2016 (6) TMI 166

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....der dated 07.12.2007 for assessment year 2005- 06. Grounds raised by assessee are reproduced below:- "1) That CIT(A) has erred in holding while disposing ground No.1 (as reproduced below) that assessment order does not suffer any legal infirmity, ignoring the fact that the assessee has challenged by this ground the computing the income at Rs. 7,31,360/- which is bad in law and not the assessment order. 'That for the facts and under the circumstances the order passed by A.O computing income taxable at Rs. 7,31,360/- is bad and also bad in law and liable to be held as such.' 2) That CIT(A) has erred in not considering that additions made by AO while arriving taxable income are not so includable in total income of th....

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....s, Ld. CIT(A) noticed that assessee had claimed deduction u/s. 80P(2)(a)(i) of the Act on the following interest income. a) From Banks Rs. Rs. UBI-RIP 30,59.884/-   UBI- RD 7,78,585/- 38,38,469/- Less: Interest paid     UBI-RIP 24,40,865/-   UBI-RD 2,75,616/- 27,16,481/-     11,21,988/- The relevant provisions of Sec.80P(2)(a)(i) of the Act reads thus: Deduction in respect of income of co-operative societies. 80P. (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 o....

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....of the activity of either banking or providing credit facilities to members. This contention was not accepted by the CIT(A). 4. Aggrieved by the order of CIT(A) the assessee is in appeal before the Tribunal. 5. At the time of hearing Ld. AR for the assessee filed a copy of order rendered by this Tribunal in the case of Rupnarayanpur Samabay Krishiunnayan Samity Ltd. Vs ACIT in ITA No.07/Kol/2014 dated 09.12.2015. In the aforesaid case the identical question as to whether interest income had to be regarded as income from "business" or "income from other sources" had come up for consideration. The assessee in the aforesaid decision accepted loans and deposits from its members and utilized the same towards providing loans and credit faci....

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....r sources in order to apply the provision of Section 80P(2)(a)(i) of the I.T. Act. It is an undisputed factual position that similar issue arose before the Commissioner of Income Tax (Appeal) in relation to the assessment year 1998-99 to 2002-2003 as also for the assessment year 1995-96 and 1996-97. Then again in relation to the assessment years 2003-04 and 2004-05 a similar point arose. The Learned Tribunal in relation to the assessment years 1998-99 to 2002-2003 by order dated 10.11.2006 in ITA Nos. 840 to 844/Kol/2006 and again by order dated 29.12.2006 in relation to assessment years 2003-04 and 2004-05 has deleted the disallowance made in those assessment years and it was held that the interest earned by the assessee cooperative societ....

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....is submitted by Mr.Bhowmick that there has been challenge of the decision in relation to assessment years 1995-96, 1996-97 and the same is pending before this Court we think that challenge of the assessee has now become redundant as the earlier view taken in both the assessment years have been reversed by the Tribunal by its subsequent decision. Hence, the pendency of that earlier matter is of no consequence in this matter. Had there been a challenge of the decision of the Tribunal in relation to the assessment years 1998-99 to 2002-03 and also 2003-04 to 2004-05 the matter would have been different. The revenue did not take any step whatsoever. Therefore, we presume the revenue has accepted the subsequent view of the Tribunal and the same ....

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....of 'Income from other sources' taxable u/s 56 of the Act and would not qualify for deduction as business income u/s 80P(2)(a)(i). From the above it is amply evident in the present case the assessee has not retained any amount due to its members and instead of paying the same had invested the same and earned interest. Thus this case law is not applicable on the facts of the present case. 7.4. As regards the decision of Hon'ble Patna High Court in the case of Bihar Rajya Sahkari Bhoomi Bikash Co-op.Bank Ltd. (supra) the same is also not applicable to the facts of the present case. In that case the question was the treatment of interest earned on provident fund and rental income as attributable to banking business and this qualifying ....