AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (5) TMI 1634
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.... has erred on facts and in law in confirming the action of in not allowing the deduction in respect of interest receipt of Rs. 2,33,780/- from banks u/s 80P(2)(a)(i) of the IT Act, 1961. 2. The assessee craves to amend, alter and modify any of the grounds of appeal. 3. Necessary cost be allowed to the assessee. 2. The assessee is a Cooperative Society and registered with the Registrar of Cooperative Societies. The assessee is accepting the deposits from the members and also providing credits to the members as per their needs at a reasonable interest rate. The AO noted that during the year under consideration the assessee society has received interest from banks and accordingly asked the assessee to offer the explanation for allowing....
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....upreme Court in case of M/s. Totgars Co-operative Sale Society Ltd. vs. ITO, 322 ITR 283 (SC). Thus the ld. A/R has submitted that when the assessee has earned the interest in the normal course of its activity providing credit facilities to its members, then the said interest from the savings bank account is eligible for deduction under section 80P(2)(a)(i). 3.1. On the other hand, the ld. D/R has relied upon the orders of the authorities below and submitted that as per the provisions of section 80P(2)(d) the interest from other co-operative banks is eligible for deduction and not from other banks. 4. Having considered the rival submissions as well as relevant material on record, we note that the assessee has earned the interest from savi....
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.... (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 ....
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....xpression "derived from". The expression "attributable to" being of wider import, the said expression is used by the legislature whenever they intended to gather receipts from sources other than the actual conduct of the business. A Co-operative Society which is carrying on the business of providing credit facilities to its members, earns profits and gains of business by providing credit facilities to its members. The interest income so derived or the capital, if not immediately required to be lent to the members, the society cannot keep the said amount idle. If they deposit this amount in bank so as to earn interest, the said interest income is attributable to the profits and gains of the business of providing credit facilities to its memb....
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.... 56 of the Act. Further they made it clear that they are confining the said judgment to the facts of that case. Therefore it is clear, Supreme Court was not laying down any law. 12. In the instant case, the amount which was invested in banks to earn interest was not an amount due to any members. It was not the liability. It was not shown as liability in their account. In fact this amount which is in the nature of profits and gains, was not immediately required by the assessee for lending money to its members, as there were no takers. Therefore they had deposited the money in a bank so as to earn interest. The said interest income is attributable to carrying on the business of banking and therefore it is liable to be deducted in terms of ....