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TMI Blog2019 (1) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... vour of assessee - ITA Nos.1136, 1137 & 1138/Chny/2018, Cross Objection Nos.94 & 95/Chny/2018 - - - Dated:- 2-1-2019 - Shri Abraham P. George, Accountant Member And Shri Duvvuru R.L. Reddy, Judicial Member For the Assessee : Mrs.S.Sriniranjani, Adv. For the Department : Mr.R.Clement Ramesh Kumar, Addl.CIT ORDER PER BENCH: All the three appeals filed by the Revenue are directed against the different orders of the Commissioner of Income Tax (Appeals)-5, Chennai, all dated 04.01.2018, relevant to the AYs 2010-11, 2011-12 2014-15. The assessee also filed Cross Objections for the AYs 2010-11 2011-12. The only effective ground raised in all the three appeals filed by the Revenue is that the Ld.CIT(A) erred in directing the Assessing Officer to delete the addition made on account of deduction claimed under section 80P of the Income Tax Act. 2. Brief facts of the case are that the assessee is co-operative society and registered under Multi-State Cooperative Societies Act, 2002. During the course of assessment proceedings in the case of the assessee for the AYs 2010-11, 2011-12 and 2014-15, the Assessing Officer has noticed that the assessee has made de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l funds, as per extant legislative requirements. Naturally, this entire activity and income arising there from is nothing but attributable to business of banking. Section 80P reads as follows: [Relevant part only] [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 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 a co-operative society engaged in- (i) carrying on the business of banking or providing credit facilities to its members, or the whole of the amount of profits and gains of business attributable to any one or more of such activities. [Note: As per section 2(19), co-operative society means a cooperative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... io was applicable to cooperative sale societies only. 6.4 The assessee in Totgars case carried on two activities, namely, (i) acceptance of deposit and lending by way of deposits to the members; and (ii) marketing the agricultural produce; and that the surplus had arisen emphatically from marketing of agricultural produces. Whereas, in the case of co-op. credit societies, generally, it does not carry out any activity except in providing credit facilities to its members and that the funds are operational funds. The only fund available with the pure credit societies is deposits from its members and, thus, there are no surplus funds as such. Therefore, we are of the considered opinion that the Department has blatantly applying the above decision of the Hon ble Supreme Court disallowed the deduction claimed by the assessee under section 80P of the Act against the income from investments, which has no application to the facts of the present case. 6.5 By considering the above clinching dissimilarities, the Ahmedabad Benches of the Tribunal has categorically held in the case of Jafari Momin Vikas Co-op Credit Society Ltd., vs. ITO in ITA No.1491/Ahd/2012 for A.Y. 2009-10 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 31.3.2009, it was observed that the fixed deposits made were to maintain liquidity and that there was no surplus funds with the assessee as attributed by the Revenue. However, in regard to the case before the Hon'ble Supreme Court (On page 286) 7............Before the assessing officer, it was argued by the assessee(s) that it had invested the funds on short term basis as the funds were not required immediately for business purposes and, consequently, such act of investment constituted a business activity by a prudent businessman; therefore, such interest income was liable to be taxed under section 28 and not under section 56 of the Act and, consequently, the assessee(s) was entitled to deduction under section 80P(2)(a)(i) of the Act. The argument was rejected by the assessing officer as also by the Tribunal and the High Court, hence, these civil appeals have been filed by the assessee(s). 19.2 From the above, it emerges that (a) that assessee (issue before the Supreme Court) had admitted before the AO that it had invested surplus funds, which were not immediately required for the purpose of its business, in short term deposits; (b) that the surplus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in coming to a conclusion that the sum of ₹ 9,40,639/- was to be taxed u/s 56 of the Act. It is ordered accordingly. 