KUMHER KRIYA VIKRYA SAHAKARI SAMITI LTD., BHARATPUR V. INCOME TAX OFFICER, WARD-3, BHARATPUR

ITA 912/JPR/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4524 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 26-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJIV GOYAL; WAY OF IDENTIFYING A SPECIFIED AMOUNT WHICH CAN BE
• Keywords: Business income
• Section: 6; 56; 28; 2; 143(3); 244A; 80P; 13

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,A JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 912/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2015-16 KUMHER KRIYA VIKRYA SAHAKARI SAMITI LTD. KUMBER, DISTT. BHARATPUR-321001. CUKE VS. THE ITO, WARD-3, BHARATPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAAAK2966J VIHYKFKHZ@ APPELLA NT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI RAJIV GOYAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SMT. MONISHA CHOUDHARY (JCIT) A LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 08/04/2021 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 30/04/2021 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A), ALWAR DATED 16.11.2018 RELEVANT TO ASSESSME NT YEAR 2015-16 WHEREIN THE ASSESSEE HAS CHALLENGED THE DENIAL OF D EDUCTION AMOUNTING TO RS. 2,33,538/-U/S 80P OF THE I.T. ACT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS A CO- OPERATIVE SOCIETY DEALING IN FERTILIZERS, SEEDS, ME DICINES, PESTICIDES FOR SUPPLY THEM TO ITS MEMBERS FOR AGRICULTURE PURPOSES . IT FILED ITS RETURN OF INCOME ON 30.10.2015 DECLARING NIL INCOME AFTER CLAIMING DEDUCTION ITA NO.912/JP/2019 KUMHER KRIYA VIKRYA SAHAKARI SAMITI LTD. VS. ITO 2 U/S 80P AMOUNTING TO RS. 14,29,037/-. THE CASE OF T HE ASSESSEE WAS SELECTED FOR LIMITED SCRUTINY ON ACCOUNT OF DEDUCTI ON CLAIMED UNDER CHAPTER VI AND AFTER ISSUING NOTICE AND CALLING FOR THE INFORMATION AND EXPLANATION FROM THE ASSESSEE, DEDUCTION U/S 80P SO CLAIMED BY THE ASSESSEE WAS RESTRICTED TO RS. 11,95,499/- THEREBY ASSESSING THE INCOME AT RS. 2,33,540/- U/S 143(3) OF THE ACT. ON APPEAL, THE SAME HAS BEEN CONFIRMED BY THE LD CIT(A) AND THE ASSESSE E IS NOW IN APPEAL CHALLENGING THE SAME. 3. THE RELEVANT FACTS AND FINDINGS OF THE ASSESSING OFFICER RELATING TO DENIAL OF DEDUCTION U/S 80P ARE CONTAINED AT PARA 3 OF THE ASSESSMENT ORDER AND WE DEEM IT APPROPRIATE TO REPRODUCE THE S AME AS UNDER:- 3. ADDITION ON ACCOUNT OF INTEREST INCOME FROM BAN K:- ON PERUSAL OF P & L ACCOUNT FOR THE YEAR ENDED 31.03.2015, IT IS NOTICED THAT THE ASSESSEE HAS CREDITED INTEREST INCOME OF RS. 2, 33,538/-. ON ASKING THE DETAILS THEREOF, A COPY OF BANK STATEMEN T MAINTAINED WITH AXIS BANK, BHARATPUR HAS BEEN SUBMITTED. 