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TMI Blog2024 (12) TMI 498X X X X Extracts X X X X X X X X Extracts X X X X ..... not under the head Income From Other Sources . we, therefore set aside the impugned order passed by the learned CIT(A) and allow the grounds raised by the assessee. - Shri V. Durga Rao, Judicial Member And Shri K.M. Roy, Accountant, Member For the Assessee : Ms. Alfiya Rozie For the Revenue : Shri Abhay Y. Marathe ORDER PER K.M. ROY, A.M. These appeals by the assessee are against the impugned orders of even dated 16/11/2023, passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [ learned CIT(A) ], for the assessment year 2013 14 and 2018 19. 2. We have heard the learned Representative appearing for the parties and gone through order of the authorities below on the short issue that we need to adjudicate in these appeals and the issue relates to whether or not the learned CIT(A) was justified in affirming the order passed by the Assessing Officer by disallowing the deduction claimed by the assessee Co operative Society under section 80P(2)(a)(i) of the Income Tax Act, 1961 ( the Act ). 3. The learned Authorised Representative appearing for the assessee reiterated the submissions made before the authorities below. Whereas, the learned D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal, while speaking through the very same Bench, rendered its findings by deciding the issue in favour of the assessee and against the Revenue in The Ismailia Urban Co operative Society v/s ITO, ITA no.122/Nag./2023, order dated 18/06/2024 and in the said case, the Tribunal has considered this issue in detail and held that interest income earned by the assessee trust is eligible for deduction under section 80P(2)(a)(i) / 80P2(d) of the Act. The relevant portion of the order reproduced below: 9. Upon hearing both the counsel and perusing the record, we find that the issue involved is covered in favour of the assessee by a catena of decisions from ITAT as well as a decision of jurisdictional High Court. In this regard we may gainfully refer the Hon ble Jurisdictional High Court decision in the case of CIT vs. Solapur Nagri Audyogik Sahakari Bank Ltd. 182 Taxman 231 wherein the following question was raised. Whether the interest income received by a Co-operative Bank from investments made in Kisan Vikas Patra ( KVP‟ for short) and Indira Vikas Patra ( IVP‟ for short) out of voluntary reserves is income from banking business exempt under Section 80P(2)(a)(i) of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of deposit, the Co-operative society is maintaining some liquidated funds as a short term deposit with the banks. This issue was thoroughly discussed by the ITAT B Bench Ahmedabad in the case of The Income Tax Officer vs. M/s.Jafari Momin Vikas Co-op Credit Society Ltd., bearing ITA No. 1491/Ahd/2012 (for A.Y. 2009-10) and CO No. 138/Ahd/2012 (by Assessee) order dated 31/10/2012. The relevant portion is reproduced below :- 19. The issue dealt with by the Hon ble Supreme Court in the case of Totgars (supra) is extracted, for appreciation of facts as under : What is sought to be taxed under section 56 of the Act is interest income arising on the surplus invested in short term deposits and securities, which surplus was not required for business purposes? The assesse(s) markets the produce of its members whose sale proceeds at times were retained by it. In this case, we are concerned with the tax treatment of such amount. Since the fund created by such retention was not required immediately for business purposes, it was invested in specified securities. The question before us, is whether interest on such deposits/securities, which strictly speaking accrues to the members‟ acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of retained amounts on marketing of agricultural produce of its members; (2) in the case of present assessee, it had not carry out any activity except in providing credit facilities to its members and that the funds were of operational funds. The only fund available with the assessee was deposits from its members and, thus, there was no surplus funds as such; - in the case of Totgars, the Hon ble Supreme Court had not spelt out anything with regard to operational funds; 19.5 Considering the above facts, we find that there is force in the argument of the assessee that the assessee not a co-operative bank, but its nature of business was coupled with banking with its members, as it accepts deposits from and lends the same to its members. To meet any eventuality, the assessee was required to maintain some liquid funds. That was why, it was submitted by the assessee that it had invested in short-term deposits. Furthermore, the assessee had maintained overdraft facility with Dena Bank and the balance as at 31.3.2009 was Rs. 13,69,955/- [source : Balance Sheet of the assessee available on record]. 19.6 In overall consideration of all the aspects, we are of the considered view that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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