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TMI Blog2016 (7) TMI 1134X X X X Extracts X X X X X X X X Extracts X X X X ..... and decide the issue in favour of the assessee - I.T.A. No. 528/Nag/2014 - - - Dated:- 17-6-2016 - Shri Mukul K. Shrawat, Judicial Member And Shri Shamim Yahya, Accountant Member For the Appellant : Shri A. R. Ninawe For the Respondent : Shri B. M. Agrawal ORDER Per Shri Shamim Yahya, A.M. This appeal by the Revenue is directed against the order of learned CIT(Appeals)-I, Nagpur dated 22-08-2014 and pertains to assessment year 2010-11. The grounds of appeal read as under : 1. On the facts and circumstances of the case, the Ld. CIT (Appeals) has erred in treating the interest income of ₹ 39,38,620/- as business income since the same is not attributable to the assessee's business of providing credit faci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of M/s Gopalkrishna Urban Credit Co-op. Society Maryadit, Nagpur, as applicability of section 80P (4) or otherwise was not an issue for consideration in the present case. 2. Ground Nos. 1,2 3: Treatment of interest income on deposits with cooperative society. Upon hearing the learned counsel of the assessee and perusing the records, we find that the above issue is covered in favour of the assessee by the decision of this ITAT, referred by the Ld. CIT(A) in his appellate order. The distinction mentioned in the Grounds of appeal is not at all sustainable. We further find that this Tribunal again in the case of Chattisgarh Urban Sahakari Sanstha Maryadit Vs. ITO in ITA No.371/Nag/2012 vide order dated 27.05.2015 has adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince the fund created by such by such retention was not required immediately for business purposes, it was invested in specified securities. The question, before us, is whether interest on such deposits/securities, which strictly speaking accrues to the members account, could be taxed as business income under section 28 of the Act? In our view, such interest income would come in the category of income from other sources , hence, such interest income would be taxable under section 56 of the Act, as rightly held by the assessing officer... 19.1. However, in the present case, on verification of the balance sheet of the assessee as on 31.3.2009, it was observed that the fixed deposits made were to maintain liquidity and that there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration, the entire funds were utilized for the purposes of business and there were no surplus funds. 19.4. While comparing the state of affairs of the present assessee with that assessee (before the Supreme Court), the following clinching dissimilarities emerge, namely: (1) in the case of the assessee, the entire funds were utilized for the purposes of business and that there were no surplus funds; - -in the case of Totgars, it had surplus funds, as admitted before the AO, out of retained amounts on marketing of agricultural produce of its members; (2) in the case of present assessee, it did not carry out any activity except in providing credit facilities to its members and that the funds were of operational funds. The o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was rightly granted by ld.CIT(A), however, he has wrongly held that the interest income is taxable u/s.56 of the Act so do not fall under the category of exempted income u/s.80P of the Act. The adverse portion of the view, which is against the assessee, of Ld.CIT(A) is hereby reversed following the decision of the Tribunal cited supra, resultantly ground is allowed. 8. We find that the ratio of above case also applies to the present case. As observed in the above case law, in this case also the submissions of the assessee s counsel is that the assessee society is maintaining operational funds and to meet any eventuality towards repayment of deposit the cooperative society is maintaining some liquidated funds as short term deposits w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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