TaxTMI 
TaxTMI 
2023 (12) TMI 1455
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....on on 30-03-2013 declaring total income of Rs. ZERO. The AO while making assessment noted that the assessee cooperative society derives income from Business or Profession. The case of the assessee was selected for scrutiny assessment for which notice u/s 143(2) was issued. During the assessment proceeding the AO noted that the assessee is a cooperative society and is availing deduction u/s 80P.In the year under consideration the assessee has shown income from business of providing credit facilities to its members. The assesssee shows gross total income of Rs.11,47,419/-out of which it claimed deduction u/s 80P amounting to Rs.11,47,419/- and declared total income at Nil. The AO observed that as per the provisions of Section 80P(2)(a)(i) of the Act, deduction is available to a cooperative society engaged in carrying on the business of banking or providing credit facility to its members. Deduction is available of the amount of profit and gains of business attributable to any one or more of such activities. The AO further observed that the income is mainly from two sources, one is interest received on loan given to members from which income is Rs.14/-. Other source is interest receive....
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.... 4. The assessee is not carried out any other business activities, wherein the assessee is having credit balances of the members of such other activities. None of balances were shown in the form of liability in the balance sheet. 5. The issue is covered by decision of LD CIT(A) in Assessee's own case for the Assessment year 2008-2009 and 2009-2010 ( PB page No 47-43 and 54-56. In the said, the AO has disallowed Interest received form term deposits and considered as income from other Sources. The Ld CIT in the case of AY 2008-2009 ... para 4.3 ..page no 6 and 7 of order (PB .. Pg No 52 ) held that ..... " I have considered the AO's order and submission made by the AR. I find that the AO has treated the interest income form FDRs as income from other sources on the presumption that the applicant has idle funds which were invested in FDRs . However from the submission of appellant it is apparent that the deposits/ fund received from the members are kept as FDRs and overdraft limit has been taken against the FDRs and loan has been given out of the overdraft account. In these facts and circumstances, I am of the considered opinion that the interest income arisin....
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....a liability towards the members. Further, this interest income is earned from the savings bank which is maintained for day to day activity of the assessee society for providing credit facilities to its members. Therefore, following the order of the Hon'ble Karnataka High Court in the case of Guttigedarara Credit Co-operative Society Ltd. vs. ITO (supra), we hold that the said interest income earned by the assessee from savings bank account is eligible for deduction under section 80P(2)(a)(i) of the Act." 2. Pune Bench ITAT ITO Ward-1(4), Nashik Vs. Niphad Nagari Sahakari Patsanstha Ltd., Ugaon Road, Niphad, Nashik, ITA No. 1336/PN/2011, Asstt.Year : 2008-09 Hon' ble Court held as under ... Para No 11.3 page No 14 of the order, (PB .. Pg No 42) " In the instant case there is no dispute to the fact that the society is a credit cooperative society authorised by the registrar of cooperative societies for accepting deposits and lending money to its members as per license granted by the registrar of cooperative societies and the main object of the society is to provide credit facility to members who can be any person of the society. We find the Pune Be....
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....se of ITO,Ward 1(4), Nasik vs Niphad Nagari Sahakari Patsanstha Ltd (ITA No. 1336/PN/2011, A.Y. 2008-09 dated 31-07-2013 wherein it was held as under:- ''11.3 In the instant case there is no dispute to the fact that the society is a credit cooperative society authorised by the registrar of cooperative societies for accepting deposits and lending money to its members as per license granted by the registrar of cooperative societies and the main object of the society is to provide credit facility to members who can be any person of the society. We find the Pune Bench of the Tribunal in the case of Mahavir Nagari Sahakari Pat Sanstha Ltd. reported in 74 TTJ 793 (Pune) has held that the credit society which is carrying on the business of banking activity and providing credit facility to its members is eligible for deduction u/s.80P(2)(a)(i). In view of the above discussion and following the decisions of the Ahmedabad Bench of the Tribunal and Cochin Bench of the Tribunal which in turn have considered the decision of the Hon'ble Supreme Court in the case of Totagar's Cooperative Sale Society Ltd. (Supra) we find no infirmity in the order of the Ld.CIT(A). Accordingly, t....
