9911796707
TMI Blog2023 (5) TMI 466X X X X Extracts X X X X X X X X Extracts X X X X ..... s services cooperative society. While processing return of income filed by the assessee for the assessment year 2018-19, claim for deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961 ('the Act') in respect of the interest derived by the assessee on deposits with banks/institutions was denied by the learned Assessing Officer on the ground that the Union Bank of India from which the assessee derived such interest is not a co-operative bank. 3. Learned CIT(A) also was of the opinion that any interest income from investment with nationalised bank/commercial bank which is not attributable to the activities specified in section 80P(2)(a) of the Act has to be necessarily assessed under the head 'income from other sources'. To reach t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etter RC No. 18169/2007/IC-2(Spl.Cell), dated 18/11/2008. The by-laws of the society which are filed by way of paper book clearly show that the assessee is involved in advancing short term, medium term and long term loans to its members apart from gathering the seeds, fertilizers and pesticides for the sale to its members. So also, the assessee is involved in sale of rice, kerosene, sugar etc. A perusal of the balance sheet as on 31/03/2018 does not reveal any liability towards its members in respect of payment of any dues to them. All these things clearly establish that the funds deposited by the assessee with the Union Bank of India are undoubtedly the own funds of the assessee and none of such fund represents any liability of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, categorised under clauses (a), (b), (c), (d), (e) and (f). Each one of these clauses deal with different types of co-operative societies engaged in different types of activities. The benefit made available to each one of them is also different from the other. Therefore, it may be useful to present a tabular form, the six categories of co-operative societies covered by clauses (a) to (f) and the nature and extent of the benefit available to each one of them, as follows : ... ... ... ... ... ... 30. Therefore, what follows is that when a co-operative society engaged in any one of the activities stipulated in sub-clauses (i) to (vii) of clause (a) makes profits and gains out of business attributable to anyone of those activities, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purview of clause (a), but still, the co-operative society may claim the benefit of clause (d) or (e) either by investing the income in another cooperative society or investing the income in the construction of a godown or warehouse and letting out the same. 33. In other words, the benefit conferred by clause (d) upon all types of co-operative societies is restricted only to the investments made in other co-operative societies. Such a restriction cannot be read into clause (a), as the temporary parking of the profits and gains of business in nationalised banks and the earning of interest income therefrom is only one of the methods of multiplying the same income. To accept the stand of the Department would mean that co-operative societi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of the agricultural produce actually resulted in net loss to the society. Therefore, it appears that the assessee in Totgars was carrying on some of the activities listed in clause (a) along with other activities. This is perhaps the reason that the assessee did not pay to its members the proceeds of the sale of their produce, but invested the same in banks. As a consequence, the investments were shown as liabilities, as they represented the money belonging to the members. The income derived from the investments made by retaining the monies belonging to the members cannot certainly be termed as profits and gains of business. This is why Totgar's struck a different note. 35. But, as rightly contended by the learned senior counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
