TaxTMI 
TaxTMI 
2025 (3) TMI 295
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....CIT(A) erred in restricting the deduction only up to the amount of interest earned on the amount reserved by the assessee i.e. 25% of profit transferred to reserves. 3. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in directing to allow expenditure only up to the amount of interest income which is not treated as business income. 4. That on the facts and circumstances of the case and in law, The Ld. CIT (A) erred in predominantly upholding the action of Ld. AO in determining the total income of the appellant at Rs. 23,92,976/-as against the returned income of Rs. Nil thereby making addition of Rs. 23,92,976/-. 5. That on the facts and circumstances of the case and in law, The Ld. CIT(A) erred in predominantly upholding the action of Ld. AO in making addition of Rs. 23,92,976/- to the income of the appellant. 6. That on the facts and circumstances of the case and in law, The Ld. CIT(A) erred in confirming the action of Ld. AO in treating the interest received from bank as Income From Other Sources and denying the benefit of deduction under section 80P of the Act 7. That on the facts and circumstances of the case and in law, The Ld. CIT(A) ....
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....3) rws 144B of the act. d. Allow the claim of the appellant." 3. The assessee has raised as many as 15 grounds of appeal which are repetitive in nature and not inconsonance with the Income Tax Tribunal Rules. However the sole grievance is that the Ld. CIT(A) erred in partly sustaining the addition made by the Ld. A.O denying the claim of deduction u/s 82 of the Act at Rs. 23,92,976/-. 4. The facts of the case in brief are that the assessee is a cooperative society engaged in providing credit facilities to its members and is eligible for deduction u/s 80P(a)(i) of the Act. The case selected for scrutiny and during the course of proceedings it was observed by the Ld.A.O that the assessee earned interest income of Rs. 23,92,976/- from the investment of surplus funds with statutory banks. The Ld. A.O specifically observed that the investment of the assessee society with Bank of India at Rs. 4,87,30,886/- fetched interest income of Rs. 23,92,976/-. The Ld. A.O passed the assessment order relying on the decision of Hon'ble Supreme Court in case of Totgar Cooperative Sale Society 322 ITR 283, State Bank of India (2016) 72 Taxman (Gujarat) and others (as referred in the assessment orde....
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....n (2), there shall 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 co-operative society engaged in- (i) carrying on the business of banking or providing credit facilities to its members, or (ii) to (vii) **** the whole of the amount of profits and gains of business attributable to any one or more of such activities." 9. 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. 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 obs....
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....dgment of the Apex Court in Totgars Co-operative Sale Society's case (supra), 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 hold the assessing officer was right in taxing the interest income indicated above under Section 56 of the Act. Further they made it clear that they are confining the said judgment to the facts of that case. Therefore it is clear Supre....
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....the interest income, which has not been treated as a business income, in view of the discussion herein above Both the grounds of the assessee are allowed in terms indicted herein above. Appeal of the assessee is allowed. Following the decision of the jurisdictional Tribunal (supra), I direct the AO to 1. allow deduction on the interest earned out of the amount reserved by the assessee ie 25% of profit transferred to reserves. 2. allow expenditure against interest income which is not treated as business income. The grounds of appeal 1 to 8 are partly allowed." 9. On going through the above finding of Ld. CIT(A) which has been given after following the decision of the jurisdictional Tribunal in the case of the assessee's sister organization i.e M.P Police Sakha Sahakari Vs ITO Ward 4(5), Indore ITA No.649/Ind/2018 dated 17.12.2019 find that CIT(A) has rightly given the part relief to the assessee. So far as the submissions made by the assessee. I find that the same have no merits because in the judgment of Hon'ble Apex Court in case of CIT vs. Nawanshahar Central Cooperative Bank Ltd (supra) the assessee was a cooperative bank having banking licensing whereas in the instant ....