TaxTMI 
TaxTMI 
2016 (7) TMI 1134
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....interest income of Rs. 39,38,620/- as business income since the same is not attributable to the assessee's business of providing credit facility to its members. 2. On the facts and circumstances of the case, the Ld. CIT (Appeals) erred in not appreciating the assessing officer's decision that interest income of Rs. 39,38,620/- was correctly taxable as 'Income from other sources as the same was earned by the assessee on investments made in bank deposits out of its surplus funds not required immediately for business purposes. 3. On the facts and circumstances of the case, the Ld. CIT (Appeals) erred in law in not following the decision o fthe Hon'ble Supreme Court in The Totgars's Co-op. Sale Society Ltd.....
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....again in the case of Chattisgarh Urban Sahakari Sanstha Maryadit Vs. ITO in ITA No.371/Nag/2012 vide order dated 27.05.2015 has adjudicated similar issue as under:- "11 Upon careful consideration, we note that identical issue was the subject matter of consideration by ITAT, Ahmedabad Bench decision in the case of Dhanlaxmi Credit Cooperative Society Ltd. (supra), in which one of us, learned Judicial Member, was a party. The concluding portion of the Tribunal's decision is as under:- "4.With this brief background, we have heard both the sides. It was explained that the Co-operative Society is maintaining "operations funds" and to meet any eventuality towards re-payment of deposit, the Co-operative Society is maintaining som....
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....ation of the balance sheet of the assessee as on 31.3.2009, it was observed that the fixed deposits made were to maintain liquidity and that there was no surplus funds with the assessee as attributed by the Revenue. However, in regard to the case before the Hon'ble Supreme Court - "(On page 286) 7....... Before the assessing officer, it was argued by the assessee(s) that it had invested the funds on short term basis as the funds were not required immediately for business purposes and, consequently, such act of investment constituted a business activity by a prudent businessman; therefore, such interest income was liable to be taxed under section 28 and not under section 56 of the Act and, consequently, the assessee(s) was entitled ....
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.... (2) in the case of present assessee, it did not carry out any activity except in providing credit facilities to its members and that the funds were of operational funds. The only fund available with the assessee was deposits from its members and, thus, there was no surplus funds as such; - in the case of Totgars, the Hon'ble Supreme Court had not spelt out anything with regard to operational funds; 19.5. Considering the above facts, we find that there is force in the argument of the assessee that the assessee not a co-operative Bank, but its nature of business was coupled with banking with its members, as it accepts deposits from and lends the same to its members. To meet any eventuality, the assessee was required to maintain....
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....e society is maintaining operational funds and to meet any eventuality towards repayment of deposit the cooperative society is maintaining some liquidated funds as short term deposits with banks. Hence adhering to the doctrin stair desises, we hold that the assessee should be granted benefit of deduction under section 80P(2)(a)(i). Accordingly, the interest on deposits would qualify for deduction under the said section. Accordingly, we set aside the orders of authorities below and decide the issue in favour of the assessee." 3. We further find that batch of similar appeals decided by the ITAT in favour of the assessee has also been considered by the Jurisdictional High Court. The Hon'ble Jurisdictional High Court has duly affirmed the vi....