO NO.26/COCH/2016 3 BANKING REGULATIONS ACT, 1949. AS PER THE LD. AR, I T WAS A MULTI STATE CO- OPERATIVE SOCIETY REGISTERED U/S. 7 OF THE MULTI S TATE CO-OPERATIVE SOCIETIES ACT, 2002 AND SUCH REGISTRATION WAS GIVEN BY DEPARTMENT OF AGRICULTURE & CO- OPERATION OF GOVERNMENT OF INDIA. CONTENTION OF TH E LD. AR WAS THAT MERE ACCEPTANCE OF BANK DEPOSITS AND ADVANCING LOANS TO MEMBERS WOULD NOT CONVERT THE ASSESSEE TO A CO-OPERATIVE BANK, UNLESS AND UNT IL IT WAS SO DECLARED BY THE RESERVE BANK OF INDIA. 5. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. CERTIFICATE DATED 16-03-2004 ISSUED BY THE OFFICE OF CENTRAL RE GISTRAR OF CO-OPERATIVE SOCIETIES UNDER THE DEPARTMENT OF AGRICULTURE & CO OPERATION OF GOVERNMENT OF INDIA CLEARLY STATES THAT ASSESSEE IS A MULTI STATE CO-OPERATIVE SOCIETY REGISTERED U/S. 7 OF THE MULTI STATE CO-OPERATIVE SOCIETIES AC T, 2002. IT IS NOT DISPUTED THAT THE EARNINGS OF THE ASSESSEE SOCIETY WERE FROM CRED IT FACILITIES GIVEN BY IT TO ITS MEMBERS. SECTION 80P(1) OF THE ACT IS REPRODUCED H EREUNDER: 80P. (1) WHERE, IN THE CASE OF AN ASSESSEE BEING A CO-O PERATIVE SOCIETY, THE GROSS TOTAL INCOME INCLUDES ANY INCOME REFERRED TO IN SUB -SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE WITH AND SUBJECT TO THE PRO VISIONS OF THIS SECTION, THE SUMS SPECIFIED IN SUB-SECTION (2), IN COMPUTING THE TOTA L INCOME OF THE ASSESSEE. (2) THE SUMS REFERRED TO IN SUB-SECTION (1) SHALL B E THE FOLLOWING, NAMELY : (A) IN THE CASE OF A CO-OPERATIVE SOCIETY ENGAGED I N (I) CARRYING ON THE BUSINESS OF BANKING OR PROVIDIN G CREDIT FACILITIES TO ITS MEMBERS, OR (II) A COTTAGE INDUSTRY, OR (III) THE MARKETING OF AGRICULTURAL PRODUCE GROWN B Y ITS MEMBERS, OR (IV) THE PURCHASE OF AGRICULTURAL IMPLEMENTS, SEEDS , LIVESTOCK OR OTHER ARTICLES INTENDED FOR AGRICULTURE FOR THE PURPOSE OF SUPPLYI NG THEM TO ITS MEMBERS, OR I.T.A. NO.340/COCH/2016 & CO NO.26/COCH/2016 4 (V) THE PROCESSING, WITHOUT THE AID OF POWER, OF TH E AGRICULTURAL PRODUCE OF ITS MEMBERS, OR (VI) THE COLLECTIVE DISPOSAL OF THE LABOUR OF ITS M EMBERS, OR (VII) FISHING OR ALLIED ACTIVITIES, THAT IS TO SAY, THE CATCHING, CURING, PROCESSING, PRESERVING, STORING OR MARKETING OF FISH OR THE PUR CHASE OF MATERIALS AND EQUIPMENT IN CONNECTION THEREWITH FOR THE PURPOSE O F SUPPLYING THEM TO ITS MEMBERS, THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUS INESS ATTRIBUTABLE TO ANY ONE OR MORE OF SUCH ACTIVITIES : PROVIDED THAT IN THE CASE OF A CO-OPERATIVE SOCIETY FALLING UNDER SUB-CLAUSE (VI), OR SUB-CLAUSE (VII), THE RULES AND BYE-LAWS OF THE SOC IETY RESTRICT THE VOTING RIGHTS TO THE FOLLOWING CLASSES OF ITS MEMBERS, NAMELY: (1) THE INDIVIDUALS WHO CONTRIBUTE THEIR LABOUR OR, AS THE CASE MAY BE, CARRY ON THE