3.1 ON PERUSAL OF TRADING ACTIVITIES AND BY LAWS OF THE SOCIETY, IT IS NOTICED THAT THE ASSESSEE IS ENGAGED IN THE TRADING ACTIVITY OF SEEDS, FERTILIZERS, MEDICINES, PESTICIDES FOR SUPPL YING THEM TO ITS MEMBERS FOR AGRICULTURE PURPOSES. FURTHER, IT IS SE EN THAT THE SOCIETY HAD SURPLUS FUNDS DURING THE YEAR UNDER CON SIDERATION WHICH WERE INVESTED IN THE BANK. THE INTEREST INCOM E ON SUCH SURPLUS CANNOT FALL WITHIN THE MEANING OF EXPRESSIO N PROFIT AND GAIN OF THE BUSINESS OF THE SOCIETY THEREFORE INTE REST INCOME WOULD COME IN THE CATEGORY OF INCOME FROM OTHER SO URCES AND LIABLE TO THE TAXED UNDER SECTION 56 OF THE ACT AND NOT UNDER SECTION 28 OF THE ACT AND CONSEQUENTLY THE ASSESSEE WAS NOT ENTITLED TO GET DEDUCTION UNDER SECTION 80P(2)(A)(I V) OF THE ACT ON SUCH RECEIPTS. IN VIEW OF THE ABOVE FACT, THE ASSES SEE WAS REQUIRED TO SHOW CAUSE AS TO WHY INTEREST INCOME RE CEIVED FROM ITA NO.912/JP/2019 KUMHER KRIYA VIKRYA SAHAKARI SAMITI LTD. VS. ITO 3 AXIS BANK SHOULD NOT BE TREATED AS NON-BUSINESS INC OME AND TO BE TAXED UNDER SECTION 56 OF THE INCOME TAX ACT, 19 61. IN REPLY TO THIS, THE ASSESSEE VIDE LETTER DATED 13.11.2017 HAS SUBMITTED THAT IN DAY TO DAY BUSINESS ACTIVITIES AND NORMAL C OURSE OF BUSINESS THE BUSINESS HAS MAINTAINED A SAVING BANK ACCOUNT AND THE BANK HAS PROVIDED THE INTEREST ON THE BALANCE K EPT WITH THEM. THE ASSESSEE IS REQUIRED TO MAINTAINED THE BA NK ACCOUNT UNDER THE IT ACT FOR COMPLY WITH THE VARIOUS PROVIS IONS OF THE ACT. THE ASSESSEE HAS NOT INVESTED ANY IDLE AMOUNT IN TH E BANK. 3.2 IN SUPPORT OF ITS CLAIM, THE A/R OF THE ASSESSE E HAS QUOTED CITATIONS IN THE CASE OF NARAIN SWADESHI WYG MILLS V CIT (1954) 26 ITR 765 (SC) AND ACIT VS. BRIJ BHUSHAN LAL & SO NS ON DECEMBER, 1999. 3.3 I HAVE CAREFULLY CONSIDERED THE REPLY OF THE AS SESSEE ALONG WITH FACTS AND SURROUNDINGS OF THE CASE AND FOUND N O MERIT IN THE ARGUMENT OF THE ASSESSEE. THE FACTS OF THE CASE LAW S CITED BY THE ASSESSEE ARE NOT AT ALL MATCH WITH THE FACTS AND CI RCUMSTANCES OF THE CASE. THE ASSESSEE SOCIETY HAD INVESTED THE SUR PLUS FUNDS BY WAY OF INVESTMENT AS AN ORDINARY INVESTOR WHICH WAS NOT REQUIRED FOR BUSINESS PURPOSE HENCE INTEREST ON SUCH SURPLUS MONEY HAS GOT TO BE TAXED UNDER THE HEAD INCOME FROM OTHER S OURCES. SUCH INTEREST WAS NOT RECEIVED FROM ITS MEMBERS FOR PROV IDING CREDIT FACILITIES TO THEM, THEREFORE IT WAS NOT ELIGIBLE F OR DEDUCTION U/S 80P(2)(IV) OF THE ACT. THE ASSESSEE MARKETS THE PRO DUCT OF IFFCO, KRIBCO AND RAJFEED ETC. WHOSE SALE PROCEEDS AT TIMES WERE RETAINED BY IT. 3.4 IT IS PERTINENT TO MENTION HERE THAT THE SECTIO N 80P DEALS WITH DEDUCTION IN RESPECT OF INCOME OF COOPE RATIVE SOCIETIES. SECTION 80P(I) STATES THAT WHERE THE GRO SS TOTAL INCOME OF, A COOPERATIVE SOCIETY INCLUDES ANY INCOM E FROM ONE OR MORE SPECIFIED ACTIVITIES, THEN SUCH INCOME SHALL BE DEDUCTED FROM THE GROSS TOTAL INCOME IN COMPUTING T HE ITA NO.912/JP/2019 KUMHER KRIYA VIKRYA SAHAKARI SAMITI LTD. VS. ITO 4 TOTAL TAXABLE INCOME OF THE SOCIETY. AN INCOME WHIC H IS ATTRIBUTABLE TO ANY OF THE SPECIFIED ACTIVITIES IN SECTION 80P(2) OF THE ACT, WOULD BE ELIGIBLE FOR DEDUCTION. THE WORK INCOME HAS BEEN DEFINED UNDER SECTION 2(24)( I) OF THE ACT TO INCLUDE PROFITS AND GAINS. THE SUB-SECTI ON IS AN INCLUSIVE PROVISION. AS STATED ABOVE, ASSESSEE-SOCI ETY REGULARLY INVESTED FUNDS NOT IMMEDIATELY REQUIRED F OR BUSINESS PURPOSE INTEREST INCOME ON SUCH INVESTMENT S, THEREFORE, CANNOT FALL WITHIN THE MEANING OF THE EX PRESSION PROFIT