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TMI Blog2017 (10) TMI 1498X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) has ignored the fact that in the case of Totgars Cooperative Society Ltd.-vs.-ITO [2010] 188 Taxman 282 (SC), Hon'ble Apex court has dismissed the appeal filed by the assessee and confirmed the ITAT's view that this interest income would fall under the "Income from Other sources" and not from "Income from Business and Profession". Thus, on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition on interest income ignoring the provisions of section 80P(1), 80P(2) and 80P(2)(d) of the Income Tax Act, 1961. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made by the A.O. on profit from the business of Holiday Homes on the decision of some other case laws which are not at all relevant in the instant case. Those cases are based entirely on different facts and not squarely applicable in this case. 4. The appellant craves the leave to add, alter or amend any ground before or at any time of hearing." 3. The first issue raised by the revenue in ground no.1 and 2 is that the ld. CIT(A) erred in deleting the addition made by the AO for Rs. 1,60,76,939/- on account of inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed deposits account with the bank. Therefore the interest income earned thereto is not eligible for deduction u/s 80P(2)(a)(i) of the Act. Accordingly the AO disallowed deduction made by the assessee for Rs. 1,60,76,339/- and added to the total income of the assessee. 6. Aggrieved assessee preferred an appeal before the ld. CIT(A). The assessee before the ld. CIT(A) submitted that the surplus funds was kept with the banks for the purpose of providing loan to the members. The assessee also submitted that in the identical issue the Hon'ble Tribunal of Kolkata in the case of S.E, S.E.C. and E.C.O.Railway Employees Cooperative Credit Society Ltd. In ITA NO.1693/Kol/2012 for A.Y.2008-09 after distinguishing the facts of Totgar's Cooperative Sales Society Ltd. (supra) has decided the issue in favour of the assessee. Thus the interest income earned on the money deposited with the bank is accordingly eligible for deduction u/s 80P(2)(a)(i) of the Act As per the provision of section 80P(2)(a)(i) of the Act the deduction is available to the assessee if it fulfills the following conditions :- (i) It is engaged in carrying on the business of banking (ii) It is engaged in the busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 010. The question before the Hon'ble Court was as follows: "i) Whether 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 Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount due to its members and instead of paying the same had invested the same and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holiday home was being run for the benefit of the members of the cooperative credit society. He has argued that as such a facility was for the mutual benefit of the members, as a result of mutuality, the resultant surpIus ought to be treated as business income. Such business income according to him was generated for providing services to the members, and such an activity is ancillary and/or supportive to the main object of the appellant society. From the order of the Assessing officer, and the facts available, it is seen that the appellant receives rental income from giving a guest house to its member/Holiday Home to its member, and that this facility is restricted to its members only. The amount of Rs. 5, 11,100/- which has been disallowed by the AO actually represent surplus from the business of letting out the Holiday Home to its own members by the appellant co-operative society. It appears that a similar matter came up before the Hon'ble ITAT Indore Bench in ITA No 315/IND/2011(ACIT Bhop.al Vs MP State Cooperative Housing Federation) relevant for A.Y. 2006-07. In that case also the Hon'ble ITAT has held that income from guest house would qualify for deduction u/s 80P ..... X X X X Extracts X X X X X X X X Extracts X X X X
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