AI Drafter 
TaxTMI 
TaxTMI 
2016 (2) TMI 298
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....,77,515/- which was earned by the assessee as interest income on fix deposits with the banks. 3. The brief facts of the case are that the assessee is a Co-operative Society registered under Gujarat Co-operative Society Act, 1961 carrying on the business of providing credit facilities to its member. It has filed its return of income on 29th of September, 2012 declaring total income at NIL. The case of the assessee was selected for scrutiny assessment and a notice u/s.143(2) of the Income Tax Act was issued and served upon the assessee. On scrutiny of the accounts, it revealed to the Assessing Officer that assessee society has earned income by way of interest derived from its investments other than co-operative society. He worked out the total interest income of Rs. 3,77,517/-. Ld. A.O. rejected the prayer of assessee to grant exemption u/s.80P(2)(a)(i) of the Income Tax Act on this amount. Accordingly, income of the assessee was determined at Rs. 3,77,520/-. 4. Appeal to the ld. CIT(A) did not bring any relief to the assessee. 5. The ld. Counsel for the assessee, at the very outset, submitted that this issue is covered in favour of the assessee by the order of ITAT, Ahmedab....
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....#39; means a State cooperative bank, a Central co-operative bank and a primary co-operative bank. 4. Thus, if the Delhi Co-op. Urban Thrift and Credit Society Ltd. does not fall within the meaning of 'co-operative bank' as defined in Part V of the Banking Regulation Act, 1949, sub-section (4) of section 80P will not apply in this case. 5. This is issued with the approval of the Chairman, Central Board of Direct Taxes." 7. From the above clarification, it can be gathered that sub-section (4) of section 80P will not apply to an assessee which is not a co-operative bank. In the case clarified by the Central Board of Direct Taxes, the Delhi Co-op. Urban Thrift and Credit Society Ltd. was under consideration. The circular clarified that the said entity not being a cooperative bank, section 80P(4) of the Act would not apply to it. In view of such clarification, we cannot entertain the Revenue's contention that section 80P(4) would exclude not only the co-operative banks other than those fulfilling the description contained therein but also credit societies, which are not co-operative banks. In the present case, the respondent-assessee is admittedly ....
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....80P Deduction in respect of income of co- operative societies:- (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing 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) to (vii) ** ** ** the whole of the amount of profits and gains of business attributable to any one or more of such activities." 9. 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 provisions of the statute in the case of Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 (at page 93) as under:- 'As regards the aspect emerging from th....
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....tributable to the activity of carrying on the business of banking or providing credit facilities to its members by a co-operative society and is liable to be deducted from the gross total income under Section 80P of the Act. 11. In this context when we look at the judgment of the Apex Court in Totgars Cooperative Sale Society's case (supra), on which reliance is placed, the Supreme Court was dealing with a case where the assessee/Co-operative Society, apart from providing credit facilities to the members, 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-Sociery 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. Therefor....
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....er to grant deduction u/s.80P(2)(a)(i) of the Income Tax Act and the interest income of Rs. 3,77,517/-. 8. Now we take ITA No.2400/Ahd/2015 i.e. appeal for A.Y. 2010-11. 9. In this appeal, the grievance of the assessee is that ld. CIT(A) has erred in upholding the denial of deduction u/s.80P(2)(a)(i) of the Income Tax Act of Rs. 56,359/- which was earned by the assessee as interest income. 10. The brief facts of the case are that assessee has filed its return of income on 08.10.2010 declaring total income at Nil. The ld. Assessing Officer has passed an assessment order u/s.143((3) of the Act on 07.12.2012. The ld. Assessing Officer has held that assessee society is carrying out business of banking and claimed deduction u/s.80P(2)(a)(i) of the Income Tax Act. He was of the opinion that in view of sub-section (4) of Section 80P inserted with effect from 01.04.2007. The assessee is not entitled for deduction u/s.80P(2)(a)(i) of the Income Tax Act. The ld. Assessing Officer has determined the taxable income of the assessee at Rs. 14,02,150/-. 11. Dissatisfied by this assessment order, assessee carried the matter in appeal before the ld. CIT(A). Ld. CIT(A) has partly allowed....