THE RIFLE FACTORY CO-OPERATIVE SOCIETY LIMITED,KOLKATA vs. A.C.I.T., CIRCLE - 49(1), KOLKATA, KOLKATA

Though the assessee has raised as many as 14 grounds of appeal, but the only grievance is that the ld. CIT(Appeals) erred in not treating the interest income of Rs.9,06,730/- received from Fixed Deposit as part of the business activity carried out by the assessee.

3. Ld. Counsel for the assessee vehemently argued referring to the written submissions filed before the lower authorities and before us and also referred to the plethora of decisions and referred to the paper book containing 60 pages filed on 05.04.2023.

On the other hand, ld. Departmental Representative vehemently argued supporting the order of lower authorities.

We have heard the rival contentions and perused the relevant record placed before us. We notice that the assessee is a Cooperative Society engaged in the business of providing credit facilities to its members. Nil income declared in the return filed for A.Y. 2015-16 on 30.09.2015. During the course of assessment proceedings, assessee carried out the matter after the case being selected for scrutiny under CASS followed by serving of notices under sections 143(2) and 142(1) of the Act. The ld. Assessing Officer noticed that the assessee has received interest income of 2 Assessment Year: 2015-2016 The Rifle Factory Cooperative Society Limited Rs.9,06,730/- from Fixed Deposit held with Cooperative Bank. We notice that the assessee is a Cooperative Society and is governed by West Bengal Cooperative Societies Act, 2006 and under Chapter (VII) of this Act under the heading “Properties and Funds of Cooperative Societies. Sections 80, 81 & 82 read as under:- “80. There shall be a fund to be called the Cooperative Education Fund to be administered by such authority and in such manner as may be prescribed. Every Cooperative Society shall, after the close of each Cooperative Year contribute to the Cooperative Education Fund such portion of its net profit in any Cooperative year as may be prescribed.

Every Cooperative Society shall create a bad debt fund by transferring of not less than fifteen per cent, of its net profit in a Cooperative year and shall utilize it in any business if it has no outside liability in the form of bad debt certified by the audit officer or in such other manner as may be prescribed.

Every Cooperative Society shall transfer, in every cooperative year, not less than ten per cent, of its net profit to a reserve fund: Provided that the Reserve Fund shall be invested in a Government Saving Bank including Natinalised Bank, Cooperative Banks and Regional Rural Banks or in any security specified in section 20 of the Indian Trust Act, 1882 or in the business of the Cooperative Society in such manner as may be prescribed. 6. From perusal of the above sections of West Bengal Cooperative Societies Act, we notice that the assessee-society is Assessment Year: 2015-2016 The Rifle Factory Cooperative Society Limited statutorily required to transfer not less than 10% of its net profit to a Reserve Fund and the same shall be invested in a Government Saving Bank including Nationalized Bank, Cooperative Banks and Regional Rural Banks or in any security specified in Section 20 of the Indian Trust Act, 1882 or in the business of the Cooperative Society in such manner as may be prescribed.