9911796707
TMI Blog2012 (11) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/-. 2. On the facts and circumstances of the case the Ld. CIT(A) ought to have upheld the other of the Assessing Officer. 3. It is therefore, prayed that the order of the learned CIT (Appeals) may be set aside and that of the A.O. be restored to the above extent." 2. The facts in brief are that the case of the assessee was selected for scrutiny assessment and the assessment u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) dated 29-10-2010 whereby the Assessing Officer disallowed the claim of the assessee for deduction u/s 80P of the Act. The assessee feeling aggrieved by the order preferred an appeal before the Ld. CIT(A) who after considering the submissions partly allowed the appeal of the assessee. 3. Now, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of lending or investment-of deposits of money from the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or otherwise. The definition of banking as per sec 5(b) Banking Regulation Act was not brought to my notice at the time of giving above judgment. The definition is basic law to be considered to decide whether a credit society is a co-operative bank or not. Only, those credit societies which are allowed to take deposits of money from the public and do other banking activities as defined in the sec 5(b) of Banking Regulation Act would quality to be a co-operative bank. In my considered view deposits from public .cannot be equivalent to taking deposits from members of the society only which has got ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to their members alone and who do not perform banking functions. In this chapter, the committee deals with these cooperative credit society. 7.2 Under the provisions of Section 5(ccii) of Banking Regulation Act, 1949 (AACS), a cooperative credit society is defined as a cooperative society, "the primary object of which is to provide financial accommodation to its members and includes a cooperative land mortgage bank." This type of institutions are thrift societies. The distinction between a primary credit society and a cooperative credit is with reference to their nature of business. The primary object or principal business of a primary credit society is the transaction of banking business. When its up capital and reserves attain the level ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the issue has been accepted in favour of the appellant. Therefore, it is held that the appellant is entitled to the benefit of deduction u/s 80P(2)(a)(i) of the IT Act. However, the AO is directed to find out whether there was any interest income on the short term bank deposits and securities included in the total income of this society which has been claimed by them as exempt. The issue was decided by the Hanble Supreme Court in the case of Totgars Co-op. Sale Society Ltd Vs 1TO Karnataka, In the aforementioned judgment, the issue for determination was whether interest income on the short term bank deposits securities would be qualified as business income u/s. 80P(2)(a)(i) of the IT Act, 1961. The Hon'ble Supreme Court had decided t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e category of 'Other Income' which has been rightly taxed by the Department under section 56 of the I. T. Act". In the light of the abover the interest income if any, earned from keeping the surplus fund in banks would be taxable u/s 56 and will not qualify for reduction u/s 80P. The AO is directed to find out if there is any such income from Banks [other than from co-operative societies which may or may not function as banks; the Income of interest or dividend from whom is otherwise exempt u/s 8OP(2)(d)] and include it in the total income as 'Income from Other Sources' and no deduction u/s 80P be allowed on it. The AO should give an opportunity of being heard to the appellant while determining such income, while giving effect to this ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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