TaxTMI 
TaxTMI 
2017 (1) TMI 766
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....reating the assessee as a society providing credit facilities to its members. 3. The Assessing Officer erred in disallowing the claim u/s 80-P of Rs. 1784272-00 and disallowance of provision. 2. In this case the assessee is a co-operative credit society. In the assessment order the AO denied the benefit of exemption u/s 80P(2)(a)(i) holding that the assessee society was engaged in the business of cooperative banking. While holding so the AO observed as under : "4.5 It is an undeniable fact that the assessee is engaged in the receiving/ giving deposits/loans to its members. Thus the attempt of the assessee to claim deduction under the guise of providing such loans or receiving deposits from its members only is not correct in as much a....
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....re, in their own terms, ambivalent and do not manifest the intention of the Legislature. 7. Front the above discussion, it now becomes crystal clear without any scope for ambiguity that the deduction under section 80P of the Income Tax Act, 1961 is not available to a Co-operative Credit Society. 8. In view of the above findings the deduction of Rs. 1784272/- claimed by the assessee under section 80P of the Income Tax Act, 1961 is accordingly disallowed. Penalty proceedings under section 271(1)(c) of the Income Tax Act,1961 are initiated for concealment of income by furnishing of inaccurate particulars of income." 3. Against the above order the assessee appealed before the learned CIT(Appeals). The learned CIT(Appeals) elaborately re....
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....to meet any eventuality towards re-payment of deposit, the Co-operative Society is maintaining some liquidated funds as a short term deposit with the banks.This issue was thoroughly discussed by the ITAT "B" Bench Ahmedabad in the case of The Income Tax Officer vs. M/s.Jafari Momin Vikas Coop. Credit Society Ltd. bearing ITA No.1491/Ahd/2012 (for A.Y. 2009-10) and CO No.138/Ahd/2012 (by Assessee) order dated 31/10/2012. The relevant portion is reproduced below:- "19. The issue dealt with by the Hon'ble Supreme Court in the case of Totgars (supra) is extracted, for appreciation of facts, as under: "What is sought to be taxed under section 56 of the Act is the interest income arising on the surplus invested in short term deposits and se....
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....under section 56 of the Act and, consequently, the assessee(s) was entitled to deduction under section 80P(2)(a)(i) of the Act. The argument was rejected by the assessing officer as also by the Tribunal and the High Court, hence, these civil appeals have been filed by the assessee(s). 19.2. From the above, it emerges that (a) that assessee (issue before the Supreme Court) had admitted before the AO that it had invested surplus funds, which were not immediately required for the purpose of its business, in short term deposits; (b) that the surplus funds arose out of the amount retained from marketing the agricultural produce of the members; (c) that assessee carried on two activities, namely , (i) acceptance of deposit and lending....
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....was required to maintain some liquid funds. That was why, it was submitted by the assessee that it had invested in short- term deposits. Furthermore, the assessee had maintained overdraft facility with Dena Bank and the balance as at 31.3.2009 was Rs. 13,69,955/- [source: Balance Sheet of the assessee available on record]. 19.6. In overall consideration of all the aspects, we are of the considered view that the ratio laid down by the Hon'ble Supreme Court in the case of Totgars Co-op. Sale Society Ltd. 9supra) cannot in any way come to the rescue of either the Ld.CIT(A) or the Revenue. In view of the above facts, we are of the firm view that the learned CIT(A) was not justified in coming to a conclusion that the sum of Rs. 9,40,639/- was....