ITO, WD-36(4), KOLKATA, KOLKATA vs. THE ELECTRO URBAN CO-OP CREDIT SOCIETY LTD., KOLKATA

This is an appeal filed by the revenue against the order of Ld. CIT(A)-10, Kolkata dated 10.11.2015 for AY 2012-13.

At the time of hearing, Ld. AR for the assessee submitted an application praying for adjournment of the appeal. After hearing the submission of the Ld. AR and also considering the adjournment application, we reject the adjournment application and the appeal is taken up for hearing. 3. The sole issue involved in this appeal of revenue is against the order of Ld. CIT(A) in holding that the interest income from nationalized banks was income from business and was eligible for deduction u/s. 80-P of the Income-tax Act, 1961 (hereinafter referred to as the “Act”). 4. Briefly stated facts are that the assessee is a primary employee co-operative credit society registered in 1911. The assessee has filed its return of income for the relevant assessment year under consideration on 28.09.2012 declaring a gross total income of Rs.3,79,82,041/- and after taking deduction of sec. 80P of the Act it has declared the total 2 The Electro Urban Co-op. Credit Society Ltd., AY 2012-13 income at Rs. Nil. The AO noted from the P&L Account of the assessee society that it has received interest on its investment from various banks at Rs.3,34,19,457/- and the same has been taken by the assessee under the head “Profit and Gains from business”. The AO issued show cause notice to the assessee to explain as to why income received on investment should not be treated as income from other sources and why it should not be added to its total income. In its reply, the assessee, inter alia, submitted that the ITAT, 3rd Member bench, Kolkata, in assessee’s own cases for AYs 1989-90 to 1992-93 has held that investments made by the assessee, was part of the normal business activities of the assessee and thus the interest earned from such investments would be eligible for deduction u/s. 80P of the Act. But the AO being dissatisfied with the reply of the assessee and, inter alia, relying on the decision of Hon’ble Supreme Court in the case of Totgar’s Co-operative Sale Society Ltd. Vs. ITO (2010) 188 Taxman 282 (SC) allowed the interest income derived by the co-operative society from its investments with other co-operative society amounting to Rs.90,21,660/- as deduction u/s. 80P(2)(d) of the Act and remaining interest income received of Rs.2,43,97,796/- was added to the total income of the assessee under the head “Income from Other Sources.” Aggrieved, assessee preferred an appeal before the Ld. CIT(A), who allowed the assessee’s grounds of appeal

In the result, appeal of revenue is dismissed.