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TMI Blog2024 (12) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... Saks Society Ltd. [ 2010 (2) TMI 3 - SUPREME COURT] Interest earned on the investment made by the Credit Co-operative Society with the nationalized bank would not be entitled to deduction under Section 80P (2) (a) (i) of the Act. Therefore, in our opinion the CIT (Appeals) as well the Tribunal on referring and relying upon the decision of the State Bank of India [ 2016 (7) TMI 516 - GUJARAT HIGH COURT] cannot be said to have committed any error while not allowing the deduction qua the interest income earned by the Appellant-assessee on the investment u/s 80P (2) (a) (i) of the Act while allowing the deduction under Section 80P (2) (d) of the Act qua the interest income earned on the investment in fixed deposit made by the assessee with the Co-operative Bank. X X X X Extracts X X X X X X X X Extracts X X X X ..... hallenging the order passed by the CIT (Appeals) disallowing the interest income of Rs. 16,80,845/- received by the assesseee from the nationalized bank. 5. The Tribunal however, considering the rival contentions of both the sides and after perusal of the order of the CIT (Appeals) referred to and relied upon the decision of this Court in case of State Bank of India (SBI) [Supra] as well as the decision of the Apex Court in case of Mavilayi Service Co-operative Bank Limited Vs. CIT reported in (123 taxmann.com 161) wherein the Apex Court has held that the primary agricultural credit societies are entitled to the benefit of the deduction contained in Section 80P (2) (a) (i) of the Act, notwithstanding the fact that the society may also be giving loans to its members which are not related to agriculture. The Tribunal thereafter upheld the decision of the order of CIT (Appeals) finding no infirmity therein. 6 Learned advocate Mr. Dhinal Shah for the Appellant-Assessee submitted that the assessee had invested the funds which were operational and not surplus fund and as such the entire interest income was earned by the Appellant -Assessee from its business operation. It was submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 80P(1) of the Act whereas, sub clause [d] of sub-section 2 of Section 80P refers to any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income would be deducted. This Court was in the Case of State Bank of India (Supra) in similar facts irrespective of whether the income is surplus fund or operational fund has after referring to the decision of the Hon'ble Apex Court in case of Totgar's Co-operative Saks Society Ltd. Vs. HO reported in [2010] 322 ITR 283 [SC] has held as under:- "12. Under section 80P of the Act, an assessee is entitled to exemption in respect of income earned out of the activities enumerated in sub-section (2) thereof, which are as follows: (a) in the case of a cooperative society engaged in-- (i) carrying on the business of banking or providing credit facilities to its members, or (ii) a cottage industry, or (iii) the marketing of the agricultural produce of its members, or (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. In the case of Totgars Co-operative Sale Society (supra), as rightly submitted by the learned counsel for the respondent, the court was dealing with two kinds of activities: interest income earned from the amount retained from the amount payable to the members from whom produce was bought and which was invested in short-term deposits/securities; and the interest derived from the surplus funds that the assessee therein invested in short-term deposits with the Government securities. This is further clear when one peruses the decision of the Karnataka High Court from which the matter travelled to the Supreme Court wherein it was the case of the assessee that it was carrying on the business of providing credit facilities to its members and therefore, the appellant-society being an assessee engaged in providing credit facilities to its members, the interest received on deposits in business and securities is attributable to the business of the assessee as its job is to provide credit facilities to its members and marketing the agricultural products of its members. This court is, therefore, of the view that the above decision is not restricted only to the investments made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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