TaxTMI 
TaxTMI 
2017 (5) TMI 1770
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.....2017 for the Assessment Year 2012-13, is not maintainable in law and liable to be set aside. 3. The assessee is a primary agriculture society and claimed the exemption under Section 80P(2)(a)(i) of the Income Tax Act, 1961 (in short 'the Act') in respect of the income in which includes interest on Fixed Deposits. The Assessing Officer denied the claim of the assessee on the ground that in view of the decision of the Hon'ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. Vs. ITO 188 Taxmann 282 (SC) and held that the interest income would not qualify for exemption under Section 80P(2)(a)(i) of the Act. The CIT (Appeals) has confirmed the action of the Assessing Officer on similar reasoning. 4. I have....
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.... Tumkur Merchants Souharda Credit Co-operative Ltd. Vs. ITO (supra) and again in the case of M/s. Guttigedarara Co-operative Society Ltd. Vs. ITO (supra). The Hon'ble High Court has understood the decision of Hon'ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. Vs. ITO (supra) and held that when the society has surplus funds which were made fixed deposit in the bank to earn interest, the same is eligible for deduction under Section 80P of the Act. In the case of M/s. Guttigedarara Co-operative Society Ltd. Vs. ITO (supra), the Hon'ble High Court has again considered this issue in paras 7 to 12 as under : "7. From the aforesaid facts and rival contentions, the undisputed facts which emerge are, certain ....
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....ng of the word 'attributable' as supposed to derive from its use in various other provisions of the statute in the case of Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 (at page 93) as under:- ' As regards the aspect emerging from the expression "attributable to" occurring in the phrase "profits and gains attributable to the business of" the specified industry (here generation and distribution of electricity) on which the learned Solicitor-General relied, it will be pertinent to observe that the legislature has deliberately used the expression "attributable to" and not the expression "derived from". It cannot be disputed that the expression "attributable to" is certainly wider in import than the expressio....
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....to the members, the society cannot keep the said amount idle. If they deposit this amount in bank so as to earn interest, the said interest income is attributable to the profits and gains of the business of providing credit facilities to its members only. The 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 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. 11. In this context when we look at the judgment of the Apex Court in Totgars Co-operative Sale Society's....
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....its members, as there were no takers. Therefore they had deposited the money in a bank so as to earn interest. The said interest income is attributable to carrying on the business of banking and therefore it is liable to be deducted in terms of Section 80P(1) of the Act. In fact similar view is taken by the Andhra Pradesh High Court in the case of CIT v. Andhra Pradesh State Co-operative Bank Ltd. [2011] 336 ITR 516/200 Taxman 220/12 taxmann.com 66." Thus it is clear that when the amount which was deposited in the bank was not an amount due to members and it was not the liability of the society to the members then the interest earned from the deposits in the bank was held to be eligible for deduction under Section 80P (1) as well as 80P(....