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TMI Blog2016 (3) TMI 1481X X X X Extracts X X X X X X X X Extracts X X X X ..... ey involve common issue, the same have been heard together and are being disposed of by this consolidated order along with the corresponding Cross- Objections filed by the assessee being C.O. nos. 05 to 07/Kol/2013. 2. The assessee in the present case is a credit cooperative society. During the course of assessment proceedings for assessment year 2008-09, it was found by the AO that the assessee society has claimed deduction under section 80P(2)(a)(i) in respect of interest on fixed deposits with banks, reserve fund, bad debts funds, PF loan etc. as well as on other receipts such as subsidy and guese house income. In the assessment completed under section 143(3) for assessment year 2008-09, the deduction claimed by the assessee under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came to be decided by the Tribunal vide its order dated 13.04.2012 passed in ITA No. 1564/Kol/2011, whereby the claim of the assessee for deduction under section 80P(2)(a)(i) was allowed by the Tribunal in respect of similar receipts except the interest income received by the assessee on fixed deposits with bank (general). Following the said decision in assessee's own case for assessment year 2008-09, the ld. CIT(A) confirmed the disallowance made by the AO under section 80P(2)(a)(i) in respect of interest on bank fixed deposits (general) but deleted the same in respect of other income and allowed partly the appeals of the assessee for all the three years under consideration. Aggrieved by the same, the Revenue has preferred these appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated by such retention was not required immediately for business purposes, it was invested in specified securities--Interest on such deposits/securities fell under the head "Income from other sources" and hence it is taxable under s. 56--It cannot fall within the expression "profits and gains of business"--Such interest income cannot be said to be attributable to the activities of the society namely, business of providing credit facilities to its members or marketing of agricultural produce of its members--Sec. 80P(2)(a)(i) cannot be placed at par with cI. (baa) of Explanation to s. 8OHHC or s. 8OHHD(3) or s. 8OHHE(5) as argued by the assessee--Clause (baa) of Explanation to s. 8OHHC was added to restrict the deduction in respect of profits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o laid down by Hon'ble Supreme Court in the case of Totgars Co-operative Sales society Ltd. vs ITO (supra)." 5. Respectfully following the decision of the Tribunal in assessee's own case for assessment year 2008-09 on a similar issue, we uphold the impugned orders of the ld. CIT(A) deleting the disallowance made by the AO under section 80P(2)(a)(i) in respect of interest on reserve fund, bad debt fund, PF loan etc. as well as subsidy and guest house income for all the three years under consideration and dismiss the appeals of the Revenue for the said years. 6. As regards the common issue involved in the Cross objections of the assessee relating to assessee's claim for deduction under section 80P(2)(a)(i) in respect of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs was also marketing its agricultural produce. The sale proceed of such agricultural produce, which was payable to its members, in many cases, was retained by the assessee-Society and the same was invested in short-term deposits/securities. In these facts and circumstances of the case, interest income received on short-term deposits/securities was held to be chargeable to tax under the head 'income from other sources' by the Hon'ble Supreme Court observing that the amount invested by the assessee was a liability payable to its members, and, therefore, the interest income could not be said to be attributable to the activity mentioned in section 80P(2)(a)(i). In the case of Tumkur Merchants Souharda Credit Cooperative Limited (su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made out of its own surplus fund, as was the case in Tumkur Merchants Souharda Credit Cooperative Limited (supra) or the same is made out of the amount payable by the assessee-Society to its members, which represent its liability as was the case in Totgar's Cooperative Sale Society Limited. In this regard, it is observed that this aspect has not been specifically considered either by the Assessing Officer or by the ld. CIT(Appeals) in their respective orders and, therefore, there is no finding specifically given by them on this relevant aspect. In this regard, a perusal of the relevant balance-sheet of the assessee as on 31.03.2009 (copy of which at pages 67 & 68 of the paper book), shows that the total investment made by the assessee- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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