9911796707
TMI Blog2019 (7) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... , Ward - 3(1)(5), Vadodara under section 143(3) of the Income Tax Act, 1961 (hereinafter referred as to 'the Act') for Assessment Year 2014-15 with the following grounds: "1. The learned Commissioner of Income Tax (Appeals) - 3, Vadodara ["the CIT(A)"] erred in fact and in law in confirming the action of the learned Income Tax Officer, Ward-3(1)(5), Vadodara ("the AO") in treating ₹ 1,51,81,968/- as Income from other sources instead of Business Income. 2. The learned CIT(A) erred in fact and in law in confirming the action of the AO in not allowing deduction u/s. 80P of the Act of ₹ 1,51,81,968/-. 3. The learned CIT(A) erred in fact and in law in taxing the gross amount instead the net amount. 4. The learned CIT(A) erred in fact and in law in confirming the action of AO in charging interest 234B of the Act. 5. The learned CIT(A) erred in fact and in law in confirming the action of AO in charging interest 234C of the Act. 6. Your Appellant craves the right to add to or alter, amend, substitute, delete or modify all or any of the above grounds of appeal." 2. Ground No.1, 2 and 3 relates to the order passed by the Learned CIT(A) confirming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the fixed deposits. After the perusal of material on records and facts of the case, we are of the view that the assessee is entitled for deduction u/s. 80P(2)(a)(i) on the profit and gains of business attributable to the activity of providing credit facilities to its members and the assessing officer has correctly treated the interest income earned from banks/co-operative banks amounting to ₹ 1,18,21506 as income from other sources u/s. 56 of the act. In this regard, we place reliance on the decision of the Hon'ble Jurisdictional High Court in the case of State Bank of India vs. CIT (2016) 72 taxman.com 64 (Guj.) and a number of judicial pronouncements of the Co-ordinate Benches of the ITAT. We have noticed that on 29.08.2018 the Coordinate Bench of the ITAT in a combined order in respect of following cases:- Sl. No. ITA No. A.Y. Assessee Revenue 1 1992/Ahd/2017 2014-15 The Narsanda Mercantile Co.Op. Credit Society Ltd. DCIT, Nadidad 2 1313/Ahd/2018 2015-16 The Sant Taluka Teachers Co-op. Credit Society Ltd. ACIT, Panchm ahal Circl e, Godhra 3 1314/Ahd/2018 2015-16 The Satyaprakash Co-op. Credit Society Ltd ACIT, Panchm ahal Circl e, G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative Sale Society on identical issue and facts is reproduced as under:- "Admittedly and undoubtedly, the assessee is a co-operative Society engaged mainly in the activity of marketing of agricultural produces grown by its members. The assessee co-operative society also accepts deposits from its members and provides credit facility to its members, runs Kirana Stores, rice mills, live stocks, van section, medical shops, lodging, plying and hiring of goods carriage, etc. [Para 10] The assessment years involved in the instant appeals are assessment years 2007-08 to 2011-12. The bone of contention is that the deduction under section 80P(2) is now claimed by the assessee under section 80P(2)(d) and not under section 80P(2)(a) of the Act. The reason is that now the investments and deposits after the Supreme Court's decision against the assessee in Totgar's Co-operative Sale Society Ltd. v. ITO [2010] 322 ITR 283/188 Taxman 282 (SC), the assessee herein has shifted the deposits and investments from Schedule Banks to Co-operative Bank and such Co-operative Bank is essentially a Cooperative Society also and clause (d) allows deduction of income by way of interest or dividends deri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply in relation to any cooperative bank other than a primary agricultural credit society…………….' The words 'in relation to' can include within its ambit and scope even the interest income earned by the assessee, a cooperative society from a Co-operative Bank. This exclusion by section 80P(4) even though without any amendment in section 80P(2)(d) is sufficient to deny the claim of the assessee for deduction under section 80P(2)(d). The only exception is that of a primary agricultural credit society. The depository I.T.A No. 108/Ahd/2017 A.Y. 2013-14 Page No The Government Servants Co-op. Credit Society Ltd. vs. ITO 5 Kanara District Central Bank Limited in the present case is admittedly not such a primary agricultural credit society. [Para 14] The amendment of section 194A(3)(v) excluding the Co-operative Banks from the definition of 'Cooperative Society' by Finance Act, 2015 and requiring them to deduct tax at source under section 194A also makes the legislative intent clear that the co-operative banks are not that specie of genus co-operative society, which would be entitled to exemption or deduction under the special provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business operations, which made it ineligible for deduction under section 80P of the Act. [Para 23] In view of the aforesaid, the appeal filed by the revenue deserves to be allowed.:" [Para 24] In the light of the above facts and legal findings we consider that the income by way of interest earned by deposit or investment of idle or surplus does not change its character irrespective of the fact whether such income of interest is earned from a schedule bank or a co-operative bank and thus clause (d) of section 80P(2) of the act would not apply in the facts and the circumstances of the present case. The assessee has earned interest income on surplus funds deposited with nationalized bank and the cooperative Bank and the same is not attributable to business operation of the assessee co-operative society as interest earned on the fund invested with the commercial bank is not operational income from providing credit facilities to its members. We consider that earning of such interest income either from nationalized or cooperative bank will not change nature and character of the income. On perusal of the provision of section we observe such deduction is pertinent to the operational in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
