TaxTMI 
TaxTMI 
2017 (5) TMI 1770
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....e of the case, the order of the CIT (Appeals) dt.8.2.2017 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 ....
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....sidered by the Hon'ble jurisdictional High Court in the case of 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 fac....
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....#39;attributable' used in the said Section is of great importance. The Apex Court had an occasion to consider the meaning 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 expr....
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....ss by providing credit facilities to its members. The interest income so derived or the capital, if not immediately required to be lent 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....
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....bility in their account. In fact this amount which is in the nature of profits and gains, was not immediately required by the assessee for lending money to 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 liabilit....
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....rdingly under the act is correct thus the CIT (A) have to have been referent from confirming the assessment order. 3. On the facts in the of the circumstance case. The Learned CIT (A) have appreciated that the earned interest on the fixed deposit amount is not liable to be taxed under the act. Without appreciating the nature of the transaction of the appellant assessee and the fact of the case, the Authority levied the tax is against the law hence it is liable to be deleted. 4. On the facts in the of the circumstance case, the Learned CIT (A), without appreciating the provision U/S 80P(2)(a)(i) read with 80P(4)of the act and disallowed the claim of the appellant by CIT (A) thus the order of the CIT (A) is liabl....