TaxTMI 
TaxTMI 
2016 (5) TMI 1620
X X X X Extracts X X X X
X X X X Extracts X X X X
..../-made by the Assessing Office being interest income earned by the assessee on investment of surplus funds as "income from other sources" u/s.56 of the IT Act,1961, not deductible u/s.80P (2) (a)(i) of the I.T. Act ? 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has rightly relied upon the decision of Hon'ble ITAT in the case of M/s. Gopalkrishna Urban Credit Co-op Society Maryadit, Nagpur, ITA No.68/Nag/2012/2008-09 dated 01.02.2013 as the said decision is on a entirely different issue and the issue relating to exemption u/s. 80P(2)(a)(i) on interest earned on investment of surplus fund by the society on Bank FDRs was not an issue in the said case ? 3. Whether on the facts and circumstances of the c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....perative Society Ltd. (supra), in which one of us, learned Judicial Member, was a party. The concluding portion of the Tribunal's decision is as under: "4. With this brief background, we have heard both the sides. It was explained that the Co-operative Society is maintaining "operations funds" and to meet any eventuality towards re-payment of deposit, the Co-operative Society is maintaining some liquidated funds as a short term deposit with the banks. This issue was thoroughly discussed by the ITAT "B" Bench Ahmedabad in the case of The Income Tax Officer vs. M/s.Jafari Momin Vikas Co-op.Credit Society Ltd. bearing ITA No.1491/Ahd/2012 (for A.Y.2009-10) and CO No.138/Ahd/2012 (by Assessee) order dated 31/10/2012. The relevant portion is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(s) that it had invested the funds on short term basis as the funds were not required immediately for business purposes and, consequently, such act of investment constituted a business activity by a prudent businessman; therefore, such interest income was liable to be taxed under section 28 and not under section 56 of the Act and, consequently, the assessee(s) was entitled to deduction under section 80P(2)(a)(i) of the Act. The argument was rejected by the assessing officer as also by the Tribunal and the High Court, hence, these civil appeals have been filed by the assessee(s). 19.2. From the above, it emerges that (a) that assessee (issue before the Supreme Court) had admitted before the AO that it had invested surplus funds, which ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....idering the above facts, we find that there is force in the argument of the assessee that the assessee not a co-operative Bank, but its nature of business was coupled with banking with its members, as it accepts deposits from and lends the same to its members. To meet any eventuality, the assessee was required to maintain some liquid funds. That was why, it was submitted by the assessee that it had invested in shortterm deposits. Furthermore, the assessee had maintained overdraft facility with Dena Bank and the balance as at 31.3.2009 was Rs.13,69,955/- [source: Balance Sheet of the assessee available on record]. 19.6. In overall consideration of all the aspects, we are of the considered view that the ratio laid down by the Hon'ble Supre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e the orders of authorities below and decide the issue in favour of the assessee." 3. We further find that batch of similar appeals decided by the ITAT in favour of the assessee has also been considered by the Jurisdictional High Court. The Hon'ble Jurisdictional High Court has duly affirmed of this Tribunal. Accordingly, in the background aforesaid discussion, we do not infirmity in the order of Ld. CIT(A). In the result, these issues decided in favour of the assessee. 4. Apropos Ground No.4 - Upon hearing both the counsel and perusing the records, we find that issue is covered in favour of the assessee by the decision of ITAT, Chandigarh Bench in the case of H.P. State Agricultural & Rural Development Bank Ltd., 100 ITD 0479. The ITA....