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TMI Blog2018 (3) TMI 1825X X X X Extracts X X X X X X X X Extracts X X X X ..... eposits by the assessee other than co-operative society is eligible for deduction under section 80P(2)(a)(i) read with section 80P(2)( d) of the 1. T.Act, 1961 ignoring the decision of the Hon'ble Supreme Court in Totgar Co-operative Sales Society Ltd. iv) That on the facts & in the circumstances of the case, the Ld. CIT(A) failed to appreciate the fact that the assessee is registered under the West Bengal Cooperative Society Act and is not governed or - registered under the Banking Regulation Act. Therefore interest of Rs. 6,07,21,269/-.earned by the assessee from investment in banks other than co-operative society does not qualify for deduction under section* 80P(2)(a)(i) read with section 80P(2)(d) of the I.T.Act and the said interest is actually income from other source 'taxable under section 56 of the Income Tax Act, 1961. (v) That the Ld.CIT(A) had erred in law and in facts in allowing the deduction under section 80P(2)(a)(i) of the Act on income of Rs. 5,11,980/- on account of Holiday Home by failing to appreciate the fact that running holiday home and earning income thereon was not attributable to the normal business activity of the society." 3. As far as groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t income was received on the investment made by the assessee out of the fund not immediately required for its business, the interest income generated on such investment cannot be said as profit or gain from business. The interest income received from investment cannot even be termed as profit or gain attributable to the business activity of the assessee, as the business of the 'assessee was to provide credit facilities to its members and to earn interest thereon. Hence the total interest received of Rs. 7,79,55,152/- by the assessee on its investment was treated as "Income from other source" by the AO and he assessed the said income under section, 56 of the Income Tax Act, 1961 and he held that such income does not qualify for deduction U/S 80P2(a)(i) of the Act. However, as per section 80P(2)( d) of the Act, any income by way of interest or dividend derived by the co-operative society from its investment with any other. co-operative society will be allowed as deduction. Since the West Bengal Co-operative Bank was a registered co-operative society, the AO held that interest income derived by way of investment in West Bengal Cooperative Bank would qualify for deduction u/s 80P(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a co-operative society and is not governed or registered under 'The Banking Regulation Act', neither, it is accepting from public. As a result of this fact, the deposits made by the assessee in nationalised banks and interest earned thereon is not eligible for deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961 and the same is required to be treated as income from the other sources. The Society is engaged in the business of providing credit facilities to its members and accepts deposits and makes loan & advances from and to its members. Investment in different banks and financial institutions and earning interest income from them is not the business activity of the society. In the present case, interest income ought to have been held not eligible for deduction under section 80P2(a)(i) of the Act as it is not the interest received from the members for providing credit facilities to them. The present case is of surplus of funds, which were not required for carrying on business of providing credit facilities to members. He submitted that the Ld.CIT(A) has decided the issue in favour of the assessee on the basis of judicial decisions without considering the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er on the facts and circumstances of the case, the interest earned by the assessee to the tune of Rs. 1,18,07,645/- out of Its investment in banks is not the activity that arose from the activity of providing loan and credit facilities to its members as the society is not engaged in the business of banking and is therefore not qualifying for deduction u/s.80P(2a)(a)(i) of the Act, the learned Tribunal is correct in law in holding that interest earned on such investment is within the purview of section 80P of the Act 7" The Hon'ble Court held as follows:- "It was found by the Tribunal while affirming the order of the Commissioner of Income Tax (Appeal) that there is no change in the facts and circumstances of this case and it was held that the assessee was eligible for deduction under Section 80P(2 )(a )(i) on interest on investment amounting to Rs. 1;18,07,645/- in this assessment 'year also. Since the Tribunal found that this decision of the Tribunal was followed by CIT (A) there is no reason to take a different view. Under these circumstances, we feel that when the Commissioner of Income Tax (A) as well as the Tribunal has followed the earlier unchallenged decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d earned interest. Thus this case law is not applicable on the facts of the present case. 7.4. As regards the decision of Hon'ble Patna High Court in the case of Bihar Rajya Sahkari Bhoomi Bikash Co-op. Bank Ltd. (supra) the same is also not applicable to the facts of the present case. In that case the question was the treatment of interest earned on provident fund and rental income as attributable to banking business 'and this qualifying for deduction u/s BOP(2)(a)(i) of the Act. 7.5. In the background of the aforesaid discussion and precedent we hold that the issue is squarely covered in favour of the assessee by the decision of the Tribunal and the Jurisdictional High Court in assessee's own case. The decision relied upon by the Id. CIT(A) are not applicable in the facts of the case. The principle of consistency as conveyed by the Hon'ble Apex Court mandates that the Revenue does not take a different stand. Accordingly we set aside the orders of the authorities below and decide the issue in favour of the assessee. 4. In view of the above discussion, respectfully following the binding judgment of the jurisdictional High Court, we direct the Ld. AO to allow d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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