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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 ..... and restore this matter to the file of the AO for deciding the same afresh as per the same direction as given in the case of Baksara Cooperative Credit Society Ltd.[ 2016 (1) TMI 409 - ITAT KOLKATA] wherein held the issue as to whether the relevant investment is made by the assessee out of its own surplus funds or out of the amount payable to its members, which represent its liability, requires verification in order to determine the exact head of income under which the interest on such investment is chargeable to tax in the hands of the assessee by applying the relevant case laws. We, therefore, set aside the impugned order of the ld. CIT(Appeals) on this issue and restore the matter to the file of the AO for deciding the same afresh - The Cross objections filed by the assessee thus are treated as allowed for statistical purposes. - SHRI P. M. JAGTAP, A.M. AND SHRI S.S. VISWANETHRA RAVI, J.M. For the Department : Shri S.Datta, JCIT, Sr. DR For the Assessee : Shri Subash Agarwal, Advocate ORDER SHRI P.M. JAGTAP, A.M. These three appeals are preferred by the Revenue against three separate orders passed by the ld. CIT(A)-XIX, Kolkata dated 14.09.2012 for assessment years 2006-07, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 appeals before the Tribuanl and the assessee has also filed its Cross Objections. 4. We have heard both the sides and also perused the material on record. As agreed by the ld. Representatives of both the sides, the common issue involved in the appeals of the Revenue relating to the assessee's claim for deduction under section 80P(2)(a)(i) in respect of interest on reserve funds, bad debt funds, PF loan etc. as well as subsidy and guest house income is squarely covered in favour of the assessee by the decision of the Tribunal rendered in assessee's ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew that the Revenue is justified in disallowing the interest on Fixed Deposits amounting to Rs. 30,00,659/- but however, in respect of disallowance of the interest on reserve fund, Bad debt funds, SBF Loan, MSS loan, we are of the view that all these incomes are relating to the main activity of the assessee. Therefore they will not fall within the mischief of the Hon'ble Apex Court's direction. Similarly, the net income from the guest house amounting to Rs. 38,190/- also will not fall within the purview of the Hon'ble Apex Court's decision. Therefore we direct the AO to allow exemption u/s 80P(2)(a)(i) of the IT Act. In respect of the subsidy amounting to Rs. 33,000/- since it is of non-capital in nature the same cannot be disallowed by applying the ratio 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest 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 (supra) cited by the ld. Counsel for the assessee, the amount, which was invested in Bank to earn interest, was not an amount due to any member and which was not the liability shown in their accounts. In fact, the said amount, which was in the nature of profit and gains, was not immediately required by the assessee for lending money to the members as there were no takers and the same, therefore, had been deposited in a Bank so as to earn interest. In these facts and circumstances of the case, as involved in the case of Tumkur Merchants Souharda Credit Cooperative Limited (supra), the decision of the Hon'ble Supreme Court in the case of Totgar's Cooperative Sale Society Limited was found to be distinguishable on facts by the Hon'ble Karnataka High Court and the interest income received by the assessee-Society on Bank deposits was held to be its business income being attributable to carrying on the business of banking eligible for deduction under section 80P(2)(a)(i) of the Act. 12. Keeping in view the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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