9911796707
TMI Blog2015 (11) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... not exclusively intended for agricultural use. We are, therefore, of the opinion that claim of the assessee was rightly denied by the lower authorities. We do not find any ground to interfere with the orders of authorities below. - Decided in favour of revenue. - ITA No. 1598/BNG/2014, ITA No. 1596/BNG/2014 - - - Dated:- 4-9-2015 - Asha Vijayaraghavan, JM And Abraham P George, AM For the Petitioner : Shri Suresh Muthukrishnan, CA For the Respondent : Shri Praveen Karanth, JCIT ORDER Per Smt. Asha Vijayaraghavan, JM These are cross appeals by the assessee and the revenue against the order of the CIT(A), Mysore both dated 02-06-2014 for the assessment year 2010-11 respectively, for the assessment year 2010-11. ITA No.1598/Bang/2014 for A. Y. 2010-11 - M/s Tibetan Rabgayling Primary Agricultural Credit Cooperative Society ltd 2. The assessee is a Co-operative Society and it is engaged in various activities like banking, supplying provisions, seeds and fertilizers etc. The net profit earned in all its activities is ₹ 9,02,472/- and has computed gross total income of ₹ 10,63,120/- on which it has claimed deduction under various clauses of 80P a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to its members. He held that such interest from deposits could only be considered as income from other sources. Relying on the decision of Hon'ble Apex Court in the case of Totagars Cooperative Sale Society in 322 ITR 283, the AO held that interest earned by assessee from surplus funds was assessable under the head income from other sources'and not eligible for claiming deduction u/s.80P(2)(a)(i) of the Act. 8. Aggrieved, assessee moved in appeal before the CIT (A). Argument of assessee was that the amounts which were placed in deposits were having direct nexus with the amounts received as deposits from members. When there were no immediate need of the funds for loan disbursements, instead of keeping the funds idle, assessee had placed it with the banks as deposits. As per assessee, it was bound to pay interest to the members. Submission of assessee was that acceptance of deposits from its members, closure of such deposits and repayments were regular and routine feature of its business. As per assessee, unless the funds which were remaining with it were placed in banks, it would not have been possible for it to pay the interest due to its members. 9. An alternate con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of multiple activities carried on by it. However, according to Ld. AR, providing credit facilities to its members was one of the avowed objects of the society. 12. The Ld. DR strongly supporting the orders of authorities below submitted that source of the interest was deposits in the bank. According to him, only the immediate source was required to be seen and not the remote source. Hon'ble Apex Court was clear in this aspect in the decision of Totgar's Cooperative Sale Society Ltd., (supra). Here in the case of assessee, only a very small amount was lent by it to its members. It was not similar to a society which was carrying on credit business. Therefore according to him, claim for deduction u/s.80P(2)(a)(i) of the Act, on such interest was unjustified. 13. The Ld. AR was that the genesis of funds was the business of assessee. Funds which were placed in banks did not belong to anybody other than members of the society. Unless such funds are placed in the banks, it would not be possible for assessee to pay interest due to the members. Hence, according to Ld. AR, it was a part of assessee's business only. 14. The learned AR brought to our notice the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontentions, the undisputed facts which emerges is, the sum of ₹ 1,77,305/- represents the interest earned from short-term deposits and from savings bank account. The assessee is a Cooperative Society providing credit facilities to its members. It is not carrying on any other business. The interest income earned by the assessee by providing credit facilities to its members is deposited in the banks for a short duration which has earned interest. Therefore, whether this interest is attributable to the business of providing credit facilities to its members, is the question. In this regard, it is necessary to notice the relevant provision of law ie., Section 80P(2)(a)(i): Deduction in respect of income of co-operative societies: 80P (1) Where, in the case of an assessee being a co-operative 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 provisions of this section, the sums specified in subsection (2), in computing the total income of the assessee. (2) The sums referred to in sub-section (1) shall be the following, namely: (a) in the case of co-operative society ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ather receipts from sources other than the actual conduct of the business. 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 or providing credit facilities to its members by a co-operative society and is liable to be deducted from the gross total income under Section 80P of the Act. 9. In this context when we look at the judgment of the Apex Court in the case of M/s. Totgars Co-operative Sale Society Ltd., on which reliance is placed, the Supreme Court was dealing with a case where the Society, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, there being no takers, if deposited in banks for earning interest, such interest income would be attributable to the business of banking carried out by the assessee, we are of the opinion that the facts of the case here fit perfectly well with the facts in the judgment mentioned above. 16. We also find that the Co-ordinate Bench has decided the issue in assessee's appeal in ITA No.1056/Bang/2013 and revenue's appeal in ITA No.1081/Bang/2013 and others dated 30-04-2015. We, therefore, hold that assessee was eligible for claiming deduction u/s.80P(2)(a)(i) of the Act, on the interest earned on the FDs placed by it with banks, this being a part of its business income. Ground 2 of the assessee therefore stands allowed. 17. When grounds 3 and 3.1 were taken up, learned counsel for assessee submitted that he was not pressing these grounds. These grounds are therefore dismissed as not pressed. 18. Vide its ground 4, grievance raised by assessee is that it was denied deduction u/s.80P(2)(a)(iv) of the Act, on income from operation of water treatment plant. 19. The assessee had supplied treated water to its members from its water treatment plant and on the amount rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in subsection(2), in computing the total income of the assessee. (2) The sums referred to in sub-section (1) shall be the following, namely:- (a) in the case of a co-operative society engaged in- (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, what is exempted by virtue of the above is income arising on account of purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to the members. Here admittedly there was no purchase. Further, the water was not exclusively intended for agricultural use. We are, therefore, of the opinion that claim of the assessee was rightly denied by the lower authorities. We do not find any ground to interfere with the orders of authorities below. Ground 4 of the assessee stands dismissed. 21. In the result, appeal of the assessee is partly allowed . ITA No. 1596(B)/2014 for AY: 2010-11 M/s Tibetan Rabgayling Co-OP. Society Ltd. 24. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
