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TMI Blog2022 (4) TMI 1384X X X X Extracts X X X X X X X X Extracts X X X X ..... /-. The net profit shown in the profit loss account is only ₹ 6,96,233/-. Though details of profit loss account have not been placed on record but even otherwise against the interest income from banks, deduction of ₹ 16,04,006/- has already been claimed by the assessee, there hardly remains any case for the assessee to claim any other benefit. AO has already allowed deduction of ₹ 50,000/- against the net profit of ₹ 6,96,233/-. The alternative submission of the assessee is that the disallowance should be restricted only to 3.12% being the net profit rate to be applied on the interest income of ₹ 23,00,239/- cannot stand for as the assessee has already claimed an expenditure of ₹ 16,04,006/- against the interest income of ₹ 23,00,239/-. We, therefore, confirm the finding of the ld. CIT(A) sustaining the addition made by the AO and dismiss the ground nos. 2 3 raised by the assessee. CIT(A) rightly dismissed the claim of deduction u/s 80P interest income received from Axis Bank, Kalna Branch by the appellant. We, therefore, confirmed the finding of the ld. CIT(A) sustaining the addition - Decided against assessee. - ITA No.506/Kol/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a recent case of Electro Urban Cooperative Society Ltd. (2020) 118 Taxmann.com 310 (Cal) considering as the above case laws are squarely applicable to your appellant which is completely bad in law because your appellant is doing banking activities and it is a primary agricultural credit society (PACS). The above case laws are not applicable to your appellant. v. For that the assessee craves leave to alter, add, amend, moderate, substitute or delete any one or more of the ground or grounds of appeal at any time before or in course of hearing. 3. The assessee also raised the following additional grounds of appeal Which are clubbed together and the Ld. DR has not raised any objection and accordingly admitted the same as under: i. For that in the facts and in the circumstances of the case the consideration of interest income of ₹ 1 16 615 00 received from Axis Bank Kalna Branch, Kalna, Purba Bardhaman as income from other sources instead of income from business or profession by learned Assessing Officer (income Tax Officer ward-1 (3) Burdwan) is wrong, erroneous misconceived arbitrary and completely bad in Law as your appellant is doing banking activities and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive society to which it is affiliated. vi. For that in the facts and in the circumstances of the case the Learned Assessing Officer (income Tax Officer, ward 1(3} Burdwan) erred in Law by ignoring the provision of section 8QP(4) of the Income Tax Act 1961 which is in the nature of a proviso to section 80P by which your appellant remains to avail the deduction under section 80P(2)(a)(i) of the whole of its profits and gains. vii. For that in the facts and in the circumstances of the case the Learned Assessing Officer (income Tax Officer ward-1(3) Burdwan) while considering the Interest Income as Income from other sources he ignored to allow ₹ 50.000.G0/- for engagement in other activities from the Interest amount under section 80P(2)(c) of the Income Tax Act 1961. viii. For that the assessee craves leave to alter, add, amend moderate, substitute or delete any one or more of the ground or grounds of appeal at any time before or in course of hearing 4. The brief facts of the case is that the assessee is a co-operative society engaged in banking, fertilizers, seeds etc. The return of income was filed on 03.09.2014 for the A.Y. 2014-15 by the assessee so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T/Circle-62(1) New Delhi ITA No. 2900 2901/Del/2015 ITAT Delhi Date of Pronouncement 26/04/2018. In which Savings Bank account Interest considered as Income from Business or Profession and are eligible for deduction under section 80P(2)(a)(i) of the Income Tax Act 1961. ii. In the case of Punjab State Cooperative Federation of House Building Society limited Vs. ACIT in ITA No. 966/Chd/2009 dated 29/01/2010. The issue in favor of the assessee by holding that funds kept in bank can be said to be ready for utilization by the Co-operative society in its business of providing credit facilities to its members. The income from such money kept in bank said to be attributable to the business of providing credit facilities so as to fall within the ambit of section 80P(2)(a)(i) of the Income Tax Act 1961. (iii) Shri Basavaraj CEO Primary Agricultural Credit Cooperative Society Limited Vs. Commissioner of Income Tax (Appeals) ITA No. 867/Bang/2017 date of Pronouncement 31.05.2017. iv. The Chitradurga City Multipurpose Cooperative Society vs. Income Tax Officer ITA No. 302/Bang/2014 date of order 04/09/2015. v. ITO ward- 56(4) Kolkata Vs. SBI Staff As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon ble Court: Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal by allowing deduction on income earned by the assessee from investment in banks and other financial institutions has rendered the provisions of Section 80P(2)(a)(i) nugatory as the said section of the Act allows deduction to a cooperative Society engaged in carrying on business of banking or providing credit facilities to its members? 