2015 (12) TMI 287

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....iable to be assessed as income from other sources. 2. The facts relating to the above said issue are stated in brief. The assessee is a co-operative credit society registered under Maharashtra CoITA No .5793/ Mum/2014 2 operative Society Act, 1960. The main objects of the society is to provide credit/loans to its members and collect deposits from its members by way of fixed deposits, saving deposits and daily recurring deposits. The assessee filed its return of income for the year under consideration declaring NIL income after claiming deduction u/s 80P(2)(a)(i) of the Act. Sec. 80P(1) of the Act provides for deduction of income specified in sec. 80P(2) in case of an assessee, being a co-operative society. Sec. 80P(2)(a)(i) provides deduct....

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....ome on appeal before the Tribunal and hence the finding given by Ld CIT(A) has attained finality. Since the assessee is not considered as bank, the provisions of sec. 80P(4) shall not apply and hence the original ground on which the AO had denied deduction u/s 80P(2)(2)(a)(i) stood reversed by Ld CIT(A). 5. The Ld CIT(A), however, noticed that the assessee has earned interest income from fixed deposits maintained with various banks. The Ld CIT(A) took the view that the above said interest income cannot be held to be income generated from business activities and hence the same is required to be assessed under the head income from other sources, in which case the deduction u/s 80P(2)(a)(i) of the Act is not available to it. The assessee submi....

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....he case of Tumkur Merchants Souharda Credit Cooperative Ltd (supra) squarely applies to the facts of the present case. In the case before the Hon'ble Karnataka High Court also, the assessee claimed deduction u/s 80P(2)(a)(i) on the interest income earned from deposits kept with banks on the reasoning that the same shall form part of its business income. The Hon'ble High Court upheld the said view by duly considering the decision rendered by Hon'ble Supreme Court in the case of Totgars Cooperative Sale Society Ltd (supra). For the sake of convenience, I extract below the observations made by the Hon'ble Karnataka High Court:- "8. Therefore, the word "attributable to" is certainly wider in import than the expression "derived from". Whenever....

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....s, was also in the business of marketing of agricultural produce grown by its members. The sale consideration received from marketing agricultural produce of its members was retained in many cases. The said retained amount which was payable to its members from whom produce was bought, was invested in a short-term deposit/security. Such an amount which was retained by the assessee - Society was a liability and it was shown in the balance sheet on the liability side. Therefore, to that extent, such interest income cannot be said to be attributable either to the activity mentioned in Section 80P(2)(a)(i) of the Act or under Section 80P(2)(a)(iii) of the Act. Therefore in the facts of the said case, the Apex Court held the assessing officer was....