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TMI Blog2017 (2) TMI 1500X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. Vs. ITO [ 2010 (2) TMI 3 - SUPREME COURT ] and held that when the society has surplus funds which were made fixed deposit in the bank to earn interest, the same is eligible for deduction under Section 80P of the Act. When the amount which was deposited in the bank was not an amount due to members and it was not the liability of the society to the members then the interest earned from the deposits in the bank was held to be eligible for deduction under Section 80P (1) as well as 80P(2)(a)(i) of the Act. In the case on hand, the assessees are co-operative societies providing the credit facilities to its members. The Assessing Officer has noted that the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. The Learned CIT (A) have appreciated that the earned interest on the fixed deposit amount is not liable to be taxed under the act. Without appreciating the nature of the transaction of the appellant assessee and the fact of the case, the Authority levied the tax is against the law hence it is liable to be deleted. 4. On the facts in the of the circumstance case, the Learned CIT (A), without appreciating the provision U/s 80P(2)(a)(i) read with 80P(4)of the act and disallowed the claim of the appellant by CIT (A) thus the order of the CIT (A) is liable to be quashed. 5. On the facts in the of the circumstance case, the Learned CIT (A), failed to consider the submissions filed by the appellant on 14.10.2016 and on 21.10.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the interest income. The Assessing Officer denied the claim under Section 80P in view of the decision of the Hon'ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. Vs. ITO 188 taxman 282 (SC). The assessee challenged the action of the Assessing Officer before the CIT (Appeals) but could not succeed as the CIT (Appeals) has also followed the decision of Hon'ble Supreme Court (supra). 4. Before the Tribunal, the learned Authorised Representative of the assessee has submitted that this issue is now covered by the Hon'ble jurisdictional High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO 230 Taxmann 309 as well as in the case of M/s. Guttigedarara Co-operative S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bers. It is not carrying on any other business. The interest income earned by the assessee by providing credit facilities to its members is deposited in the banks for a short duration which has earned interest. Therefore, whether this interest is attributable to the business of providing credit facilities to its members, is the question. 8. In this regard, it is necessary to notice the relevant provision of law i.e., Section 80P(2)(a)(i):- 80P Deduction in respect of income of co- operative societies:- (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing charge arising from the sale of old machinery and buildings cannot be regarded as profits and gains derived from the conduct of the business of generation and distribution of electricity. In this connection, it may be pointed out that whenever the legislature wanted to give a restricted meaning in the manner suggested by the learned Solicitor- General, it has used the expression derived from , as, for instance, in section 80J. In our view, since the expression of wider import, namely, attributable to , has been used, the legislature intended to cover receipts from sources other than the actual conduct of the business of generation and distribution of electricity.' 10. Therefore, the word attributable to is certainly wider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rative 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 which was payable to its members from whom produce was bought, was invested in a short-term deposit/security. Such an amount which was retained by the assessee-Society was a liability and it was shown in the balance sheet on the liability side. Therefore, to that extent, such interest income cannot be said to be attributable either to the activity mentioned in Section 80P(2)(a)(i) of the Act or under Section 80P(2)(a)(iii) of the Act. Therefore in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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