TaxTMI 
TaxTMI 
2026 (9) TMI 1252
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....of misappropriation of funds to the tune of about Rs. 30,60,000/-, in respect of which complaints and an FIR came to be lodged. It is further submitted that the official who was thereafter assigned the responsibility of managing the day-to-day affairs and statutory compliances of the society passed away on 19/04/2021. Further, the management of the society underwent successive changes during the period 2019 to 2026, with none of the incumbent office-bearers or the in-charge Chief Executive Officers being made aware of the pendency of the assessment and appellate proceedings. It is submitted that all notices, intimations and orders, including the impugned order, were served only on an e-mail ID which had been created and was solely accessed by the society's erstwhile tax advisor, without the knowledge of the Board of Management or its officials. It has further been submitted that it was only upon the election of the present President on 07/01/2026 that the pendency of the appeal came to light, pursuant to which the present Chartered Accountant was engaged under a power of attorney to file and prosecute the present appeal. Thus, the assessee has sought the condonation of delay in fil....
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....ossly erred in confirming the denial of benefit of deduction under section 80P(2)(a)(i) towards the interest earned on short term deposits in banks were only investment in the course of activity of providing credit facility to members and that the same cannot be considered as investment made for the purpose of earning interest income and consequently passed a perverse order. 4.On the facts and circumstances of the appellant case and in law the Ld.AO and the CIT(A) grossly erred in treating the interest income of Rs. 29,08,301 earned from banks on short term deposits to comply with statutory compliance as income from other sources. The investments being made in the regular course of business and in compliance with statutory to be treated as income from business and consequently deduction under section 80P, which otherwise is held allowable to the appellant ought to have been extended to this interest income as well as per law. 5.On the facts and circumstances of the appellant case, the learned authorities ought to have analysed and assessed the word attributable used in section 80P as opposed the word derived from, the word attributable to, being of wider import, w....
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....ve Societies there under requiring credit cooperative societies to maintain not less than 3 percent of the deposits received from members in savings bank account and not less than 10 percent of such deposits in banks and accordingly, ought to have held that the interest received by the appellant aggregating to Rs. 29,08,301 on deposits with co-operative banks and scheduled banks made incompliance with statutory provisions to enable it to carry on business constituted its income from the business of providing credit facilities to the members and therefore, eligible for deduction under section 80-P(2)(a)(i) of the Income Tax Act 1961. 10.On facts and circumstances of the Appellants case, the learned assessing officer failed to appreciate that the facts of the case of the appellant were not in perimetria with those in Totagars Co Operative Society IN ITA No.100066/2016 dt 16/6/2017 and Mavilayi services Coop Bank Ltd & Ors V/s CIT Civil Appeal No.7343-7350 of 2019(Supreme Court) and, therefore, ratio was not applicable to the case of the appellant. 11.On facts and circumstances of the Appellants case, the learned assessing Officer erred in not allowing deduction ....
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....il. Though the assessee carried the matter in appeal, the learned CIT(A), vide impugned order, dismissed the appeal solely for non-prosecution, without rendering any finding on the grounds raised on merits. Being aggrieved, the assessee is in appeal before us. 8. We have considered the submissions and perused the material available on record. It is undisputed that the assessee is a co-operative credit society registered under the Karnataka Co-Operative Societies Act, 1959, and is engaged solely in providing credit facilities to its members. It is also undisputed that the interest income of Rs. 29,08,301/- represents interest earned on deposits maintained with Co-operative Banks and Scheduled Banks out of its funds not immediately required for lending to its members. 9. We find that while deciding a similar issue the Hon'ble Jurisdictional High Court in Tumkur Merchants Souharda Credit Co-operative Ltd. Vs. ITO, Ward-V, Tumkur, reported in (2015) 55 taxmann.com 447 (Kar), after considering the decision of the Hon'ble Supreme Court in Totgar's Co-operative Sale Society Ltd vs ITO., reported in [2010] 322 ITR 283 (SC), held that the interest earned by the Co-operative Society, w....
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....ibution of electricity) on which the learned Solicitor-General relied, it will be pertinent to observe that the legislature, has deliberately used the expression "attributable to" and not the expression "derived from". It cannot be disputed that the expression "attributable to" is certainly wider in import than the expression "derived from". Had the expression "derived from" been used, it could have with some force been contended that a balancing charge arising from the sale of old machinery and buildings cannot be regarded as profits and gains derived from the conduct of the business of generation and distribution 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 section-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 ....
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....the Act. Further they made it clear that they are confining the said judgment to the facts of that case. Therefore it is clear, Supreme Court was not laying down any law. 10. In the instant case, the amount which was invested in banks to earn interest was not an amount due to any members. It was not the liability. It was not shown as liability in their account. In fact this amount which is in the nature of profits and gains, was not immediately required by the assessee for lending money to the members, as there were no takers. Therefore they had deposited the money in a bank so as to earn interest. The said interest income is attributable 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 CIT v. Andhra Pradesh State co-operative Bank Ltd., [2011] 200 Taxman 220/12 taxmann.com 66. 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 ....