FISHING OR ALLIED ACTIVITIES; (2) THE CO-OPERATIVE CREDIT SOCIETIES WHICH PROVIDE FINANCIAL ASSISTANCE TO THE SOCIETY; (3) THE STATE GOVERNMENT; (B) IN THE CASE OF A CO-OPERATIVE SOCIETY, BEING A PRIMARY SOCIETY ENGAGED IN SUPPLYING MILK, OILSEEDS, FRUITS OR VEGETABLES RAISED OR GROW N BY ITS MEMBERS TO (I) A FEDERAL CO-OPERATIVE SOCIETY, BEING A SOCIETY ENGAGED IN THE BUSINESS OF SUPPLYING MILK, OILSEEDS, FRUITS, OR VEGETABLES, AS THE CASE MAY BE; OR (II) THE GOVERNMENT OR A LOCAL AUTHORITY; OR (III) A GOVERNMENT COMPANY AS DEFINED IN SECTION 61 7 OF THE COMPANIES ACT, 1956 (1 OF 1956), OR A CORPORATION ESTABLISHED BY OR UND ER A CENTRAL, STATE OR PROVINCIAL ACT (BEING A COMPANY OR CORPORATION ENGA GED IN SUPPLYING MILK, OILSEEDS, FRUITS OR VEGETABLES, AS THE CASE MAY BE, TO THE PUBLIC), THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF SUC H BUSINESS; (C) IN THE CASE OF A CO-OPERATIVE SOCIETY ENGAGED I N ACTIVITIES OTHER THAN THOSE SPECIFIED IN CLAUSE (A) OR CLAUSE (B) (EITHER INDEPENDENTLY O F, OR IN ADDITION TO, ALL OR ANY OF THE ACTIVITIES SO SPECIFIED), SO MUCH OF ITS PROFIT S AND GAINS ATTRIBUTABLE TO SUCH ACTIVITIES AS DOES NOT EXCEED, (I) WHERE SUCH CO-OPERATIVE SOCIETY IS A CONSUMERS' CO-OPERATIVE SOCIETY, ONE HUNDRED THOUSAND RUPEES; AND (II) IN ANY OTHER CASE, FIFTY THOUSAND RUPEES. EXPLANATION.IN THIS CLAUSE, 'CONSUMERS' CO-OPERATI VE SOCIETY' MEANS A SOCIETY FOR THE BENEFIT OF THE CONSUMERS; (D) IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY THE CO-OPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANY OTHER CO-OPER ATIVE SOCIETY, THE WHOLE OF SUCH INCOME; I.T.A. NO.340/COCH/2016 & CO NO.26/COCH/2016 5 (E) IN RESPECT OF ANY INCOME DERIVED BY THE CO-OPER ATIVE SOCIETY FROM THE LETTING OF GODOWNS OR WAREHOUSES FOR STORAGE, PROCESSING OR FA CILITATING THE MARKETING OF COMMODITIES, THE WHOLE OF SUCH INCOME; (F) IN THE CASE OF A CO-OPERATIVE SOCIETY, NOT BEIN G A HOUSING SOCIETY OR AN URBAN CONSUMERS' SOCIETY OR A SOCIETY CARRYING ON TRANSPO RT BUSINESS OR A SOCIETY ENGAGED IN THE PERFORMANCE OF ANY MANUFACTURING OPERATIONS WITH THE AID OF POWER, WHERE THE GROSS TOTAL INCOME DOES NOT EXCEED TWENTY THOUS AND RUPEES, THE AMOUNT OF ANY INCOME BY WAY OF INTEREST ON SECURITIES OR ANY INCO ME FROM HOUSE PROPERTY CHARGEABLE UNDER SECTION 22 . EXPLANATION.FOR THE PURPOSES OF THIS SECTION, AN ' URBAN CONSUMERS' CO-OPERATIVE SOCIETY' MEANS A SOCIETY FOR THE BENEFIT OF THE CON SUMERS WITHIN THE LIMITS OF A MUNICIPAL CORPORATION, MUNICIPALITY, MUNICIPAL COMMITTEE, NOT IFIED AREA COMMITTEE, TOWN AREA OR CANTONMENT. IT IS CLEAR FROM THE ABOVE THAT THE PROFITS AND GAI NS OF BUSINESS OR PROFESSION ATTRIBUTABLE TO CARRYING ON A BUSINESS OF PROVIDING CREDIT FACILITY TO MEMBERS