TaxTMI 
TaxTMI 
2016 (6) TMI 1310
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....its by way of fixed deposit, saving deposits and recurring daily deposits. He found that as on 31^st March 2010, the paid-up capital of the society was `88,76,300 and it has taken loans including deposits amounting to `10,14,47,893 and has given loans and advances of `9,53,85,330. The profit declared by the assessee during the relevant previous year was `30,09,477, which was claimed as deduction under section 80P(2)(a)(i). The Assessing Officer referring to the provisions of section 80P and more specifically section 80P(4) was of the view that the assessee is not a co-operative society but falls in the category of primary co-operative bank as provided under section 80P(4). The assessee, though, objected to the aforesaid view of the Assessing Officer, but the Assessing Officer rejecting the objections of the assessee held that assessee being a co-operative bank, the provisions of section 80P(4) will apply and the assessee would not be eligible for deduction under section 80P(2)(a)(i). Accordingly, he completed the assessment disallowing assessee's claim of deduction under section 80P(2)(a)(i). Being aggrieved of the disallowance of deduction claimed under section 80P(2)(a)(i), asses....
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....ed deposit is to be treated as business income and not income from other sources. In this context, he relied upon the following decisions:- i) ITO v/s Sunder Patel Co-operative Credit Society Ltd., 2018-46-CCH-427 (Ahd.); and ii) Yashomandir Sahakari Patpedi Ltd., ITA no.3477/Mum./2014 dated 20.1.2016. 6. He submitted, the decision of the Hon'ble Supreme Court in Totgars Co-operative Sale Society Ltd. (supra), is factually distinguishable as in that case, the Co-operative Society was utilising the funds of the members for investments in fixed deposits whereas in assessee's case, its own funds were invested in fixed deposits. He, therefore, submitted that assessee's claim of deduction under section 80P(2)(a)(i) should be allowed. 7. Learned Departmental Representative on the other hand relied upon the decision of the learned Commissioner (Appeals). 8. We have considered the submissions of the parties and perused the material available on record in the light of the decisions relied upon by the learned Authorised Representative. At the outset, we need to observe that as far as assessee's eligibility to claim deduction under section 80P(2)(a)(i), as a Co-operative Cr....
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..... Even otherwise also, the issue in dispute involved in the present appeal is covered by the decision of the co-ordinate bench of the Tribunal cited before us by the learned Authorised Representative. In the case of Sunder Patel Co-operative Credit Society Ltd., (supra), the Tribunal after taking note of the decision of the Hon'ble Supreme Court in Totagars Co-operative Sale Society Ltd. (supra), held that interest income is to be assessed as income from business and the assessee would be eligible to claim deduction under section 80P. Similarly, in the case of Yashomandir Sahakari Pathpedi Ltd.(supra), Mumbai Bench of the Tribunal expressed identical view while distinguishing the decision of the Hon'ble Supreme Court in Totgars Co-operative Sale Society Ltd. (supra). In this context, the Tribunal relied upon the decision of the Hon'ble Karnataka High Court in Tumkur Merchants Souharda Credit Co-operative Ltd., [2015] 230 Taxman 309 (Kar.).The observations of the co-ordinate bench are as under:- "11.3.1 We have heard the rival contentions and perused and carefully considered the material on record; including the judicial decisions cited. Taking into consideration the ....
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....arning such interest income. The income so derived is the amount of profits and gains of business attributable to the activity of carrying on the business of banking or providing credit facilities to its members by a co-operative society and is liable to be deducted from the gross total income under Section 80P of the Act. 9. In this context when we look at the judgment of the Apex Court in the case of M/s. Totgars Co-operative Sale Society Ltd., on which reliance is placed, the Supreme Court was dealing with a case where the assessee-Cooperative Society, apart from providing credit facilities to the members, was also in the business of marketing of agricultural produce grown by its members. The sale consideration received from marketing agricultural produce of its members was retained in many cases. The said retained amount which was payable to its members from whom produce was bought, was invested in a short-term deposit/security. Such an amount which was retained by the assessee -Society was a liability and it was shown in the balance sheet on the liability side. Therefore, to that extent, such interest income cannot be said to be attributable either to the activity mentioned....