TaxTMI 
TaxTMI 
2021 (4) TMI 992
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....red in law and on facts in not following the judgment of Hon'ble High Court of Karnataka, Dharwad Bench in the case of Tumkur Merchants Souharda Credit Co-operative Ltd. V/s ITO and Guttugedarara Credit Co-operative Society Ltd. Vs. ITO. 4. The learned CIT Appeal erred in law and on facts in confirming the disallowance of Pigmy Commission paid to Pigmy Agents U/S 40(a)(ia) of the Act of Rs. 2,23,397.00. Sir in this connection we would like to bring to your kind consideration that the CBDT has issued a letter to CIT, Belgaum dtd. 01.12.2011 to consider the pigmy agents commission will be treated as salary and subject to TDS U/S 192 of the Income Tax Act, 1961. Here in our society, none of the agents commission is in excess of basic exemption limit. Therefore the disallowance confirmed by the learned CIT Appeal may be deleted. 5. The learned CIT Appeal erred in law and on facts in confirming the twice disallowance of Audit Fees of Rs. 70,000.00 paid to Statutory Auditor U/S 40(a)(ia) of the Act. Sir in this connection we would like to bring to your kind consideration that the amount of audit fees is already disallowed at the time of filing of return of income. But the learned....
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.... 80P(2)(a)(i) of the Act to income earned from its regular members who have full voting and equal dividend rights on the principle of mutuality. The CIT(A) observed that the Hon'ble Supreme Court judgment dated 30.7.2018 in Civil Appeal No. 3327 of 2007 in Commissioner of Customs v. Dilip Kumar & Co. & Ors. (SC)(Constitution Bench) while overruling the 3 member Bench of Apex Court in the case of Sun Exports Corporation held that burden of proving applicability would be on the assessee to show that his case comes within the parameters of exemption clause or notification. When there is ambiguity, it must be interpreted in favour of revenue. He therefore held that income earned from persons other than its regular members would not be eligible for deduction u/s. 80P(2)(a) of the Act would be taxable as income and allowed as business expenditure relying on the judgment of Hon'ble Supreme Court of India in the case of Citizen Co-Op. Credit Society Ltd., Vs ACIT (supra). Therefore the AO was directed accordingly. 5. After hearing both the parties, we are of the opinion that similar issue came up for consideration before this Tribunal in the case of 6. The CIT(A) observe that the....
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....he interest received from the members for providing credit facilities to them. What is sought to be taxed under s. 56 of the Act is the interest income arising on the surplus invested in short-term deposits and securities which surplus was not required for business purposes. Assessee(s) markets the produce of its members whose sale proceeds at times were retained by it. In this case, we are concerned with the tax treatment of such amount. Since the fund created by such retention was not required immediately for business purposes, it was invested in specified securities. The question, before us, is-whether interest on such deposits/securities, which strictly speaking accrues to the members' account, could be taxed as business income under s. 28 of the Act? In our view, such interest income would come in the category of "income from other sources", hence, such interest income would be taxable under s. 56 of the Act, as rightly held by the AO. In this connection, we may analyze s. 80P of the Act. This section comes in Chapter VI-A, which, in turn, deals with "Deductions in respect of certain incomes". The headnote to s. 80P indicates that the said section deals with deductions in ....
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....cumstances of this case, we are of the view that the AO was right in taxing the interest income, indicated above, under s. 56 of the Act." 6. There is one judgment of Hon'ble Karnataka High Court rendered in the case of Tumkur Merchants Souhadra Credit Cooperative Ltd. Vs. ITO (Supra) in which this judgment of Hon'ble apex court rendered in the case of Totgars Co - Operative Sale Society Limited vs. ITO (Supra) was considered but still, the issue was decided in favour of the assessee because in that case, money used to earn bank interest was out of own funds and not of out of liability. To examine the applicability of these two judgments, the facts are to be examined as to whether in the present case, the money advanced to earn interest income from various banks is out of liability or own funds of the assessee because if such advances are out of liability, then this judgment of Hon'ble apex court rendered in the case of Totgars Co-Operative Sale Society Limited vs. ITO (Supra) will be applicable and the assessee will not be entitled to deduction u/s. 80P with regard to interest from banks but if such advances are not out of liability but are out of own funds of the as....