WILL BE ELIGIBLE FOR DEDUCTION U/S. 80P(1) OF THE ACT. HENCE ASSESSEE IS ELIGIBLE FOR CLAIMING SUCH DEDUCTION. ONLY QUESTION THAT REMAIN S IS WHETHER ASSESSEE COULD BE DENIED THIS CLAIM, ON ACCOUNT OF RESTRICTIONS PL ACED BY SECTION 80P(4) OF THE ACT. SECTION 80P(4) IS REPRODUCED HEREUNDER: (4) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY IN RELATION TO ANY CO- OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CR EDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOP MENT BANK. EXPLANATION FOR THE PURPOSE OF THIS SUB-SECTION,- (A) CO-OPERATIVE BANK AND PRIMARY AGRICULTURAL CREDI T SOCIETY SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO TH EM IN PART V OF THE BANKING REGULATION ACT, 1949 (10 OF 1949); (B) PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELO PMENT BANK MEANS A SOCIETY HAVING ITS AREA OF OPERATION CONFIN ED TO A TALUK AND THE PRINCIPAL OBJECT OF WHICH IS TO PROVIDE FOR LONG-TERM CREDIT FOR AGRICULTURAL AND RURAL DEVELOPMENT ACTI VITIES. I.T.A. NO.340/COCH/2016 & CO NO.26/COCH/2016 6 HENCE THE QUESTION BOILS DOWN TO WHETHER ASSESSEE C OULD BE CONSIDERED AS A CO- OPERATIVE BANK. NOTHING WAS BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT RESERVE BANK OF INDIA DECLARED IT AS A CO-OPERATIVE BANK. NEITHER WAS THE ASSESSEE A PRIMARY AGRICULTURAL CREDIT SOCIETY NOR WAS IT A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SRI BILURU GURUBASAVA PATTINA SAHAKARI SANG HA NIYAMITHA, BAGALKOT, (2014) ( 369 ITR 86) HAS CLEARLY HELD THAT FOR A CO-OPERATIVE SOCIETY TO BE CONSIDERED AS A CO-OPERATIVE BANK, IT WAS NECESS ARY THAT RESERVE BANK OF INDIA SHOULD HAVE GIVEN SUCH A CLASSIFICATION TO TH E SAID CO-OPERATIVE SOCIETY. A SIMILAR VIEW WAS TAKEN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF JAFARI MOMIN VIKAS CO-OP CREDIT SOCIETY LTD.(2014) ( 362 ITR 331). IN THE CIRCUMSTANCES, WE ARE OF THE OPINION THAT SECTION 8 0P(4) HAD NO APPLICATION IN THE CASE OF THE ASSESSEE. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF CIT(A) IN THIS REGARD. APPEAL OF THE REVENUE IS THUS DISMISSED. 6. IN THE CROSS OBJECTION OF THE ASSESSEE, GRIE VANCE RAISED IS ON THE TREATMENT OF INTEREST, UNDER THE HEAD INCOME FROM OTHER SOUR CES INSTEAD OF INCOME FROM BUSINESS. THE ASSESSING OFFICER, WHILE DOING THE ASSESSMENT, HAD CONSIDERED INTEREST EARNED BY THE ASSESSEE ON BANK DEPOSITS UN DER THE HEAD INCOME FROM OTHER SOURCES. ASSESSEE HAD EARNED INTEREST OF RS .51,93,347/- ON BANK DEPOSITS. SINCE THE ABOVE INCOME WAS TREATED UNDER THE HEAD INCOME FROM I.T.A. NO.340/COCH/2016 & CO NO.26/COCH/2016 7 OTHER SOURCES, CLAIM OF DEDUCTION U/S. 80P(1) OF T HE ACT STOOD AUTOMATICALLY DENIED. RELIANCE WAS PLACED BY THE ASSESSING OFFIC ER ON THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF TOTGARS CO-OPERA TIVE SALE SOCIETY VS.ITO (322 ITR 283). ASSESSEES APPEAL ON THIS ISSUE BEFORE T HE CIT(A) DID NOT MEET WITH SUCCESS. 