TaxTMI 
TaxTMI 
2015 (10) TMI 941
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....s. Bangalore Commercial Transport Credit Coop Society and ITO v. M/s. Yeshwanthpur Credit Co-op. Society Ltd. 2. Ld. DR submitted that assessee had claimed deduction u/s.80P(2)(a)(i) of the Act on the interest earned by it. Assessee is registered as a Credit Cooperative Society under the Karnataka Cooperative Societies Act. AO was of the opinion that assessee was hit by Section 80P(4) of the Act. As per the AO it was in the business of giving credits and should be considered as a cooperative bank. He disallowed the claim. 3. Assessee's appeal before the CIT (A) was successful. CIT (A) held that unless a credit cooperative society is considered as a cooperative bank, holding a licence from RBI, it would not be hit by Section 80P(4)....
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.... held as under in relation to a cooperative society having as its object, business of providing business credits to its members, at paras 3 to 10 of the judgement dt.28.10.2014 : "4. The learned counsel for the assessee assailing the impugned order contended, the interest accrued in a sum of Rs. 1,77,305/- is from the deposits made by the assessee in a nationalized bank out of the amounts which was used by the assessee for providing credit facilities to its members and therefore the said interest amount is attributable to the credit facilities provided by the assesseeand forms part of profits and gains of business and therefore he submits the appellate authorities were not justified in denying the said benefit in terms of Sub-sec.(....
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....g the total income of the assessee. (2) The sums referred to in sub-section (1) shall be the following, namely: (a) in the case of co-operative society engaged in - (i) carrying on the business of banking or providing credit facilities to its members, or (ii) xxx (iii) xxx (iv) xxx (v) xxx (vi) xxx (vii) xxx the whole of the amount of profits and gains of business attributable to any one or more of such activities." 7. The word 'attributable' used in the said section is of great importance. The Apex Court had an occasion to consider the meaning of the word 'attributable' as supposed to derive from its use in various other provi....
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....ricity." 8. Therefore, the word "attributable to" is certainly wider in import than the expression "derived from". Whenever the legislature wanted to give a restricted meaning, they have used the expression "derived from". The expression "attributable to" being of wider import, the said expression is used by the legislature whenever they intended to gather receipts from sources other than the actual conduct of the business. A Cooperative Society which is carrying on the business of providing credit facilities to its members, earns profits and gains of business by providing credit facilities to its members. The interest income so derived or the capital, if not immediately required to be lent to the members, they cannot keep the said....
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....tion 80P(2)(a)(iii) of the Act. Therefore in the facts of the said case, the Apex Court held the assessing officer was right in taxing the interest income indicated above under Section 56 of the Act. Further they made it clear that they are confining the said judgment to the facts of that case. Therefore it is clear, Supreme Court was not laying down any law. 10. In the instant case, the amount which was invested in banks to earn interest was not an amount due to any members. It was not the liability. It was not shown as liability in their account. In fact this amount which is in the nature of profits and gains, was not immediately required by the assessee for lending money to the members, as there were no takers. Therefore they ha....