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TMI Blog2016 (12) TMI 453X X X X Extracts X X X X X X X X Extracts X X X X ..... ources as per the prevailing provisions of 80P(2)(d) of I.T.Act, 1961. 3. The Ld.CIT(A) erred in allowing the deduction claimed u/s. 80P(2)(a)(i) treating the interest income earned from investments made in Nationalized and Scheduled Banks, through the basic nature of income earned does not fall under section 80P(2)(a)(i). 4. The Ld. CIT(A) erred in holding the decision against the Settled decision of Hon'ble Supreme Court in the case of Totgar's Co-op. Sale Society Ltd. V/s ITO (188 Taxman 282 (2010)) which is in favour of the department." 3. The brief facts of the case are that assessee is a Cooperative Society engaged in providing credit facilities to its members. The assessee earned interest income of Rs. 1,14,49,638/- from the Banks. The assessee filed its return of income on 27/09/2012 declaring 'NIL' income after claiming deduction of Rs. 75,24,621/- u/s. 80P(2)(d) of the Act. However, the AO disallowed the deduction on the ground that interest income earned from other than cooperative societies does not qualify for deduction u/s.80P(2)(d)of the Act and as since the Assessee had earned the interest income from the banks of Rs. 1,14,49,638/-, the same was added to the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be deducted, in accordance with and subject to the provisions of this 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 be the following, namely: (a) in the case of co-operative society engaged in- (i) carrying on the business of banking or providing credit facilities to its members, or (ii) to (vii) ****** the whole of the amount of profits and gains of business attributable to any one or more of such activities." 9. 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. v. CIT [1978] 113 ITR 84 (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 Ld. Solicitor-General relied, it will be pertinent to observe that the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt appeal are identical to the cases discussed above. The assessee is a co-operative society providing credit facilities to its members and deposits are also accepted from members. The assessee claimed that surplus funds were invested in banks and earned interest income. It is claimed as normal business of the society. The CIT(A) observed that AO has not disputed any of the claims in the assessment order In view of the binding-jurisdictional Hon'ble High Court and Hon'ble ITAT decisions (discussed above), the CIT(A) observed that the word "attributable to" is certainly wider in import than the expression "derived from" Hence, the CIT(A) directed the AO to treat interest income of the appellant as business income and allowed the deduction u/s.80P(2)(a)(i) of the Act and delete the entire addition made." Thus in nutshell, the Ld. CIT(A) allowed the appeal of the assessee vide appellate order dated 25/02/2016. 5. Aggrieved by the appellate order dated 25/02/2016 passed by the Ld.CIT(A), the Revenue has filed an appeal before this tribunal. The Ld. DR contended that the assessee has received interest income from the banks, which are other than cooperative societies and hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT vs. A.P.State Cooperative Bank Ltd., are all in favour of the assessee, whereas the AC relied more on Supreme Court's decision in the case of Totgar's Co-operative Society. This can't be accepted because the facts are different in this case. The Karnataka High Court in the case of Tumkur Merchants Souhardha Credit Co-operative Society has not only analyzed the facts of Totgars Co-operative Sale Society but also has said as to how the decisions of the Andhra Pradesh High Court referred to above and also that of the Supreme Court's decision in the case of Cambay Electric Supply Industrial Co., are applicable to the facts of the case of the assessee. In this case the assessee is a primary agricultural credit society and mainly engaged in trading activities for its members like purchase and sale of ration goods, fertilizers, kirana items, pesticides, agricultural implements, etc., and also provides credit facilities to its members. The assessee has made investments in other cooperative banks and has received interest and dividend income as detailed below: 1. Interest on deposits from Kanara District Central Cooperative bank Ltd Rs.2,30,711/- 2. Dividend and interest incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also the decision of the Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. in ITA No. 307/2014, dated 28/10/2014. No contrary decision could be cited by the Departmental Representative. We, therefore, do not find any good and justifiable reason to interfere with the order of the Commissioner of Income Tax (Appeals), which is hereby confirmed and this ground of appeal of the Revenue is dismissed. 6. In the result, appeal filed by the Revenue stands dismissed." 7. The Ld. DR could not point out any infirmity in the order of the Ld. CIT(A) which allowed the appeal of the assessee. Further, he could not bring any contrary decision to the decision of the Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Society Ltd (supra), wherein the Hon'ble Karnataka High court held as under:- "6. From the aforesaid facts and rival contentions, the undisputed facts which emerges is, the sum of Rs. 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 busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f generation and distribution of electricity. In this connection, it may be pointed out that whenever the legislature wanted to give a restricted meaning in the manner suggested by the Ld. Solicitor-General, it has used the expression "derived from", as, for instance, in section 80J. In our view, since the expression of wider import, namely, "attributable to", has been used, the legislature intended to cover receipts from sources other than the actual conduct of the business of generation and distribution of electricity." 8. Therefore, the word "attributable to" is certainly wider in import than the expression "derived from". Whenever the legislature wanted to give a restricted meaning, they have used the expression "derived from". The expression "attributable to" being of wider import, the said expression is used by the legislature whenever they intended to gather 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 INCOME -TAX III, HYDERABAD Vs. ANDHRA PRADESH STATE COOPERATIVE BANK LTD reported in (2011) 200 TAXMAN 220/12 in that view of the matter, the order passed by the appellate authorities denying the benefit of deduct ion of the aforesaid amount is unsustainable in law. Accordingly it is hereby set aside. The substantial question of law is answered in favour of the assessee and against the revenue. Hence, we pass the following order: Appeal is allowed." 8. Respectfully following the decision of the Coordinate Bench of this Tribunal at Panaji in the case of M/s. Vyavasaya Seva Sahakari Bank Ltd. (supra) and the decision of Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Society Ltd (Supra), we do not find any good and justifiable reason to interfere with the order of the Ld. CIT(A) which is hereby confirmed and the appeal of the Revenue is dismissed. We order accordingly. 9. In the result, appeal of the Revenue is dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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