TaxTMI 
TaxTMI 
2023 (9) TMI 828
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....e sake of brevity grounds of A.Y. 2014-15 are extracted) inter-alia that :- "1. On the facts of the case and in law, the learned CIT (Appeals), NFAC, Delhi has erred in confirming the addition of Rs. 2,30,64,636/- made by the Assessing Officer by denial of admissible 100% deduction u/s 80-P(2)(a)(i) and u/s 80-P(2)(d) of the Income Tax Act for its Business Income and also Interest Income earned by appellant Co- operative Credit Society on Investments made in Fixed Deposits with Co- operative Banks as the Operational Income from its exclusive business activity of Providing Credit Facilities to its Members only, in accordance with the provisions of Maharashtra State Co-operative Societies Act, 1960 and Rules made thereunder as well as its Bye-Laws. 2. On the facts of the case and in law, the learned CIT (Appeals) has failed to consider that the ground of appeal raised by the Appellant Co- operative Credit Society that the aforesaid Interest Income of Rs. 10,22,81,916/- has been assessed under the head Income from Other Sources by Assessing Officer in incorrect, arbitrary & unlawful manner. 3. The learned CIT (Appeals) has also erred in not considering the o....
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....,60,266/- & Rs. 8,36,53,333/- for A.Y. 2014-15, 2018-19 & 2017-18 respectively to the total income of the assessee by framing the assessment under section 143(3) of the Income Tax Act, 1961 (for short 'the Act'). 4. The assessee carried the matter before the Ld. CIT(A) by way of filing appeals who has confirmed the disallowance by dismissing the appeals. Feeling aggrieved with the impugned order passed by the Ld. CIT(A) the assessee has come up before the Tribunal by way of filing the present appeals. 5. We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto. 6. Undisputedly the assessee society is wholly and exclusively engaged in providing credit facilities to members of the society and business is also being transacted with the members only. It is also not in dispute that the assessee society is classified as resource society under section 12 of MCS Act and is not a primary co- operative bank. It is also not in dispute that assessee society parked its surplus funds with....
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....(a)(i) of the Act. 10. The Ld. A.R. for the assessee further contended that the average interest income earned by the assessee society is lesser than the cost of funds involved in investment with Central Bank of India, IDBI Bank and Axis Bank as per detail given in the table below: Loss on Investments with Bank's FDRs of other than Co-operative Banks Received Interest Fin. Year 2013-14 (AY 2014-15) Name of Bank Interest Recd. Rs. Cost of Investment In Bank FDRs Rs. Loss Rs. Central Bank of India 71,12,418 80,51,579 9,39,161 IDBI Bank 2,43,110 2,78,725 35,615 Axis Bank 57,383 79,920 22,637 Total Rs. 74,12,811 84,10,224 9,97,413 Received Interest Fin. Year 2016-17 (AY 2017-18) Name of Bank Interest Recd. Rs. Cost of Investment In Bank FDRs Rs. Loss Rs. Central Bank of India 1,93,12,684 2,54,68,380 61,55,696 IDBI Bank 2,92,802 3,79,399 86,597 Axis Bank 78,737 97,139 18,402 Total Rs. 1,96,84,223 2,59,44,918 62,60,695 ....
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....er the head "Profits and Gains of Business and Profession". 3. The matter has been examined in light of the judicial decisions on this issue. In the case of ClT Vs Nawanshahar Central Cooperative Bank Ltd. [2007] 160 TAXMAN 48(SC), the Apex Court held that the investments made by a banking concern are part of the business of banking. Therefore, the income arising from such investments is attributable to the business of banking falling under the head "Profits and Gains of Business and Profession". 3.2 Even though the above mentioned decision was in the context of co- operative societies / Banks claiming deduction under section 80P(2)(a)(i) of the Act, the principle is equally applicable to all banks/commercial banks, to which Banking Regulation Act, 1949 applies. 4. In the light of the Supreme Court's decision in the matter, the issue is well settled. Accordingly, the Board has decided that no appeals may henceforth be filed on this ground by the officers of the Department and appeals already filed, if any, on this ground before Courts/Tribunals may be withdrawn / not pressed upon. This may be brought to the notice of all concerned. Sd/- ....
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....1 to 5.3 of its order. The operative portion of the order of Ld. CIT(A) is contained in para no. 5.3 of its order and the same is reproduced below-.- "5.3 From the facts of the instant case, it is quite clear that the appellant has limited himself to his own members. The appellant has not provided banking facilities either to the general public at large or even to the members of the society. Even the bye laws of the appellant does not provide for banking activities. Therefore facts of this case are not identical with any of the case laws relied upon by the AO. On the other hand the facts of instant case are almost similar to the decisions of the ITAT Nagpur & Panaji Benches in the cases of (i) ACIT Vs. Buldana Urban Coop Credit Soc. Ltd 32 Taxman 69 ITAT Nagpur and (II) DCIT Vs. Jayalaxnmi Mahila Vividodeshagala Souharda Sahakart, Ltd. by ITA T Panaji Bench 23 Taxman 313 where the activities of the assessee were limited to the members of a specific group and the area of operations was also limited to the acceptance of deposits of members and providing credit facilities to only members, which have been held as not falling under banking activities as defined in the Banking R....
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....ry provisions of Maharashtra Co-operative Society Act and explained the total cost of investment, average rate of interest earned and loss on deposits with nationalized/commercial banks in tabulated form as under: 17. Aforesaid factual position as to deposit of funds by the assessee society with the nationalized/commercial banks, earning interest thereon with total cost of investment shows that the investment made by the assessee society was in compliance to the mandatory provisions of Maharashtra Co-operative Society Act thus integral part of its business and profession. Furthermore, when the assessee is wholly and exclusively doing its business for its members, the earning of interest on FDs with the banks is incidental to the assessee society's business of accepting the deposit and provision of credit facilities from/to its members. Hence, the interest income has rightly been treated as business income by the assessee society and assessed to tax under the head "profit and gains of business". We are of the further view that in the present scenario parking of funds with nationalized and commercial banks is safe and easy for ease of business of the assessee society because many ....