AI Drafter 
TaxTMI 
TaxTMI 
2025 (8) TMI 772
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....nce of Deduction of interest income of Rs.2,83,02,934/- under section 80P(2)(a)(i) by relying on the assessee's own case for AY 2006-07? 2. Whether on the facts and in the circumstances of case, Learned Tribunal was justified in relying on the decision of Totgars' Cooperative Sale Society Ltd., v. ITO, [322 ITR 283 (SC)] as the decision in Totgars' Cooperative Sale Society Ltd. (supra) rendered by the Hon'ble Supreme Court is clearly distinguishable on facts? 3. Whether the Learned Tribunal was justified in rejecting the alternative submission of the petitioner that the attributable cost of funds that went towards making deposits with the scheduled banks was required to be deducted from the eligible business and consequently, increased amount of profit of eligible business will be allowed as deduction under section 80(P)(2)(a)(i)? 4. Whether on the facts and in the circumstances of case, Learned Tribunal was justified by holding that the interest on personal loans amounting to Rs.21,98,448/- and interest on House Building Loan to staff to the tune of Rs.1,76,490/- could not be treated as income attributable to the banking business and as such, the same we....
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.... the profits and gains of business of providing credit facilities to its members. Further, the assessee contended that the society is not carrying on any separate business for earning such interest income and the income so derived is the amount of profits and gains attributable to the activities of carrying in the business of banking or providing credit facilities to its members by a cooperative society and the same is liable to be deducted from the gross total income under Section 80P of the Act. 6. The Assessing Officer who completed the assessment under Section 143(3) of the Act by order dated 30.3.2016, did not accept the submissions made by the assessee by referring to the decision of the Hon'ble Supreme Court in Totgars Cooperative Sales Society Ltd. vs. ITO, (2010) 188 Taxman 282 (SC). Apart from that, the assessee also contended that they are eligible for deduction under Section 80P in respect of the interest on personal loans amounting to Rs.21,98,448/- as well as interest on House Building Loan to staff to the tune of Rs.1,76,490/- and these should be treated as income attributable to the banking business carried on by the assessee. The Assessing Officer held neither o....
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....ndhra Pradesh as also a decision of this Court. In Guttigedarara Credit Cooperative Society Ltd. vs. Income-tax Officer, Ward 2(2), Mysore, [2015] 60 taxmann.com 215 (Karnataka), one of the substantial question of law framed for consideration was whether the Tribunal in the said case was correct in law in holding that interest earned on the deposits in banks by the appellant Cooperative Society therein does not qualify for deduction under section 80P(2)(a)(i) of the Act on the facts and circumstances of the said case. The Hon'ble Division Bench took note of the statutory provision namely, Section 80P(2)(a)(i) and interpreted the word 'attributable' as mentioned in the said statutory provision. To explain the meaning of the word 'attributable' reliance was placed on the decision of the Hon'ble Supreme Court in Cambay Electric Supply Industrial Co. Ltd. vs. CIT [1978] 113 ITR 84 [SC] and it was held as follows : "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,....
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....ested in a short term deposit/security. 12. The facts of the case of the assessee before us is entirely different as the amount which was deposited in the bank was not an amount due to the members and it was not the liability of the society to the members and, therefore, the interest earned from such deposits in the bank should be held to be eligible for deduction under section 80P(2)(a)(i) of the Act. Yet again in Tumkur Merchants Souharda Credit Cooperative Ltd. vs. Income-tax Officer Word- V, Tumkur, [2015] 55 taxmann.com 447 (Karnataka) identical issue was considered and it was held that where Cooperative Society was engaged in the business of providing credit facilities to its members, they deposited excess amount for short term in banks, interest earned was entitled to be deducted under section 80P of the Act. 13. In Vavveru Co-operative Rural Bank Ltd. vs. Chief Commissioner of Income Tax (2017) 88 taxmann.com 728 (Telangana and Andhra Pradesh), the Hon'ble Division Bench was considering a writ petition challenging order of assessment passed under Section 143(3) of the Act and the question arose whether the denial by the Assessing Officer of the benefit of deduction un....
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....nder section 80P(2)(a)(i). 14. Thus, the above decisions which have been referred to would clearly apply to the facts and circumstances of the assessee's case and this will lead to the irresistible conclusion that the Assessing Officer, the CIT(A) as well as the Tribunal erred in not granting the deduction as claimed by the assessee under section 80P(2)(a)(i) of the Act and also erred in following the decision in Totgars Cooperative Sales Society Ltd. (supra) which is not applicable to the facts and circumstances of the case. Accordingly, the substantial questions of law (1), (2) and (3) are answered in favour of the appellant/assessee. 15. Substantial question of law (4) has two components; one relating to interest on personal loan and the other interest on house building loan to staff. So far as the interest on house building loan to staff is concerned, we concur with the view taken by the Assessing Officer as confirmed by the CIT(A) as well as the Tribunal. Therefore, to that extent the substantial question of law has to be answered against the appellant/assessee. The other component which arises in substantial question (4) is with regard to the interest on personal loan g....