7. NOW BEFORE US, LD. COUNSEL SUBMITTED THAT THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF TOTGARS CO-OPERATIVE SALE SOC IETY LTD. (SUPRA) WAS NOT APPLICABLE SINCE IN THE SAID CASE THE ISSUE WAS TRE ATMENT OF INTEREST RECEIVED ON DEPOSITS CREATED FROM RETENTION OF SALE PROCEEDS, N OT IMMEDIATELY REQUIRED FOR BUSINESS PURPOSE. AS PER THE LD. AR, IN THE CASE O F THE ASSESSEE DEPOSITS ON WHICH INTEREST INCOME WAS EARNED WERE NOT FROM ANY SUCH RETENTION BUT WERE DEPOSITS FOR MEETING THE STATUTORY RESERVE REQUIREM ENTS UNDER SECTION 64 OF THE MULTI STATE CO-OPERATIVE SOCIETIES ACT, 2002. THE LD. AR ALSO PLACED RELIANCE ON BOARD CIRCULAR NO. 18/2015 IN F.1279/MISC./140/2015 /ITJ DATED 02/11/2015. AS PER THE LD. AR BY VIRTUE OF THE JUDGMENT OF THE HON BLE APEX COURT IN THE CASE OF NAWANSHAHAR CENTRAL CO-OPERATIVE BANK LTD. (2007) 1 60 TAXMAN 48 THE INTEREST INCOME WOULD BE CONSIDERED ONLY UNDER THE HEAD OF BUSINESS. 8. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. IT HAS NOT BEEN DISPUTED THAT INTEREST INCOME EARNED BY THE ASSESSE E WERE FROM DEPOSITS PLACED BY IT IN BANKS. CONTENTION OF THE ASSESSEE IS THAT SUCH INTEREST SHOULD BE I.T.A. NO.340/COCH/2016 & CO NO.26/COCH/2016 8 CONSIDERED ONLY AS PART OF ITS BUSINESS INCOME SINC E THE DEPOSITS WERE PLACED FOR MEETING THE REQUIREMENTS OF STATUTORY RESERVES UNDE R THE MULTI STATE CO- OPERATIVE SOCIETIES ACT, 2002. NO DOUBT, THE HONB LE APEX COURT IN THE CASE OF TOTGARS CO-OPERATIVE SALE SOCIETY BANK LTD.(SUPRA) HAD HELD THAT INTEREST RECEIVED ON DEPOSITS CREATED OUT OF SALE PROCEEDS R ECEIVED FROM THE MEMBERS NOT IMMEDIATELY DISBURSED TO SUCH MEMBERS, WAS TO B E CONSIDERED UNDER THE HEAD INCOME FROM OTHER SOURCES. HOWEVER, IN THE CASE BEFORE US, ADMITTEDLY, THE DEPOSITS WERE NOT OUT OF SALE PROCEEDS FROM THE MEMBERS OF THE ASSESSEE- SOCIETY. REVENUE HAS NOT REBUTTED THE CLAIM OF THE ASSESSEE THAT DEPOSITS ON WHICH INTEREST WAS EARNED WAS FOR MEETING INVESTMEN T REQUIREMENT ON STATUTORY RESERVES UNDER THE MULTI STATE CO-OPERATIVE SOCIETI ES ACT, 2002. CLEARLY, IT WAS OUT OF COMPULSIONS OF BUSINESS THAT THE DEPOSITS WE RE PLACED BY THE AS IN THE BANKS. EARNING OF INTEREST THERE FROM, IN OUR OPINIO N, COULD ONLY BE TREATED AS INCOME FROM ITS BUSINESS. IT IS ALSO INTERESTING T O HAVE A LOOK AT CIRCULAR DATED 02/11/2015 (SUPRA) ISSUED BY THE CBDT WHICH IS REPR ODUCED HEREUNDER: NEW DELHI, 2 ND NOVEMBER,2015 SUBJECT: INTEREST FROM NON-SLR SECURITIES OF BANKS REG IT HAS BEEN BROUGHT TO THE NOTICE OF THE BOARD THAT IN THE CASE OF BANKS, FIELD OFFICERS ARE TAKING A VIEW THAT, EXPE NSES RELATABLE TO INVESTMENT IN NON-SLR SECURITIES NEED TO BE DISALLO WED U/S. 57(I) OF THE ACT AS INTEREST ON NON-SLR SECURITIES IS INCOME FROM OT HER SOURCES. 