19.7 Before parting with, we would, with due regards, like to record that the ruling of the Hon'ble jurisdictional High Court in the case of CIT v. Manekbang Co-op Housing Society Ltd reported in (2012) 22 Taxmann.com 220(Guj) has been kept in view while deciding the issue. 20. In the result (i) the Revenue's appeal is dismissed; (ii) the assessee's Cross Objection is allowed. 6.6 By following the judgement of the Hon ble Jurisdictional High Court in assessee s own case, in the case of S.E., S.E.C. E. Co. Railways Employees' Coop. Credit Society Ltd., Kolkata for the assessment year 2008-09 in ITA.No.1693/K/2012 vide order dated 30.10.2014, and by distinguishing the judgement of the Hon ble Supreme Court in the case of Totgars Co-operative Sale Society Ltd. v. ITO (supra), the Kolkata Benches of the Tribunal has observed and held as under: 5. We have heard both the counsel and perused the records. The ld. Counsel of the assessee submitted that the assessee has been continuously granted exemption u/s 80P(2)(a)(i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he interest paid by the assessee to its members amounting to ₹ 1,21,31,880/-. Only the resultant income from bank deposits amounting to ₹ 2,84,445/- was brought to tax. We do not find any reason as to why this principle should not be adopted in the current year. In our considered opinion the ld. CIT(A) has erred in not entertaining this plea of the assessee. 7.1. We further find that the issue involved is covered in favour of the assessee by catena of decisions of the Tribunal in assessee's own case. These decisions are also affirmed by the Hon'ble Jurisdictional High Court in its order for A.Yr.2005-06. In this order the Hon'ble Jurisdictional High Court has considered all the relevant orders and has decided the issue in favour of the assessee. We may gainfully reproduce the operative order of the Jurisdictional High Court which is as under:- We have gone through the impugned judgment and order of the Learned Tribunal. It appears that the point involved .is whether interest earned out of the investment earned by the assessee cooperative can be treated to be the income arising out of business activity or from other sources in order to apply t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessee has now become redundant as the earlier view taken in both the assessment years have been reversed by the Tribunal by its subsequent decision. Hence, the pendency of that earlier matter is of no consequence in this matter. Had there been a challenge of the decision of the Tribunal in relation to the assessment years 1998-99 to 2002-03 and also 2003-04 to 2004-05 the matter would have been different. The revenue did not take any step whatsoever. Therefore, we presume the revenue has accepted the subsequent view of the Tribunal and the same now hold the field right now. 7.2. Considering the above we find that this issue is squarely covered in favour of the assessee by the decision of the Hon'ble Jurisdictional High Court in assessee's own case. In this regard we would like to place reliance upon the decision of the Hon'ble Apex Court in the case of CIT vs. Excel Industries 358 ITR 295 wherein the principle of consistency has been reiterated. Hence when the issue has been decided by the Jurisdictional High Court no convincing reason has been pointed to take a different view, any deviation is not permitted. 7.3. Now we come to the case laws ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving regard to the Hon ble High Court Calcutta, vide its decision dated 15.07.2016 in GA No.1446 of 2015, the Ld.CIT(A) ought to have upheld the action of the Assessing Officer. In the above case referred in Para No.2.3, the Calcutta Benches of the Tribunal restored registration of the assessee invalidating the order of cancellation, against which, the Department preferred further appeal before the Hon ble High Court. What way the above said case is relevant to the case in hand is better known to the concern ITO, NCW-6(4), Chennai. Thus, the case law relied on by the Department has no relevance to the facts of the present case. 7. Under the above facts and circumstances and in view of overwhelming judgements, we set aside the order of the Ld.CIT(A) and direct the AO to allow the deduction claimed under section 80P of the Act to the assessee. Thus, the ground raised by the assessee is allowed. 8. Coming to the Cross-Objections of the assessee, both the Cos are filed with a delay of 7 days before the Tribunal. The assessee has filed condonation petition in support of the Affidavit, to which, the Revenue has not raised any serious objection. Consequently, we condoned the delay o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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