8. We, further, find that the Hon ble Court decided the issue observing as follows: 7. We have not been impressed by the first submission advanced by Mr. Saraf. If the Multi State Cooperative Societies Act, 2002 does not provide for the consequences of an omission to act in accordance with Section 63 thereof, that is no valid reason why the mandate of law should not be followed. When law requires a business to be done in a particular manner, the business can be done only in that manner or not at all. 8. We are also not impressed by the submission advanced by Mr. Khaitan that the interest earned by the assessee from the investments made, to the extent of a sum of ₹ 99 lakhs during the assessment year 2003-04 and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed activities, then such income shall be deducted from the gross total income in computing the total taxable income of the assessee-society. An income, which is attributable to any of the specified activities in s. 80P(2) of the Act, would be eligible for deduction. The word income has been defined under s.2(24)(i) of the Act to include profits and gains. This sub-section is an inclusive provision. The Parliament has included specifically business profits into the definition of the word income . Therefore, we are required to give a precise meaning to the words profits and gains of business mentioned in s.80P(2) of the Act. In the present case, as stated above, assessee-society regularly invests funds not immediately required for business purposes. Interest on such investments, therefore, cannot fall within the meaning of the expression profits and gains of business . Such 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 members or marketing of the agricultural produce of its members. When the assessee-society provides credit facilities to its members, it earns inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the basis that the view taken by them was supported by the Judgment in the case of Karnataka State Co-operative Apex Bank (supra) which, with respect, was not a correct impression. The other judgement cited by Mr. Khaitan in the case of Guttigedarara Credit Co-operative Society Ltd. (supra) is not applicable because the caution appearing in sub-section (1) of Section 80P, that only an income referred to in sub-section (2) was deductible, was not taken into account. The subsection (2) provides for only the income attributable to the business of advancing credit facilities to its members. Income arising from any other source including investment of capital if not immediately required to be lent to the members was not contemplated. The assessee cannot claim any deduction which is not provided for by the section. Moreover the judgment in the case of Totgars Co-operative Sale Society Ltd. v. ITO [2010] 322 ITR 283/188 Taxman 282 (SC) is a binding authority for the preposition that interest income arising on the surplus invested in short-term deposits and securities . would come in the category of income from other sources. 11. Realising his difficulty, Mr. Khaita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is answered in the affirmative and in favour of the revenue to the extent as indicated above. The appeal is allowed. The matter is, however, remanded to the Assessing Officer (a) to work out the interest earned under Sections 63 and 64 of the Multi-State Co-operative Societies Act, 2002 and to allow benefit under Section 80P and (b) to ascertain the interest paid to the members for the purpose of earning the sums of ₹ 99 lakhs and 1.2 crores on account of interest from investments. Such interest shall be deducted from the expenses of eligible business. Consequent increased amount of profits of eligible business as discussed above shall be the amount of deduction available to the assessee under Section 80P. 14. The appeal is thus disposed of. 9. On examining the facts of the case in light of the above judgment, we find that as regards the disallowance of deduction u/s 80P(2)(d) of the Act of ₹ 6,46,233/- we do not find any merit in the contentions of the ld. Counsel for the assessee for the very reason that there is no dispute at the end of the assessee that interest income of ₹ 23,00,239/- has been earned from term deposit/other deposits with sched ..... X X X X Extracts X X X X X X X X Extracts X X X X
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