2. CLAUSE (ID) OF SUB-SECTION(1) OF SECTION 56 OF THE ACT PROVIDES THAT INCOME BY WAY OF INTEREST ON SECURITIES SHALL BE CH ARGEABLE TO INCOME-TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS AND P ROFESSION. I.T.A. NO.340/COCH/2016 & CO NO.26/COCH/2016 9 3. THE MATTER HAS BEEN EXAMINED IN LIGHT OF THE JUDICIAL DECISIONS ON THIS ISSUE. IN THE CASE OF CIT VS. NAWANSHAHAR CENTRAL CO-OPERATIVE BANK LTD. (2007) 160 TAXMANN 48 (SC), THE APEX COURT HELD THAT THE I NVESTMENTS MADE BY A BANKING CONCERN ARE PART OF THE BUSINESS OF BANKING. THEREFORE, THE INCOME ARISING FROM SUCH INVESTMENTS IS ATTRIBU TABLE TO THE BUSINESS OF BANKING FALLING UNDER THE HEAD PROFITS AND GAINS O F BUSINESS AND PROFESSION. 3.2 EVEN THOUGH THE ABOVEMENTIONED DECISION WAS IN THE CONTEXT OF CO- OPERATIVE SOCIETIES/BANKS CLAIMING DEDUCTION U/S.80 P(2)(A)(I) OF THE ACT, THE PRINCIPLE IS EQUALLY APPLICABLE TO ALL BANKS/CO MMERCIAL BANKS, TO WHICH BANKING REGULATION ACT, 1949 APPLIES. 4. IN THE LIGHT OF THE SUPREME COURTS DECISION IN THE MATTER, THE ISSUE IS WELL SETTLED. ACCORDINGLY, THE BOARD HAS DECIDED T HAT NO APPEALS MAY HENCEFORTH BE FILED ON THIS GROUND BY THE OFFICERS OF HE DEPARTMENT AND APPEALS ALREADY FILED, IF ANY, ON THIS GROUND BEFOR E COURTS/TRIBUNALS MAY BE WITHDRAWN/NOT PRESSED UPON. THIS MAY BE BROUGHT TO THE NOTICE OF ALL CONCERNED. SD/- (D S CHAUDHRY) CIT(A&J), CBDT, NEW DELHI PARA 3.2 OF THE ABOVE CIRCULAR CLEARLY INDICATES TH AT THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF NAWANSHAHAR CENTRAL CO-OP ERATIVE BANK LTD. (SUPRA) CAN BE APPLIED TO A CO-OPERATIVE SOCIETY ALSO WHERE THERE IS A CLAIM OF DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT. CONSIDERING ALL THES E ASPECTS, WE ARE OF THE OPINION THAT THE INTEREST EARNED BY THE ASSESSEE COULD NOT HAVE BEEN TREATED UNDER THE HEAD INCOME FROM OTHER SOURCES BUT ONLY AS A PART OF ITS BUSINESS INCOME. CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. I.T.A. NO.340/COCH/2016 & CO NO.26/COCH/2016 10 9. TO SUMMARIZE, APPEAL OF THE REVENUE IS DISMISSE D WHEREAS THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COU RT ON 26-05-2017. SD/- SD/- (GEORGE GEORGE K.) ( ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 26 TH MARCH, 2017 GJ COPY TO: 1. M/S. SAHYADRI CO-OPERATIVE CREDIT SOCIETY LTD., 1 ST FLOOR, AMAL JYOTHI BUILDING, CATHEDRAL ROAD, KANJIRAPALLY, KOTTAYAM. 2. THE INCOME TAX OFFICER, WARD-4, KOTTAYAM. 3. THE PR. COMMISSIONER OF INCOME-TAX(APPEALS), KOT TAYAM. 4. THE COMMISSIONER OF INCOME-TAX, 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COC HIN