AND GAINS OF BUSINESS. IT CANNOT BE SAID ALSO TO BE ATTRIBUTABLE TO THE ACTIVITIES OF THE SOCIETY NA MELY THE PURCHASE OF AGRICULTURAL IMPLEMENTS, SEEDS, LIVESTO CK OR OTHER ARTICLES INTENDED FOR AGRICULTURE FOR THE PUR POSE OF SUPPLY THEM TO ITS MEMBERS. SUCH AN AMOUNT WHICH WA S RETAINED BY THE ASSESSEE WAS A LIABILITY AND IT WAS SHOWN IN THE BALANCE SHEET ON THE LIABILITY SIDE. THEREFO RE, TO THAT EXTENT, SUCH INTEREST INCOME CANNOT BE SAID TO BE ATTRIBUTABLE TO THE ACTIVITY MENTIONED IN SECTION 8 0P(2)(IV) OF THE ACT. AN IMPORTANT POINT NEEDS TO BE MENTIONE D HERE THAT THE WORD THE WHOLE OF THE AMOUNT OF PROFITS A ND GAINS OF THE BUSINESS EMPHASIZES IN SECTION 80P(2) THAT THE INCOME IN RESPECT OF WHICH DEDUCTION IS SOUGHT MUST CONSTITUTE THE OPERATIONAL INCOME AND NOT THE OTHER INCOME WHICH ACCRUES TO THE SOCIETY. IN THIS CASE, THE EVIDENCES SHOW THAT THE ASSESSEE SOCIETY EARNS INTE REST ON FUNDS WHICH ARE NOT REQUIRED FOR BUSINESS PURPOSES AT THE GIVEN POINT OF TIME, THEREFORE, ON THE FACTS AND CIRCUMSTANCES, SUCH INTEREST INCOME FALLS IN THE CA TEGORY OF OTHER INCOME WHICH ARE TAXABLE UNDER SECTION 5 6 OF THE ACT AND CONSEQUENTLY, DEDUCTION U/S 80P ON SUCH INTEREST INCOME OF RS. 2,33,538/- IS DISALLOWED. I DRAW SUPPORT FROM THE RATIO LAID DOWN BY THE HONBLE SUP REME COURT OF INDIA IN THE CASE OF M/S TOTGARS CO-OP. S ALE SOCIETY LTD VS. INCOME TAX OFFICER, KARNATAKA PRONO UNCED ON 08.02.2010. ITA NO.912/JP/2019 KUMHER KRIYA VIKRYA SAHAKARI SAMITI LTD. VS. ITO 5 4. ON APPEAL, THE FINDINGS OF THE ASSESSING OFFICER HAS BEEN CONFIRMED BY THE LD. CIT(A) AND WHILE DOING SO, HAS RECORDED HIS FINDINGS WHICH READ AS UNDER: 5.3 I HAVE CONSIDERED THE ORDER PASSED BY THE AO A ND SUBMISSIONS FILED BY THE APPELLANT. THE PROVISION OF CLAUSE (D) OF SUB-SECTION (2) OF SECTION 80P IS VERY CLEAR THAT O NLY INTEREST AND DIVIDEND FROM CO-OPERATIVE BANKS IS ALLOWABLE AS DE DUCTION. SINCE THE INTEREST IS EARNED FROM AXIS BANK WHICH I S NOT A CO- OPERATIVE BANK, HENCE, THE AO HAS RIGHTLY DISALLOWE D THE INTEREST CLAIMED AS DEDUCTION U/S 80P OF THE ACT. ACCORDING LY, THE ADDITION IS SUSTAINED AND THE APPELLANTS GROUND OF APPEAL ON THE ISSUE IS DISMISSED. 5. DURING THE COURSE OF HEARING, THE LD. AR SUBMITT ED THAT THE ASSESSING OFFICER AS WELL AS THE LD CIT(A) HAS NOT APPRECIATED THE FACTS OF THE ASSESSEE-SOCIETY IN CORRECT PERSPECTIVE AND HAS WRONGLY DENIED THE DEDUCTION U/S 80P OF THE ACT. IT WAS SUBMITTED THAT THE ASSESSEE- SOCIETY HAS NOT INVESTED ANY SURPLUS FUNDS IN ANY F IXED DEPOSITS WITH THE AXIS BANK RATHER THE ASSESSEE SOCIETY WAS MAINTAINI NG A REGULAR SAVING BANK ACCOUNT WITH AXIS BANK WHICH WAS PERMITTED TO BE OPENED BY THE ASSESSEE-SOCIETY AS AN INTEGRAL PART OF ITS BUSINES S ACTIVITIES IN WHICH TRANSACTIONS WERE ENTERED RELATING TO SUCH ACTIVITI ES AND INTEREST ACCRUED IN SUCH ACCOUNT OR INTEREST BECOMING PAYABL E TO BANK IS A NATURAL COROLLARY OF SUCH BUSINESS. THE BANK ACCOUN T IS NOT ALIEN BUT INCIDENTAL TO AND INEVITABLE PART OF THE BUSINESS A CTIVITY OF THE ASSESSEE AND RESULTING INTEREST IS PROFIT OR LOSS OF ITS