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TMI Blog2022 (9) TMI 1597X X X X Extracts X X X X X X X X Extracts X X X X ..... ind that the arguments of the assessees are that the assessees had placed the funds in the form of fixed deposits with nationalized banks and Co-operative banks in view of the specific requirements of U.P. Co-operative Societies Act. Interest earned by a Co-operative Society on deposits, which are statutorily required to be kept in the form of bank deposits or Government securities, are attributable to the business of an assessee. Here in the present cases, we do not find the figures regarding the interest which the assessees may have earned on fixed deposits attributable to the making of statutory reserves. We further find that bye laws of the assessee has to be gone through which, though are available in the paper book, but require examination by the AO as these were filed before Hon'ble Supreme Court in the case of Totgars Co-operative Sale Society Limited [Supra] as additional evidences. Therefore, we deem it appropriate to remit the issue of deduction u/s 80P for read judication by the Assessing Officer, who, in the light of judgment of Hon'ble Supreme Court and keeping in view the judgments relied on by the assessee and keeping in view the additional documents, as fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the bye laws of the societies (being not for profit) are for the welfare of cane growers as a whole and further it was submitted that Hon'ble High Court had erred in interpreting that the appellant assessees are covered by the orders of Hon'ble Supreme Court in the case of Totgars Co-operative Sale Society Limited which in fact was a sales society as per its objects and was selling agricultural products to its members. Learned counsel for the assessee submitted that as additional documents, the bye laws of the assessee were furnished before Hon'ble Supreme Court and it was also submitted before Hon'ble Supreme Court that the surplus amount generated from the activities of the societies was deposited with Co-operative Banks and Nationalized Banks approved by cane societies as per clause 59 of U.P. Co-operative Societies Act and these surplus funds, generated in the course of carrying the activities, was invested in accordance with section 58 of the Co-operative Societies Act (disposal of net profit). Learned counsel for the assessee submitted that section 58 of U.P. Co-operative Societies Act stipulates that after incurring the expenditure, the net profit is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not eligible for deduction u/s 80P(2) of the Act. Learned counsel for the assessee further submitted that in the cases before us, the assessees had parked the funds in nationalized and Co-operative banks due to statutory requirement of U.P. Co-operative Societies Act and therefore, the earning of such interest income was attributable to the business of the assessee and hence is eligible for deduction u/s 80P(2) of the Act. Learned counsel for the assessee also filed a copy of the judgment of I.T.A.T. Raipur Bench in the case of Gramin Sewa Sahakari Samiti Maryadit vs. Income Tax Officer [2022] 138 taxmann.com 476 (Raipur-Trib.) where vide order dated 23/02/2022, the Tribunal has held the interest earned by the assessee as eligible for deduction u/s 80P(2) of the Act and therefore, it was prayed that the deduction disallowed by the Assessing Officer was rightly allowed by learned CIT(A) which may be upheld. 5. Learned D. R., on the other hand, invited our attention to the order of the Assessing Officer and submitted that the Assessing Officer has clearly held that the deduction u/s 80P(2)(d) of the Act is not available to the assessee and he read the provisions of section 80P(2)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue or the assessee to reopen the closed cases where assessments have become final. The Trial Court/Tribunal would try to dispose of the appeals expeditiously and preferably within a period of eight months from the date of first hearing. The party would appear before the Tribunal on 10th January, 2022 when date of hearing would be fixed. With the aforementioned directions, the civil appeals are disposed of. All the pending applications are disposed of. 7.1 Now the parties are again before us. We find that assessees had earned interest from fixed deposits from bank and co-operative societies. Hon'ble Supreme Court, after acceptance of additional documents had set aside the issue before this Tribunal for readjudication. We find that the arguments of the assessees are that the assessees had placed the funds in the form of fixed deposits with nationalized banks and Co-operative banks in view of the specific requirements of U.P. Co-operative Societies Act. We find that section 58 of the U.P. Co-operative Societies Act requires the net profit to be distributed as under: (a) An amount not less than twenty five percent shall be transferred to a fund called the reserved fund: (b) N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a condition of the carrying on the business. The profits or gains from such investments were connected with or incidental to the carrying on of the actual business. They were, in our opinion, rightly held by the Tribunal to be attributable to the activity carried on by the assessee within the meaning of clause (c) aforesaid. We therefore, answer the question referred to us in the affirmative in favour of the assessee and against the Department. 8. Following the aforementioned ratio laid down by the Division Bench which we consider binding on us, we too answer the question referred to us in the affirmative in favour of the assessee cooperative society and against the Revenue. 7.3 Further we find that the assessee has relied on a judgment of Raipur Tribunal in the case of Gramin Sewa Sahakari Samiti Maryadit vs. Income Tax Officer [2022] 138 taxmann.com 476 (Raipur-Trib.) wherein the Tribunal has held that the interest earned by the assessee from deposit with co-operative bank and nationalized bank was eligible for deduction u/s 80P(2)(a) of the Act. 7.4 The above two judgments respectively by Hon'ble High Court and Tribunal hold that the interest earned by a Co-operative So ..... X X X X Extracts X X X X X X X X Extracts X X X X
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