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....e includes any income referred to in sub-section (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 a co-operative society engaged in- (i). carrying on the business of banking or providing credit facilities to its members, or (ii) to (iii)....................................................................." (Emphasis by underlining supplied by us) 10.3 On a perusal of the aforesaid statutory provision, we find that the same, contemplates, that the income of a co-operative society from its business of banking or providing credit facilities to its members is eligible for deduction u/s. 80P(2)(a)(i) of the Act. Our indulgence in the present appeal is confined to the limited aspect, i.e, as to whether or not the interest income earned by the assessee-society by depositing its surplus funds with a bank can be brought within the meaning of "income from carrying on the business of banking or providing credit facilities ....
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....a short-term deposit/security with the bank, then, the interest income therein earned to the said extent could not be said to be attributable to its activity of providing credit facilities to its members. As is discernible from the aforesaid judicial pronouncement of the Hon'ble Supreme Court, we find the Hon'ble Apex Court had clarified beyond doubt that they have confined the judgment to the facts of the case before them, and the same was not to be considered as laying down of any law. Be that as it may, the aforesaid judgment of the Hon'ble Supreme Court in the case of Totgars Co-operative Sale Society Ltd. (supra) had thereafter been considered by the Hon'ble High Court of Karnataka in the case of Tumkur Merchants Souharda Cooperative Ltd. (supra), wherein the Hon'ble High Court had after exhaustive deliberations held as under : '6. From the aforesaid facts and rival contentions, the undisputed facts which emerges is, the sum of Rs. 1,77,305/- represents the interest earned from short term deposits and from savings bank account. The assessee is a cooperative society providing credit facilities to its members. It is not carrying on any other busi....
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....ion of electricity. In this connection it may be pointed out that whenever the Legislature wanted to give a restricted meaning in the manner suggested by the learned Solicitor General it has used the expression "derived from", as for instance in s. 80J. In our view since the expression of wider import, namely, "attributable to" has been used, the Legislature intended to cover receipts from sources other than the actual conduct of the business of generation and distribution of electricity. 8. Therefore, the word "attributable to" is certainly wider in import than the expression "derived from". Whenever the legislature wanted to give a restricted meaning, they have used the expression "derived from". The expression "attributable to" being of wider import, the said expression is used by the legislature whenever they intended to gather receipts from sources other than the actual conduct of the business. A cooperative society which is carrying on the business providing credit facilities to its members, earns profit and gains of business by providing credit facilities to its members. The interest income so derived or the capital, if not immediately required to be lent to the mem....
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....to carrying on the business of banking and therefore, it is liable to be deducted in terms of section 80P(1) of the Act. In fact similar view is taken by the Andhra Pradesh High Court in the case of COMMISSIONER OF INCOME TAX III HYDERABAD v. ANDHRA PRADESH STATE COOPERATIVE BANK LTD. Reported in (2011) 200 TAXMAN 220/12. In that view of the matter, the order passed by the appellate authorities denying the benefit of deduction of the aforesaid amount is unsustainable in law. Accordingly, it is hereby set aside. The substantial question of law is answered in favour of the assessee and against the revenue. Hence, we pass the following order: Appeal is allowed. The impugned order is hereby set aside. Parties to bear their own cost.' 10.4 Recently even the honourable apex court on 20.04.2023 in the Civil Appeal NO . 8719/2022 in the case of The PR. Commissioner of Income Tax 17, Mumbai VERSUS M/S ANNASAHEB PATIL MATHADI KAMGAR SAHAKARI PATHPEDI LIMITED held that Apart from the fact that against the relied upon decision in the case of M/s. Quepem Urban Co-operative Credit Society Ltd.(supra),the Special Leave Petition has been dismissed, hav....