BUS INESS ACTIVITIES WHICH ITA NO.912/JP/2019 KUMHER KRIYA VIKRYA SAHAKARI SAMITI LTD. VS. ITO 6 WOULD FALL UNDER THE HEAD INCOME FROM BUSINESS AN D NOT UNDER THE HEAD INCOME FROM OTHER SOURCES AND THEREFORE THE INTEREST ACCRUED IS ELIGIBLE FOR DEDUCTION U/S 80P(2) OF THE ACT WHICH THE ASSESSEE SOCIETY HAS RIGHTFULLY CLAIMED AND THE SAME MAY THUS BE ALL OWED. FURTHER, THE LD. AR HAS RELIED ON THE WRITTEN SUBMISSIONS WHICH READ AS UNDER:- THE ASSESSEE CO-OPERATIVE SOCIETY IS ENGAGED IN TH E MARKETING OF AGRICULTURAL PRODUCE OF ITS MEMBERS AND THE PURC HASE OF AGRICULTURE IMPLEMENTS, SEEDS, LIVE STOCK OR OTHER ACTIVITIES INTENDED FOR AGRICULTURE FOR THE PURPOSE OF SUPPLYI NG THEM TO ITS MEMBERS. IN ITS CASE THE WHOLE OF THE AMOUNT OF PRO FITS AND GAINS OF BUSINESS ATTRIBUTABLE TO SUCH ACTIVITIES S HALL BE DEDUCTED U/S 80P IN COMPUTING THE TOTAL INCOME OF THE ASSESS EE. IT MAINTAINED AN ACCOUNT WITH THE AXIS BANK, BHARATPUR AS AN INTEGRAL PART OF ITS BUSINESS ACTIVITIES IN WHICH T RANSACTIONS WERE ENTERED RELATING TO SUCH ACTIVITIES AND INTEREST AC CRUED IN SUCH ACCOUNT OR INTEREST BECOMING PAYABLE TO BANK IS A N ATURAL COROLLARY OF SUCH BUSINESS. THE BANK ACCOUNT IS NOT ALIEN BUT INCIDENTAL TO AND INEVITABLE PART OF THE BUSINESS A CTIVITY OF THE ASSESSEE AND RESULTING INTEREST IS PROFIT OR LOSS O F ITS BUSINESS ACTIVITIES. IT HAD NOT DEPOSITED ANY FUNDS IN ANY F IXED DEPOSIT ACCOUNT. THE LD. AO DISALLOWED THE AMOUNT OF INTERE ST CREDITED BY THE BANK IN THE ASSESSEES BANK ACCOUNT IN THE COMP UTATION OF ITS TOTAL INCOME, TREATED THE SAME AS TAXABLE INCOME AN D LEVIED TAX THEREON VIDE ASSESSMENT ORDER DATED 21.11.2017 HOLD ING THAT INTEREST INCOME CANNOT FALL WITHIN THE MEANING OF T HE EXPRESSION ' PROFITS AND GAINS ' OF THE CO-OPERATIVE SOCIETY, TH E ASSESSEE WAS REQUIRED TO SHOW CAUSE WHY THE INTEREST INCOME SHOU LD NOT BE TREATED AS 'NON-BUSINESS INCOME. THE ASSESSEE REPL IED THAT THE BANK ACCOUNT IS MAINTAINED IN THE COURSE OF THE ASS ESSEES NORMAL BUSINESS AND INTEREST IS EARNED, THE SAME WOULD FAL L UNDER THE HEAD 'INCOME FROM BUSINESS AND NOT AS 'INCOME FROM OTHER ITA NO.912/JP/2019 KUMHER KRIYA VIKRYA SAHAKARI SAMITI LTD. VS. ITO 7 SOURCES AND THEREFORE THE INTEREST ACCRUED IS ENTI TLED TO DEDUCTION U/S 80P (2). THE AO HAS FALSELY STATED IN HIS ASSESSMENT ORDER T HAT IN THIS CASE THE EVIDENCE SHOWS THAT THE ASSESSEE SOCIETY E ARNED INTEREST ON FUNDS WHICH ARE NOT REQUIRED FOR BUSINE SS PURPOSES. IN FACT, THERE IS NO SUCH EVIDENCE AVAILABLE ON THE DE PARTMENTS RECORD. CONTRARY TO THE FACTS OF THE ASSESSEE SOCIETY THE L D AO RELIED ON THE HONBLE SUPREME COURT VERDICT IN THE TOTGARS C OOPERATIVE SALE SOCIETY LTD. V. ITO, KARNATAKA WHICH IS DISTIN GUISHED ON FACTS WHEREIN THE INTEREST WAS EARNED ON THE FIXED DEPOSI TS. THE LD CIT (APPEALS) WRONGLY UPHELD THE ACTION OF THE LD ITO A ND DISMISSED THE APPEAL. GROUNDS OF APPEAL : 1.IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD CIT (APPEALS) HAS ERRED IN NOT ADJUDICATING THE ASSESSEES GROUND THAT THE LD AO HAS WRONGLY CLASSIFIED THE BUSINESS INCOME AS 'INCO ME