TaxTMI 
TaxTMI 
TaxTMI 
2024 (10) TMI 1269
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....3(3) r.w.s. 143(3A & 3B) of the Act for assessment year 2018-19 ['AY' hereinafter]. 2. The case was called twice; none appeared at the behest of the appellant and on the primary briefing from the Ld. DR, we deem it fit to invoke rule 24 of ITAT-rules, 1963 and proceed to adjudicate the limited issue ex-parte. Advanced accordingly. 3. At the outset, after vouching sufficiency of reasons beyond undeliberate delay of 90 days occurred in instituting the present appeal, in the larger interest of justice and after placing reliance on 'Vijay Vishin Meghani Vs. DCIT & Anr' reported 398 ITR 250 (Bom) and 'Collector, Land Acquisition, Anantnag and Anr. Vs Ms Katiji and Others' [167 ITR 5 (SC), we deem it fit to condone the same and advanced accordi....
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....n present belated appeal filed on 20/06/2024 challenging the balance disallowance of Rs.5,36,732/- retained by the Ld. AO after giving effect to the direction. 5. The appellant's submission suggests impugned order is challenged on threefold contentions viz; (i) in view of the restriction placed by section 251(1)(a) of the Act the Ld. NFAC had no right to issue any direction (ii) interest accrued/earned on fixed/term deposits investment held with cooperative & other banks is solely attributable to the principal business of the appellant. The theory of surplus fund does have no application because investing liquid funds with other banks for generating income was to service interest liability on deposits accepted from its member and that bein....
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....or deduction therein. Insofar as the deduction u/s 80P(2)(a)(i) is concerned the theory of surplus funds does not apply to credit cooperative society for the reasons that, (i) credit co-operative society owning to regulatory supervision operates with liquid funds which cannot be characterised as other than business funds and (ii) such liquid funds for the purpose of generation of income are invested into liquid assets like fixed deposits / term deposits, etc. The interest generated from such liquid investment partakes the character of business income being earned while carrying on the business of providing credit facilities to its members. The surplus fund theory as applied in 'Totagars Co-op. Sale Society' and as binding precedents shall a....
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....vities indicated in subclauses (i) to (vii) of clause (a) of sub- section (2) of section 80P or not. 9. While petitioners place strong reliance upon a decision of the Division Bench of this court in CIT v. Andhra Pradesh State Co-operative Bank Ltd. [2011] 12 taxmann.com 66/200 Taxman 200/336 ITR 516, the Revenue places strong reliance upon the decision of the Supreme Court in Totgar's Co-operative Sale Society Ltd. v. ITO [2010] 188 Taxman 282/322 ITR 283. 34. The case before the Supreme Court in Totgar's Co-operative Sale Society Ltd.'s case (supra) was in respect of a co-operative credit society, which was also marketing the agricultural produce of its members. As seen from the facts disclosed in the decision of the Karna....
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.... and warehouses, the respondents would have granted the benefit of deduction under clause (d) or (e), as the case may be. 36. The original source of the investments made by the petitioners in nationalised banks is admittedly the income that the petitioners derived from the activities listed in sub-clauses (i) to (vii) of clause (a). The character of such income may not be lost, especially when the statute uses the expression "attributable to" and not any one of the two expressions, namely, "derived from" or "directly attributable to". 37. Therefore, we are of the considered view that the petitioners are entitled to succeed. Hence, the writ petitions are allowed, and the order of the Assessing Officer, in so far as it relates to treating....