TaxTMI 
TaxTMI 
2024 (11) TMI 75
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....tain the disallowance of the deduction claimed u/s80P(2)(a)(i) of Rs. 8,97,362/- being income from interest earned on bank deposits treated the income from banking activities as income from other source instead of its true nature of business income. 3. The appellant reserves the right to addition, after or omit all or any of the grounds of appeal in the interest of justice." 2. Shri Yogesh Sethia, Ld. Authorized Representative (for short 'AR') for the assessee society at the threshold submitted that the present appeal involves a delay of 12 days. Elaborating upon the reasons leading to the impugned delay, the Ld. AR had taken us through an application dated 23.10.2024 and "affidavit" dated 21.10.2024 filed by the assessee. 3. We have heard the Ld. Authorized representatives of both the parties on the issue of the delay involved in filing the present appeal. As the delay involved is not inordinate and there are justifiable reasons which had led to the same, therefore, we condone the same. 4. Succinctly stated, the assessee society had filed its return of income for A.Y.2018-19, declaring an income of Rs. Nil (after claiming deduction u/s. 80P(2)(a)(i) of Rs. 5,75,8....
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....o the words the whole of the amount of profits and gains of business' attributable to one of the activities specified in section 80P(2)(a). The words the whole of the amount of profits and gains of business emphasize that the income. in respect of which deduction is sought. must constitute the operational income and not the other income which accrues to the society. In the instant case, the evidence showed that the assessee-society earned interest on funds which were not required for business purposes at the given point of time. Therefore. on the facts and circumstances of the instant case. such interest income fell in the category of 'other income' which had rightly been taxed by the department under section 56......" The Hon'ble Supreme Court has clearly held in the above case that interest income fell in the category of other income which had been rightly taxed by the department under section 56. Therefore the contention of the appellant is not found tenable. I further find that facts of the-Ease laws relied upon by the appellant are distinguishable on facts and hence are not applicable to the case of the appellant. Therefore, contention raised by the appell....
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....ct, had been deliberated upon and is squarely covered by the order passed by the ITAT, Raipur in the case of Gramin Sewa Sahakari Samiti Maryadit Vs. ITO-1(3), Raipur, 2022(3) TMI 75-ITAT Raipur. The Tribunal after exhaustive deliberation on the aforesaid issue had held as under: "13. We shall first advert to the assessee's grievance that the lower authorities had erred in declining its claim for deduction u/s. 80P(2)(a)(i) of the Act, i.e, as regards the interest income that was earned on the surplus funds which were deposited by it with Jila Sahakari Kendriya Bank, i.e, a co-operative bank. After deliberating at length on the issue in hand, we find that the aforesaid claim of the assessee hinges around the aspect that as to whether or not the interest income earned by it on its surplus funds which were parked as deposits in the normal course of its business of providing credit facilities to its members, i.e., at the point of time when there were no takers for the said funds, was eligible for deduction u/s. 80P(2)(a)(i) of the Act. We have given a thoughtful consideration to the contentions advanced by the Ld. Authorized representatives for both the parties. Before procee....
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.... manures and pesticides and sale of controlled items under Public Distribution System (PDS), however, it is neither the case of the revenue nor a fact discernible from the record that the funds deposited by the assessee-society with the bank, viz. Jila Sahakari Kendriya Bank (supra) were the amounts that were payable by the society to its members, and the same having being retained were for the time being invested as a short-term deposit/security with the bank. If that would have been so, then, the interest income earned on such short-term deposit/security with the bank would not have been eligible for deduction u/s. 80P(2)(a)(i) of the Act. But then, as the amount deposited by the assessee-society with the bank, viz. Jila Sahakari Kendriya Bank (supra) was in the nature of simpliciter surplus or idle funds of the assessee society, for which there were no takers for the time being in course of its business of providing credit facilities to its members, therefore, depositing of the same by way of short-term deposits with the aforesaid bank, as stated by the ld. A.R, and rightly so, would clearly be inextricably interlinked, or in fact interwoven with its aforesaid primary business a....
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....be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. (2) The sums referred to in sub-section (1) shall be the following, namely:- (a) in the case of a co-operative society engaged in- (i) carrying on the business of banking or providing credit facilities to its members, or (ii) xxx (iii) xxx (iv) xxx (v) xxx (vi) xxx (vii) xxx the whole of the amount of profits and gains of business attributable to any one or more of such activities." 7. The word '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. VS. COMMISSIONER OF INCOME TAX, GUJARAT-II reported in ITR Vol.113 (1978) Page 842 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"....
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....y and is liable to be deducted from the gross total income under section 80P of the Act. 9. In this context when we look at the judgment of the Apex Court in the case of M/s. Totgars Co-operative Sale Society Ltd, on which reliance is placed, the Supreme Court was dealing with a case where the assessee co-operative society, apart from providing credit facilities to the members, was also in the business of marketing of agricultural produce grown by its members. The sale consideration received from marketing agricultural produce of its members was retained in many cases. The said retained amount which was payable to its members from whom produce was bought, was invested in a short-term deposit/security. Such an amount which was retained by the assessee-society was a liability and it was shown in the balance sheet on the liability side. Therefore, to that extent, such interest income cannot be said to be attributable either to the activity mentioned in section 80P(2)(a)(i) of the Act or under section 80P(2)(a)(iii) of the Act. Therefore, in the facts of the said case, the Apex Court held the assessing Officer was right in taxing the interest income indicated above under secti....