FROM OTHER SOURCES. THE LD CIT (APPEALS) MECHANICALLY UPHELD THE WRONG ORDER OF THE LD AO WITHOUT CONSIDERING THE TRUE IMPORT OF SECTIO N 80P WHICH READS AS UNDER : 80P. (1) WHERE, IN THE CASE OF AN ASSESSEE BEING A CO-OPERATIVE SOCIETY, THE GROSS TOTAL INCOME INCL UDES ANY INCOME REFERRED TO IN SUB-SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF TH IS 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 A CO-OPERATIVE SOCIETY ENGAGED I N ITA NO.912/JP/2019 KUMHER KRIYA VIKRYA SAHAKARI SAMITI LTD. VS. ITO 8 (III) THE MARKETING OF THE AGRICULTURAL PRODUCE OF ITS MEMBERS, OR (IV) THE PURCHASE OF AGRICULTURAL IMPLEMENTS, SEEDS , LIVESTOCK OR OTHER ARTICLES INTENDED FOR AGRICULTURE FOR THE PUR POSE OF SUPPLYING THEM TO ITS MEMBERS, THE WHOLE OF THE AMO UNT OF PROFITS AND GAINS OF SUCH BUSINESS;] THE INTEREST ACCRUED IN THE SAVING BANK ACCOUNT MAI NTAINED BY THE COOPERATIVE SOCIETY FOR EXECUTING THE DAY TO DA Y BUSINESS ACTIVITIES IS PART OF ITS INCOME FROM 'PROFITS AND GAINS OF BUSINESS AND NOT ' INCOME FROM OTHER SOURCES, NOT HAVING ARISEN FROM FIXED DEPOSITS. 2. IN THE FACTS AND CIRCUMSTANCE OF THE CASE THE LD CIT (APPEALS) HAS ERRED IN NOT ADJUDICATING THE ASSESSE ES GROUND THAT THE LD AO HAD IGNORED THE EXISTENT FACTS AND M ADE THE ASSESSMENT ON THE NON-EXISTENT FACTS. THE ASSESSEE SOCIETY HAD MAINTAINED A SAVING BANK I N AXIS BANK TO EXECUTE ITS BUSINESS ACTIVITIES AND DID NOT DEPO SIT ANY FUNDS IN ANY SEPARATELY MAINTAINED 'FIXED DEPOSIT ACCOUNT . THE LD AO CONTRARY TO ACTUAL FACTS WRONGLY STATED THAT EVIDEN CE SHOWS THAT THE SOCIETY EARNED INTEREST ON FUNDS WHICH ARE NOT REQUIRED FOR BUSINESS PURPOSES. THE LD CIT (APPEALS) DID NOT DWE LL UPON THE APPELLANTS GROUND AND UPHELD BY A NON-SPEAKING ORD ER THE ORDER OF THE LD AO. 3. THAT THE LD CIT (APPEALS) HAS DISALLOWED THE APP EAL AND CONFIRMED THE WRONG ORDER OF THE LD AO MAKING ADDIT ION U/S 80P(2)(IV) TAKING RECOURSE TO AN EXTRANEOUS DIFFERE NT PROVISION OF SEC. 80P(2)(D) OF IT ACT AND THEREFORE HIS ACTIO N IS INCONSISTENT AND UNSUSTAINABLE. ITA NO.912/JP/2019 KUMHER KRIYA VIKRYA SAHAKARI SAMITI LTD. VS. ITO 9 THE LD CIT (APPEALS) WRONGLY APPROVED THE ORDER OF THE LD AO DISALLOWING THE AMOUNT OF INTEREST ON THE WRONG FOO TING THAT IT IS NOT INCOME COVERED U/S 80P(2)(D) OF IT ACT WHERE AS THE APPELLANT SOCIETY HAD NOT CLAIMED BENEFIT UNDER THA T SECTION. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D CIT (APPEALS) HAS ERRED IN NOT ADJUDICATING THE ASSESSE ES GROUND THAT LD AO MADE THE ASSESSMENT ON THE BASIS OF APEX COURT JUDGMENT WHICH IS DISTINGUISHABLE ON FACTS AND LAW AND DOES NOT GOVERN THE APPELLANTS CASE. THE APPELLANT SOCIETYS CASE IS DISTINGUISHABLE ON FACTS FROM THE TOTGARS COOPERATIVE SALE SOCIETY LTD. V. ITO, KARN ATAKA RELIED UPON BY THE LD AO AND THE LD CIT (APPEALS) WRONGLY UPHELD THE ASSESSMENT ORDER OF THE LD AO AND DID NOT DISPOSE O F THE APPELLANTS GROUND. DEDUCTION UNDER S. 80P(2)(A)(III)IN ORDER TO CATEG ORIZE AN INCOME UNDER THE HEAD 'PROFITS AND GAINS OF BUSINES S OR PROFESSION IT IS IMPERATIVE THAT THE INCOME SHOULD HAVE