2020 (3) TMI 402

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....13. The substantial question of law, on which the appeal was admitted, is set out below:- "Was Totgar's (supra) made applicable to Co-operative Societies carrying on the business of banking or providing credit facilities to its members, by South Eastern Railway Employees Co-operative Credit Society Ltd. (supra)?" Mr. Bhowmick, learned advocate appears on behalf of appellant-revenue and submits, declaration of law in Totgar's Co-operative Sale Society Ltd. vs ITO reported in (2010) 322 ITR 283 (SC) was on the question whether interest on deposits/securities, which strictly speaking accrues to the members' account, could be taxed as business income under section 28 of Income Tax Act, 1961? Supreme Court said, such interest income ....

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....n assessee such as respondent by a Division Bench of this Court, to which one of us was party (Arindam Sinha, J.), in CIT vs. South Eastern Railways Employees Cooperative Credit Society Limited reported in [2017]390 ITR 524 (Cal). Appeal of revenue is covered by the decision and the question should be answered accordingly. Mr. Majumder, learned senior advocate, Additional Advocate- General appears on behalf of assessee-respondent. He submits, his client is an existing cooperative society, on whom deeming provision in section 6 of West Bengal Co-operative Societies Act, 2006 operates. He relies on sections 79 and 82 therein for provisions relating to firstly, investment of funds by his client and secondly, on mandate to transfer, in every co....

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....bmits in fairness, the Tribunal upheld the order of CIT (Appeal) upon reliance of a case, which could not be tracked on the reference given in impugned order. Without prejudice to above contentions Mr. Majumder submits further, if Court answers the question in favour of revenue, then directions made in South Eastern Railways Employees Co-operative Credit Society Limited (supra) must necessarily be made in this appeal as well. In South Eastern Railways Employees Co-operative Credit Society Limited (supra), one contention advanced on behalf of assessee therein was that it being a multi-State cooperative society, duly registered, was bound by mandate in section 63 of Multi-State Cooperative Societies Act, 2002, regarding disposal of net pro....

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....pose of earning the sums of Rs. 99 lakhs and 1.2 crores on account of interest from investments. Such interest shall be deducted from the expenses of eligible business. Consequent increased amount of profits of eligible business as discussed above shall be the amount of deduction available to the assessee under section 80P." We find that revenue's case is covered by South Eastern Railways Employees Co-operative Credit Society Limited (supra). The Act of 2006 and Rules thereunder mandate 10% of net profit in every cooperative year to be transferred to a reserve fund. Interest income on rest of the net profit of respondent appears to be similar income or to be similarly treated as interest income on investment of sale of agricultural produ....