TaxTMI 
TaxTMI 
2021 (4) TMI 806
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....ent proceedings u/s 143(3) of the Act, the Assessing Officer observed that the assessee has earned interest from surplus funds, which are not required immediately for business purposes and were invested in short term deposits and securities and claimed it also as a deduction u/s 80P(2)(a) of the Act. He held that such an interest is not attributable to the business of the assessee in carrying on the business of providing credit facilities to its members or marketing of the agricultural produce of its members and is therefore, assessable as income from other sources and not as its business profit. Observing that the deduction u/s 80P(2)(a) is allowable only from its business income and not from income from other sources, the Assessing Office....
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....gh Court has distinguished the decision of the Hon'ble Supreme Court in the case of Totgar's Cooperative Sale Society vs. ITO (Supra) that the facts of the case before them and have held that the interest income from fixed deposits made out of surplus funds available with the assessee is also attributable to the business of the assessee and is accordingly allowable as a deduction u/s 80P of the Act. In support of this contention, the learned Counsel for the assessee placed reliance upon the decision of the Hon'ble jurisdictional High Court of Andhra Pradesh & Telangana in the case of Vavveru Coop. Rural Bank Ltd vs. Chief CIT, reported in (2017) 396 ITR 371. 5. The learned DR, however, supported the orders of the authorities belo....
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....and the earning of interest income therefrom is only one of the methods of multiplying the same income. To accept the stand of the Department would mean that Co-operative Societies carrying on the activities listed in Clauses (i) to (vii), which invest their profits and gains of business either in other Co-operative Societies or in the construction of godowns and warehouses, may benefit in terms of Clause (d) or (e), but the very same Societies will not be entitled to any benefit, if they invest the very same funds in Banks. Such an understanding of section 80P(2) is impermissible for one simple reason. The benefits under Clauses (d) and (e) are available in general to all Co-operative Societies, including Societies engaged in the activitie....
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....ote. 35. But, as rightly contended by the learned senior counsel for the petitioners, the investment made by the petitioners in fixed deposits in nationalised banks, were of their own monies. If the petitioners had invested those amounts in fixed deposits in other Co-operative Societies or in the construction of godowns and warehouses, the respondents would have granted the benefit of deduction under Clause (d) or (e), as the case may be. 36. The original source of the investments made by the petitioners in nationalised Banks is admittedly the income that the petitioners derived from the activities listed in sub- Clauses (i) to (vii) of Clause (a). The character of such income may not be lost, especially when the statute u....