ARISEN FROM BUSINESS CARRIED ON BY THE ASSESSEEWHAT IS DE DUCTIBLE UNDER S. 80P IS THE AMOUNT OF 'PROFITS AND GAINS O F BUSINESS ATTRIBUTABLE TO CARRYING ON OF THE BUSINESS OF MARK ETING OF AGRICULTURAL PRODUCE --EXPRESSION 'PROFITS AND GAIN S OF BUSINESS IS WIDER IN SCOPE AND ENCOMPASSES NOT ONLY THE INCO ME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUS INESS OR PROFESSION BUT ALSO OTHER INCOMES WHICH HAVE SOME RELATION WITH THE BUSINESS, THOUGH NOT ARISING DIRECTLY FROM THE CARRYING ON OF THE BUSINESSFURTHER, THE TERM 'GAIN IS OF W IDER IMPORT THEN THE WORD 'PROFITTHUS, THE EXPRESSION 'PROFIT S AND GAINS IN S. 80P(2) ALSO INCLUDES OTHER ITEMS OF INCOME (A S COVERED BY 'GAINS) WHICH HAVE SOME RELATION WITH THE BUSINESS EVEN THOUGH THEY DO NOT FALL UNDER THE HEAD OF BUSINESS INCOME THEREFORE, 'INTEREST ON REFUND OF TAX IS COVERED W ITHIN THE EXPRESSION PROFITS AND GAINS OF BUSINESS' NOTWITHS TANDING THE FACT THAT IT FALLS UNDER THE HEAD 'INCOME FROM OTHE R SOURCES ITA NO.912/JP/2019 KUMHER KRIYA VIKRYA SAHAKARI SAMITI LTD. VS. ITO 10 PHRASE 'ATTRIBUTABLE TO BRINGS WITHIN ITS FOLD NOT ONLY THE ITEMS OF INCOME HAVING DIRECT NEXUS BUT ALSO ITEMS OF INC OME HAVING SOME COMMERCIAL OR CAUSAL CONNECTION WITH THE SOURC E THEREFORE, THE ASSESSEE IS ENTITLED TO DEDUCTION UN DER S. 80P(2)(A)(III) ON THE AMOUNT OF INTEREST RECEIVED U NDER S. 244A ON THE REFUND OF TAX' IT IS THEREFORE PRAYED THAT THE APPELLANTS SOCIETY S APPEAL MAY KINDLY BE ALLOWED TO SUBSERVE THE INTERESTS OF JUST ICE. 6. PER CONTRA, THE LD. DR SUBMITTED THAT THE ASSESS ING OFFICER HAS NOWHERE STATED THAT THE ASSESSEE HAS OPENED FIXED D EPOSIT AND INVESTED SURPLUS FUNDS. IT WAS SUBMITTED THAT EVEN IN SAVING BANK ACCOUNT MAINTAINED BY THE ASSESSEE WITH AXIS BANK, THERE WAS SURPLUS FUNDS FROM TIME TO TIME ON WHICH INTEREST HAS ACCRU ED TO THE ASSESSEE SOCIETY AND SUCH INTEREST INCOME HAS BEEN RIGHTLY H ELD AS TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES U/S 56 AND CON SEQUENTLY NOT ENTITLED TO DEDUCTION U/S 80P(2)(IV) OF THE ACT. I T WAS FURTHER SUBMITTED THAT SINCE THE INTEREST INCOME IS EARNED FROM AXIS BANK WHICH IS NOT A CO-OPERATIVE BANK, EVEN THE PROVISIONS OF SECTION 8 0P(2)(D) ARE ATTRACTED AND RIGHTLY INVOKED BY THE LD. CIT(A) WHI LE CONFIRMING THE ACTION OF THE AO. SHE ACCORDINGLY SUPPORTED THE FI NDINGS OF THE LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE HYDERABAD BENCHES OF THE TRIBUNAL HAS DEALT WITH A SIMILAR ISSUE IN CASE OF VANAM MAHILA SANGAM LIMITED, HYDERABAD VS. ITO, W ARD 2, WARANGAL (IN ITA ITA NO.912/JP/2019 KUMHER KRIYA VIKRYA SAHAKARI SAMITI LTD. VS. ITO 11 NO. 1284/HYD./2019 DATED 6.01.2021) AND THE RELEVANT FINDINGS READ AS UNDER: 4. HAVING REGARD TO RIVAL CONTENTIONS AND MATERIAL PLACED ON RECORD AS WELL AS CASE LAWS RELIED UPON BY THE AO A ND THE CIT (A), I FIND THAT THE ONLY ISSUE BEFORE THE TRIBUNAL IS WHETHER THE INTEREST INCOME EARNED BY THE ASSESSEE FIRM FROM TH E DEPOSITS IN THE SAVINGS BANK IS ELIGIBLE FOR DEDUCTION U/S 80P( 2) OF THE I.T. ACT. THE AO AND THE CIT (A) HAVE RELIED UPON THE DE CISION