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TMI Blog2015 (9) TMI 546X X X X Extracts X X X X X X X X Extracts X X X X ..... ative society providing credit facilities to its members had filed its return declaring nil income. Assessee had claimed deduction u/s.80P(a)(2)(i) of the Act and 80P(2)(d) of the Act. AO was of the opinion that assessee was doing banking business and hence not eligible for claim of deduction u/s.80P(2)(a)(i) of the Act. Vis-a-vis claim of deduction u/s.80P(2)(d) of the Act, AO was of the opinion that interest earned by assessee from deposits placed with cooperative banks would not fall within the ambit of the said sub-section. 03. Aggrieved assessee moved in appeal before the CIT (A). CIT (A) held that assessee was only a credit cooperative society covered u/s.80P(2)(a)(i) of the Act and not a cooperative bank. As per the CIT (A) assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) was not warranted by it wordings. Section 80P(2)(d) is reproduced hereunder: "in respect of any income by way of interest or dividends derived by the Co-operative Society from its investments with any other Co-operative society, the whole of such income" This Tribunal in the case of Bagalkot District Central cooperative Bank had held that a cooperative bank which is also a cooperative society cannot be excluded from the purview of benefits available to a cooperative society, unless the provisions of the Act so stipulate. No doubt in the said decision the Tribunal was considering the application of Section 194A(3)(v) of the Act, wherein it was mandated that a cooperative society was not required to deduct tax at source if the interest c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accrued in a sum of Rs. 1,77,305/- is from the deposits made by the assessee in a nationalized bank out of the amounts which was used by the assessee for providing credit facilities to its members and therefore the said interest amount is attributable to the credit facilities provided by the assesseeand forms part of profits and gains of business and therefore he submits the appellate authorities were not justified in denying the said benefit in terms of Sub-sec.(2) of Section 80P of the Act. In support of his contentions, he relied on several judgments and pointed out that the Apex Court in the aforesaid judgment has not laid down any law. 5. Per contra, learned counsel for the Revenue strongly relied on the said judgment of the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) xxx the whole of the amount of profits and gains of business 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 meaning of the word 'attributable' as supposed to derive from its use in various other provisions of the statute in the case of CAMBAY ELECTRIC SUPPLY INDUSTRIAL CO. LTD. VS. COMMISSIONER OF INCOME-TAX, GUJARAT-ll reported in ITR VOL. 113 (1978) PAGE 842 at page 93 as under: "As regards the aspect emerging from the expression "attributable to" occurring in the phrase "profits and gains attributable to the business of the specified industry here generation and distribution of electricity on which the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess. A Cooperative Society which is carrying on the business of providing credit facilities to its members, earns profits and gains of business by providing credit facilities to its members. The interest income so derived 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 the profits and gains of the business of providing credit facilities to its members only. The society is not carrying on any separate business for earning such interest income. The income so derived is the amount of profits and gains of business attributable to the activity of carrying on the business of banking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est was not an amount due to any members. It was not the liability. It was not shown as liability in their account. In fact this amount which is in the nature of profits and gains, was not immediately required by the assessee for lending money to the members, as there were no takers. Therefore they had deposited the money in a bank so as to earn interest. The said interest income is attributable to carrying on the business of banking and therefore it is liable to be deducted in terms of Section 80P(1) of the Act. In fact similar view is taken by the Andhra Pradesh High Court in the case of COMMISSIONER OF INCOMETAX III, HYDERABAD vs. ANDHRA PRADESH STATE COOPERATIVE BANK LTD., reported in (2011) 200 TAXMAN 220/12 In that view of the matter, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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