9911796707
TMI Blog2018 (10) TMI 1918X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided in section 71 of the Gujarat Co-operative Societies Act including in any of the modes specified in section 20 of Indian Trust Act 1882, without there being any upper limit as to the amount that can be invested, once the statutory requirement of reserve fund as stipulated in section 67(2) of the Gujarat Cooperative Societies Act is satisfied. Therefore, it was held that the assessee would be eligible for deduction in terms of section 80P(2)(a)(i) of the Act. We are of the view that interest earned on FD s placed with SBI is eligible for deduction u/s.80P(2)(a)(i) of the Act, accordingly we direct the AO to allow the same - Decided in favour of assessee. - I.T.A No.2799/AHD/2015/SRT - - - Dated:- 4-10-2018 - SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER Assessee by Shri Hiren R.Vepari CA Revenue by Shri Anil Dhaka Sr.DR ORDER PER O. P. MEENA, ACCOUTANT MEMBER: 1. This appeal filed by the Assessee is directed against the order of learned Commissioner of Income tax (Appeals)-1, Surat(in short the CIT (A) ) dated 16.07.2015 pertaining to Assessment Year 2012-13, which in turn has arisen from the order passed by the Depu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest income cannot be said also to be attributable to the activities of the society, namely carrying on the business of providing credit facilities to its member or marketing of the agriculture produce of its members. In view of these facts, the AO disallowed interest income of ₹ 18,79,050/- u/s.80(P)(2) of the Act. 4. Being aggrieved, the assessee carried the matter before the CIT(A) wherein the CIT(A) observed that the appellant has tried to distinguish the facts of Totgars CSS Ltd. [2010] 188 taxmann 282 (SC) by saying that the said society was doing business of providing credit facilities to its members and to market their agricultural produce and society was not doing purely banking business, hence, as per AR the ratio of said decision is of the Act applicable to the assessee who is purely engaged in the banking business. However, the CIT(A) observed that the finding of the Hon'ble Supreme Court is very much crystal clear and as clinched the issue under consideration. It is held that such interest income earned from funds invested in bank FDR s is taxable as income from other source u/s.56 of the Act and not u/s.28 of the Act. Consequently, the assessee socie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act on the ground that such income constitute income from other sources and not part of the activity of the society. The ld.Counsel further placed reliance in the case of Tumkur Mercants Sogharada Credit Co-operative Ltd. 55 taxmann.com 447 (KARN) and Andhra Pradesh State Co-operative Bank Ltd. [2011] 336 ITR 516 (AP), Surat Vankar Sahkari Sangh Ltd. vs. ACIT [2016] 72 taxmann.com 169 (Gujarat), Surat District Co-operative Bank Ltd. 78 TTJ 1 (Ahd) and CIT vs. The Baroda Peoples Co-operative Bank Ltd. [2006] 280 ITR 282 (Guj) in support of his contention wherein the decision of Totgars CSS Ltd. (supra) was distinguished it was submitted that decision of Hon'ble Supreme Court in the case of Totgars CSS Ltd. is distinguishable as in the said case the assessee was Co-operative Society apart from providing credit facilities to the members, was also in the business of marketing of agricultural produce grown by its members. The sale consideration received from marketing agricultural produce of its members was retained in many cases. The said retained amount was payable to its members from whom produce was bought, was invested in a short term deposit / security. Such an amount w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee Co-operative Society was eligible for deduction u/s.80P(2)(d) in repsect of gross profit received from Co-operative Bank without adjusting interest paid to said bank. The ld.Counsel has placed reliance in the case of CIT vs Andhra Pradesh State Co-operative Bank Ltd. [2011] 336 ITR 516 (AP) wherein after considering the decision of Totgars CCS Ltd.(supra) it was observed that the deposits of the surplus is in other banks for the purpose of earning interest is not unauthorized or not barred by any of the applicable statitute the income is certainly attributable to the business of banking. It was further submitted that if section 80P(2)(a) of the Act is given a restrictive meaning as including the interest earned only on the statutory deposits made by a Co-operative Society, it would amount to supplying a casus-omissus and has to be avoided by the court. Investment of funds by banks including the nonreserve is part of banking activities since no bank would like its reserve funds to remain ideal and not earn any interest. Therefore, the interest earned on such deposits is directly attributable to the business of banking and therefore exemption u/s.80P(2)(a)(i) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