OF THE HON'BLE SUPREME COURT IN THE CASE OF M/S TOTGAR'S C O-OPERATIVE SALE SOCIETY LTD TO DENY THE DEDUCTION. HOWEVER, I FIND THAT THE SAID DECISION IS DISTINGUISHABLE ON FACTS AND IS NO T APPLICABLE TO THE FACTS OF THE CASE BEFORE THIS TRIBUNAL. IN THE CASE OF M/S TOTGAR'S CO-OPERATIVE SALE SOCIETY LTD, THE INTERES T INCOME WAS EARNED ON SHORT TERM BANK DEPOSITS AND SECURITIES W HICH WERE MADE OUT OF THE SURPLUS FUNDS OF THE MEMBERS RETAIN ED BY THE SOCIETY AND WERE NOT IMMEDIATELY NECESSARY FOR THE BUSINESS OF THE ASSESSEE THEREIN. BUT IN THE CASE BEFORE THIS T RIBUNAL, THE ASSESSEE SOCIETY HAD TO MAKE THE DEPOSITS INTO THE SAVINGS BANK A/C HELD WITH KOTAK MAHINDRA BANK AS A BUSINESS REQ UIREMENT. SINCE THE ASSESSEE'S FUNDS WERE AVAILABLE IN THE SA VINGS BANK A/C, THE ASSESSEE HAS EARNED CERTAIN INTEREST INCOM E THEREON. THUS, IT CAN BE SEEN THAT THE INTEREST INCOME EARNE D IS NOT ON FIXED DEPOSITS, BUT IT IS ON THE FUNDS WHICH ARE AV AILABLE AND WHICH ARE REQUIRED FOR THE BUSINESS PURPOSE OF THE ASSESSEE. THEREFORE, THE DECISION OF THE HON'BLE SUPREME COUR T IN THE CASE OF M/S TOTGAR'S CO-OPERATIVE SALE SOCIETY LTD IS CL EARLY NOT APPLICABLE TO THE CASE BEFORE THE TRIBUNAL. FURTHER THE HON'BLE ITA NO.912/JP/2019 KUMHER KRIYA VIKRYA SAHAKARI SAMITI LTD. VS. ITO 12 ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT VS. AN DHRA PRADESH STATE COOP. BANK LTD IN ITA NO.86/03 AND OTHERS DAT ED 7.6.2011 HAS CLEARLY HELD THAT THE INTEREST INCOME EARNED ON DEPOSITS IN THE BANK IS ALSO IN THE NATURE OF BUSINESS INCOME W HICH IS ELIGIBLE AS DEDUCTION U/S 80P(2) OF THE I.T. ACT. 5. RESPECTFULLY FOLLOWING THE ABOVE, I HOLD THAT TH E RELIANCE OF THE AO AND THE CIT (A) ON THE DECISION OF THE HON'BLE S UPREME COURT IS MISPLACED AND THE ASSESSEE IS ELIGIBLE FOR DEDUC TION U/S 80P(2) OF THE ACT ON THE INTEREST INCOME EARNED FROM THE S AVINGS BANK A/C HELD WITH THE KOTAK MAHINDRA BANK. 8. IN THE AFORESAID DECISION, THE COORDINATE BENCH HAS HELD THAT THE ASSESSEE SOCIETY HAD MADE THE DEPOSITS INTO THE SAV INGS BANK A/C HELD WITH KOTAK MAHINDRA BANK AS A BUSINESS REQUIREMENT AND SINCE THE ASSESSEE'S FUNDS WERE AVAILABLE IN THE SAVINGS BANK A/C WHICH ARE REQUIRED FOR BUSINESS PURPOSES, BY VIRTUE OF MAINTA INING SUCH AN ACCOUNT, THE ASSESSEE HAS EARNED CERTAIN INTEREST I NCOME THEREON WHICH IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2) OF T HE ACT. IN THE SAID DECISION, THE COORDINATE BENCH HAS ALSO DISTINGUISH ED THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF M/S TOTGAR 'S CO-OPERATIVE SALE SOCIETY LTD (SUPRA) HOLDING THAT IN THE SAID C ASE, THE INTEREST INCOME WAS EARNED ON SHORT TERM BANK DEPOSITS AND S ECURITIES WHICH WERE MADE OUT OF THE SURPLUS FUNDS OF THE MEMBERS R ETAINED BY THE SOCIETY AND WERE NOT IMMEDIATELY NECESSARY FOR THE BUSINESS OF THE ASSESSEE THEREIN WHEREAS IN THE INSTANT CASE, THE I NTEREST INCOME EARNED IS NOT ON FIXED DEPOSITS, BUT IT IS ON THE F UNDS WHICH ARE ITA NO.912/JP/2019 KUMHER KRIYA VIKRYA SAHAKARI SAMITI LTD. VS. ITO 13 AVAILABLE AND WHICH ARE REQUIRED FOR THE BUSINESS P