TaxTMI 
TaxTMI 
2016 (4) TMI 1367
X X X X Extracts X X X X
X X X X Extracts X X X X
....s taken the following grounds: "1. That the ld. CIT(A), has erred in upholding the action of the Assessing Officer in denying the deduction claimed and allowable u/s 80P(2)(a)(i) in respect of the interest of Rs. 8,52,314/- earned from banks. The factual as well as the legal position has not been appreciated. 2. Without prejudice to the contention raised in ground no.1, having held that deduction u/s 80P(2)(a)(i) was not allowable, the CIT(A) has erred in not allowing the adjustment of interest paid and other costs attributable to interest earned. Only the net amount after set off/adjustment could have been taxed as income from other sources." 3. The facts of the case are that the assessee Society is engaged in multipur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t APB 27 to 31), which has not been correctly appreciated by the ld. CIT(A). 7. The ld. DR, on the other hand, has placed strong reliance on the impugned order. 8. In 'Totgars Co-operative Sale Society Ltd. vs. ITO' (supra), the assessee was a Co-operative Society, where, apart from providing credit facilities to the members, it 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 by the Society in many cases. Such retained amount, which was payable by the Society to its members from whom agricultural produce was brought, was invested by the Society in a short-term deposit/security. This amount was shown by th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e." 9. The Hon'ble High Court also took note of the fact that their Lordships of the Hon'ble Supreme Court, in 'Totgars Co-operative Sale Society Ltd.' (supra), had made it clear that they were confining the said judgment to the facts of that case and that, therefore, it was clear that the Hon'ble Supreme Court was not laying down any law. 10. The facts in the present case, it is seen, are entirely akin to those in 'Tumkur Merchants Souharda Credit Co-operative Ltd.' (supra). As noted by the ld. CIT(A) in para 11 of the impugned order, the activities of the present assessee Co-operative Society are as follows: "1. To encourage thrift and saving among its members by accepting deposits and offering other suitable facilities. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....interest income so derived, or the capital, if and when not immediately required to be lent to the members, was deposited by the assessee Society in banks so as to earn interest. As such, in keeping with 'Tumkur Merchants Souharda Credit Co-operative Ltd.' (supra), the interest from the banks on deposit of the interest income received by the assessee Society from its members, is attributable to the profits and gains of business of providing credit facilities to its members only. As in 'Tumkur Merchants Souharda Credit Co-operative Ltd.' (supra), in the present case also, the assessee Society is not carrying on any separate business for earning such interest income. The income so derived is the amount of profits and gains of business attribu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....umentary evidence, or otherwise. For the year under consideration, as noted hereinabove, both the AO as well as the ld. CIT(A) have made specific note of the activities of the assessee Society, as per which, the assessee Society is carrying on the business of providing credit facilities to its members. Therefore, the order dated 18.03.2014, passed by the Tribunal in assessee's case for the assessment year 2007-08 is of no detriment to the assessee for the year presently under consideration. 13. For the above discussion, finding merit in Ground no. 1 raised by the assessee, the same is accepted and it is held that the action of the AO, as confirmed by the ld. CIT(A), in denying the deduction claimed and allowable u/s 80P(2)(a)(i) of the A....