TaxTMI 
TaxTMI 
2009 (12) TMI 948
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.... of learned CIT(A) has erred in confirming the order of AO. 3. That the learned AO has erred in law and on facts while holding that activities of the assessee fall under s. 80(2)(c) and 100 per cent deduction cannot be allowed. 4. That the learned CIT(A) has erred in law and on facts while confirming the addition of Rs. 21,61,240 on account of interest received from its members. 5. That the observation of the AO regarding NPA provision in the assessment order is wrong, illegal and without justification. 6. That the learned AO has erred in law and on facts while making an addition of Rs. 3,92,600 out of NPA provision which does not change the character of income of the assessee, rather the addition on account of said NPA provision has enhanced the exempt income. 7. That the learned CIT(A) has further erred in law and on facts while confirming the addition of Rs. 3,92,660 out of NPA provision. 8. The appellant seeks the permission for any other ground as may be submitted during the course of hearing. Accordingly, it is prayed that the order of the AO making addition referred to above and likewise the order of learned CIT ....
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.... members for the benefit of non-farming sector and made the addition accordingly. The AO completed the assessment in dispute vide its order dt. 14th Nov., 2008. Aggrieved by the same, the assessee filed the appeal before the learned first appellate authority who vide order dt. 27th July, 2009 dismissed the appeal of the assessee by upholding the order of the AO. 4. The learned counsel for the assessee stated that the assessee was required to provide credit facility to the members of the bank both for development of agricultural sector or for non-agricultural sector. He further stated that the AO completed the assessment without referring any bye-laws, which have been violated by the AO (assessee). He further stated that the Revenue authorities have not cited any provisions of the Act or the bye-laws prohibiting the assessee from advancing loans to its members for the non-farming sector. He stated that the assessee has produced the instructions issued by the Punjab State Co-operative Agricultural Bank Ltd., Chandigarh bearing No. SADB/7653, dt. 16th Oct., 1993, (PBR-7) 7789, dt. 20th Oct., 1992 (PBR-7 and 8) and 14540, dt. 11th March, 1994 (PBR-8) specifically before the authorit....
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....l part of the same business. The language of the section is unambiguous and clear. Therefore, the assessee would be entitled to deduction under s. 80P(2)(a)(i) of the Act because such income falls in the nature and character mentioned therein. He further stated that the expression used for allowing deduction is in respect of the whole of the amount of profits and gains of business "attributable to" any one or more of activities enumerated in s. 80P(2)(a) of the Act. The expression used is not "derived from". It is settled position of law. that expression "attributable to" is more liberal and wide than the expression "derived from". In case of income "derived from", the nexus must be direct and not incidental to the carrying on of a particular activity. However, in case of "attributable to", income would be exempt or entitled to deduction even if the connection with the carrying on of activity is indirect or incidental. This difference was duly noted by the Hon'ble Supreme Court of India in the case of Cambay Electric Supply Industrial Co. Ltd. vs. CIT 1978 CTR (SC) 50 : (1978) 113 ITR 84 (SC), wherein it is observed that the legislature has deliberately used the expression "att....
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....Nawanshahar Central Co-operative Bank Ltd. (2007) 208 CTR (SC) 438 : (2007) 289 ITR 6 (SC); 7. The Milli Co-operative Urban Bank Ltd. vs. ITO (2007) 109 TTJ (Hyd) 116 : (2007) 291 ITR 163 (Hyd)(AT); 8. Asstt. CIT vs. H.P. State Co-operative Agriculture & Rural Development Bank Ltd. (2006) 104 TTJ (Chd) 864 : (2006) 100 ITD 479 (Chd); 9. Ambala Central Co-operative Bank Ltd. vs. ITO (1984) 20 TTJ (Chd) 37 : (1984) 8 ITD 795 (Chd); 10. Asstt. CIT vs. Punjab State Co-op. Agri. Dev. Bank Ltd. (ITA No. 435/Chd/2009). 6. The learned counsel for the assessee also placed reliance on a recent judgment of the Hon'ble Punjab & Haryana High Court in the case of CIT vs. Punjab State Co-operative Bank Ltd. (2008) 5 DTR (P&H) 132 : (2008) 300 ITR (P&H) 24 and stated that in the case, the assessee was a co-operative society carrying on the business and extending credit facilities to its members and nominal members. The AO denied exactly similar deduction to the assessee and treated the interest received from the nominal members as income under the head 'Income from other sources'. The learned CIT(A) and the Tribunal allowed the deduction under s. ....
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....i) uses the words "attributable to" the business referred to therein. It is also evident from the bare reading of s. 80P(2)a)(i) that deduction is permissible to an assessee in respect of profits and gains attributable to either the business of banking carried out by a co-operative society or the business of providing credit facilities to its members earned out by a co-operative society. Both these points are relevant to decide the controversy on hand. Firstly, there is no dispute that the assessee before us is a co-operative society. Further, in relation to the significance of the expression "attributable to" in s. 80P(2)(a)(i), it is now well-settled, in view of the judgment of the Hon'ble apex Court in the case of Cambay Electric Supply Industrial Co. Ltd. vs. CIT 1978 CTR (SC) 50 : (1978) 113 ITR 84 (SC) that the aforesaid expression is much wider in scope and connotation than the words "derived from". The words 'derived from' are considered to mean only such incomes which have a direct nexus between the profits/gains and the particular activity in question. The difference in scope and connotation between the expressions "attributable to" and "derived from" has also....
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....the State. 3. All the District Managers in the State for information and strict compliance. Sd/ Managing Director." "The Punjab State Co-operative Agricultural Development Bank Ltd., Chandigarh. No. 7789/SDB/NFS dt. 20th Oct., 1993. To All the Managers. Primary Co-operative Agricultural Development Banks in the State. Subject : Regarding advancement under non-farm sector. Memo In continuation of this office letter No. SADB/7653, dt. 16th Oct., 1993, the required guidelines along with specimen of documents required for non-farm sector financing are enclosed herewith for further necessary action. The details of proformae are given below : 1. List of activities'Annex. A. 2. Project at a glance'Annex. B. 3. Techno-economic project report'Annexs. B1 and B2, 4. Certificate from the competent authority'Annexs. B1 and B2. 5. Appraisal report by F.O.'Annex. C. 6. Proper utilisation certificate by F.O.'Annex. D. 7. Proper utilisation certificate by manager'Annex. E. 8. Monitorin....
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...., in the State. Subject : Regarding advancement under non-farm sector : clarifications. In continuation of this bank's letter No. 7709, dt. 20th Oct., 1993, the following clarifications are made as requested by the managers for the purpose of advancement of loans under non-farm sector, by the PADBs in the State : 1. The approval of firms by the committee/administrator/supervisory officer of the PADB, as the case may be, may not be adhered to in case of non-farm sector loans. However, the manager shall ensure the utilisation of loans advanced under non-farm sector. 2. Earlier a member of the PADB could purchase shares upto Rs. 10,000 and as such the M.C.L. of the member was Rs. 2 lacs for raising of long-term loans. Since this limit for purchase of shares has been enhanced in the Punjab Co-operative Societies Act and now a member of the PADB can purchase shares upto Rs. 50,000, the M.C.L. of the member, therefore, also increases to Rs. 10 lacs accordingly, provided he fulfils the conditions and has a security of agriculture land to offer for the purpose. Further, the committee of the PADB is already authorised to finally sanction all ....