URPOSE OF THE ASSESSEE. THE SAID DECISION SQUARELY APPLIES IN THE INSTANT CASE WHERE THE ASSESSEE HAS BEEN PERMITTED TO MAINTAIN A SAVIN G BANK ACCOUNT WITH AXIS BANK TO TRANSACT ITS REGULAR BUSINESS ACT IVITIES AND BEING A SAVING BANK ACCOUNT WHICH BY ITS VERY NATURE CARRIE S A SPECIFIED RATE OF INTEREST, INTEREST INCOME HAS ACCRUED AND HAS BEEN CREDITED BY THE AXIS BANK TO THE ACCOUNT OF THE ASSESSEE. THEREFORE, BY VIRTUE OF HOLDING A BANK ACCOUNT WHICH BY ITS VERY NATURE AND SINCE INC EPTION CARRIES A SPECIFIED RATE OF INTEREST AND WHEREIN THERE ARE RE GULAR DEPOSITS AND WITHDRAWALS MADE BY THE ASSESSEE DURING THE YEAR AS PART OF ITS REGULAR BUSINESS ACTIVITIES, THE FUNDS SO HELD IN THE SAID ACCOUNT CANNOT BE TERMED AS SURPLUS AND AVAILABLE FOR INVESTMENT RATH ER THE FUNDS ARE CLEARLY HELD FOR ITS REGULAR BUSINESS PURPOSES AND IN THE PROCESS, WHERE ANY INTEREST IS ACCRUED AND CREDITED TO THE ASSESSE ES ACCOUNT BY VIRTUE OF HOLDING SUCH AN ACCOUNT, SUCH INTEREST INCOME IS CLEARLY INHERENT AND INTRINSICALLY LINKED TO HOLDING SUCH AN ACCOUNT FOR BUSINESS PURPOSES AND IS THUS, AN INTEGRAL PART AND PARCEL OF ITS BUSINES S ACTIVITIES AND CANNOT BE DELINKED FROM ITS BUSINESS ACTIVITIES AND IS IN THE NATURE OF BUSINESS INCOME ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)( A)(IV) OF THE ACT. FURTHER, THE FUNDS LYING IN THE SAVING BANK ACCOUNT MAINTAINED FOR REGULAR BUSINESS ACTIVITIES CANNOT BE TERMED AS AN INVESTMENT FOR THE PURPOSES OF EARNING INTEREST INCOME FOR THE SIMPLE REASON THAT THE FUNDS ARE REQUIRED FOR BUSINESS PURPOSES AT ANY GIV EN POINT IN TIME AND CANNOT BE SAID TO BE INVESTED AND DOESNT CARRY THE NECESSARY ATTRIBUTES OF INVESTMENT IN TERMS OF CONSCIOUS DECISION AND ST EPS TAKEN BY THE ASSESSEE BY WAY OF IDENTIFYING A SPECIFIED AMOUNT W HICH CAN BE WITHDRAWN/IDENTIFIED AND INVESTED FOR A SPECIFIED A ND DEFINED PERIOD FOR ITA NO.912/JP/2019 KUMHER KRIYA VIKRYA SAHAKARI SAMITI LTD. VS. ITO 14 THE PURPOSES OF EARNING INTEREST INCOME AND THEREFO RE, THE PROVISIONS OF SECTION 80P(2)(D) ARE CLEARLY NOT ATTRACTED AND INF ACT, THE SAME IS NOT EVEN THE CLAIM OF THE ASSESSEE BEFORE THE AO OR FOR THAT MATTER, INVOKED BY THE AO DURING THE COURSE OF ASSESSMENT P ROCEEDINGS. IN LIGHT OF AFORESAID DISCUSSION AND IN THE ENTIRETY O F FACTS AND CIRCUMSTANCES OF THE CASE AND FOLLOWING THE PRINCIP LE OF CONSISTENCY WHERE A SIMILAR VIEW HAS BEEN TAKEN BY A COORDINATE BENCH UNDER IDENTICAL SET OF FACTS AND CIRCUMSTANCES OF THE CAS E, THE ORDER OF THE LOWER AUTHORITIES ARE SET-ASIDE AND THE AO IS DIREC TED TO ALLOW THE CLAIM OF THE ASSESSEE UNDER SECTION 80P(2)(A)(IV) OF THE ACT. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/04/2021. SD/- SD/- LANHI XKSLKBZ FOE FLAG ;KNO ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 30/04/2021. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- KUMHER KRIYA VIKRYA SAHAKARI SAMITI LTD. BHARAPUR. 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD-3, BHARATPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 912/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR