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Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC” JAIPUR
ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal filed by the assessee is directed against the order of ld. CIT(A) dated 12-05-2023, National Faceless Appeal Centre, Delhi [ hereinafter referred to as ld.CIT(A)/(NFAC) ] for the assessment year 2013-14 wherein the assessee has raised following solitary ground of appeal.
‘’That on the facts and in the circumstances of the case, the ld. CIT(A) has grossly erred on the facts and in law in confirming the action of AO in 2 THE BANK OF RAJASTHAN EMPLOYEES CREDIT THRIFT COOPERATIVE SOCIETY LTD. VS ACIT,CIR-1,JAIPUR not allowing the deduction of interest receipt of Rs.14,33,125/- from banks u/s 80P(2)(a)(i) of the Income Tax Act, 1961.’’ 2.1 Brief facts of the case are that the assessee cooperative society has filed its e-return of income for the assessment year under consideration 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 received on term deposit amounting to Rs.14,33,125/-. Hence the AO in view of the above facts and vide order sheet dated 23.12.2015 asked the ld. AR to 3 ITA NO. 416/JP/2023 THE BANK OF RAJASTHAN EMPLOYEES CREDIT THRIFT COOPERATIVE SOCIETY LTD. VS ACIT,CIR-1,JAIPUR explain as to why interest received on term deposit of Rs.,14,33,125/- not be treated as disallowance u/s80P(2)(i) of the Act. However, the ld. AR of the assessee filed the reply before the AO vide letter dated 28.12.2015 but the same was not found acceptable by the AO and thus held that income of Rs.14,33,125/- as interest received on term deposits is not eligible for deduction u/s 80P(2)(a)(i) because it is neither income from business or profession as it is income from other sources not it is attributable to the activities of providing credit facilities to the members. Hence, the income is held to be not eligible for deduction u/s 80P(2)(a)(i) and the AO added the same to the total income of the assessee as income from other sources.
2.2 In first appeal, the ld CIT(A) has confirmed the disallowance / addition made by the AO on the ground that the interest income earned from banks is not eligible for deduction u/s 80P of the Act 2.3 During the course of hearing, the ld .AR of the assessee objected to the findings of the ld. CIT(A) and prayed that the addition so confirmed by the ld.CIT(A) amounting to Rs.14,33,125/- as made by the AO should be deleted for which the ld. AR of the assessee filed the following written submission.
The Assessee is accepting the deposits from the members and also providing credits to the members as per their needs at a reasonable 4 THE BANK OF RAJASTHAN EMPLOYEES CREDIT THRIFT COOPERATIVE SOCIETY LTD. VS ACIT,CIR-1,JAIPUR interest rate. Except that activities, The society is not carried out any other activities.
The fund which were ususually deposited into current account of the society were deposited in FDRs and same were pledged against O/D limit. The O/D account is being used for the day to day transaction of the Society. Thus The FDR’s were not idle funds of the society. The same is being utilised in the business activities of providing credit facility to its members.
The aforesaid funds which were kept in FDRs are not idle funds and same were used in business activities, thus income from Term deposits cannot be considered income from other sources. These funds were deposited in business and income from these funds from part of profit and gains of business and therefore eligible for deduction 80P(2)(a)(i) of the Income Tax Act ,1961.
The assesse is not carried out any other business activities, wherein the assesse 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.
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 arising from such FDRs is in the nature of income attributable to the profits and gains of business of providing credit facilities to its members….. ….. The expression “attributable to” used in section 80P (2) has a wider meaning and since the appellant has taken the FDRs to get overdraft limit out of which loan is being provided to the members, the income arising from such FDRs is found to be attributable to the appellant’s business and the same would be eligible for deduction 5 THE BANK OF RAJASTHAN EMPLOYEES CREDIT THRIFT COOPERATIVE SOCIETY LTD. VS ACIT,CIR-1,JAIPUR u/s 80P(2) (a)(i) . The AO is accordingly directed to allow deduction u/s 80P(2) (a)(i) on the full amount of such interest income of Rs 24647251/- The addition of Rs 663285/- is found to be without any merit and is deleted “
Further reliance is Placed on the following cases: 6.1 Jaipur ITAT Shiksha Cooperative Thrift & Credit Society, Malakhera Gate Bahar, Near Post Office, Alwar. & 958/JP/2017…. Assessment Years : 2013-14 & 14-15. Hon’ ble Court held as under … page No 5 of the order (PB .. Pg No 23- 25) “Thus it is clear that the Hon’ble High Court has analyzed the provisions of section 80P(2) and particularly the term ‘attributable’ used in the section and held that the word ‘attributable to’ is certainly wider in import than the expression ‘derived from’.Thus on the identical fact, the Hon’ble High Court has held that the decision of Hon’ble Supreme Court in the case of M/s. Totgars Co- operative Sale Society Ltd. vs. ITO (supra) is not applicable in the facts of the present case as in the said case before the Hon’ble Supreme Court the amount deposited with bank did not belong to the society but it was a liability of the society to be paid to the members against the sale of agricultural produce. Thus the sale consideration received by the society to be paid to the members was kept with the bank and earned interest and according the Hon’ble Supreme Court held that such an amount was retained by the society was a liability and it was shown in the Balance Sheet on the liability side.
Therefore, on the specific facts of the said case the interest income was held to be non-attributable either to the activities mentioned in section 80P(2)(a)(i) or under section 80P(2)(a)(iii) of the Act. In the case in hand, the interest income received by the assessee is on its own funds and not on the funds which is 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 6 THE BANK OF RAJASTHAN EMPLOYEES CREDIT THRIFT COOPERATIVE SOCIETY LTD. VS ACIT,CIR-1,JAIPUR 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 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, the same is upheld and the grounds raised by the Revenue are dismissed.’’ 2.4 On the other hand, the ld DR supported the order of the ld. CIT(A) and raised the similar contentions as per the finding in the orders of the lower authority and based on that argument she prayed not to considering the plea of the assessee.
2.5 We have heard both the parties and perused the materials available on record including the case laws cited in the orders. Brief facts of the case are that the Assessee is an Employees Co-Operative Society. It is incorporated for the 7 THE BANK OF RAJASTHAN EMPLOYEES CREDIT THRIFT COOPERATIVE SOCIETY LTD. VS ACIT,CIR-1,JAIPUR Employees of Bank of Rajasthan, vide registration No 2427L dated30/03/1968. The Society is registered with the Registrar of Co-operative Societies,Jaipur, Rajasthan.The Assessee is accepting the deposits from the members and also providing credits to the members as per their needs at a reasonable interest rate. Except those activities, The society is not carried out any other activities. The Assessee filed it return of income Vide E Filling Acknowledgement No 807308150300913 on dated 30/09/2013, declaring a total income of Rs Nil after claiming a deduction of Rs 11,47,419/-under the provision of section 80P(2)(i) of Income Tax Act, 1961. It is not imperative repeat the facts but it is notable that the AO did not accept the claim of the assessee and disallowed the claim u/s 80P(2)(a)(i) in respect of the interest received from co-operative Banks for an amount of Rs.14,33,125/-.Though the deduction u/s 80P(2)(a)(i) was allowed by the AO in respect of interest income from members of Rs,14/-. In first appeal, the ld. CIT(A) confirmed the action of the AO. While hearing of the appeal of the assessee, it is noted that the issue raised by the assessee is covered by the decision ITAT Pune Bench in the case 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 8 ITA NO. 416/JP/2023 THE BANK OF RAJASTHAN EMPLOYEES CREDIT THRIFT COOPERATIVE SOCIETY LTD. VS ACIT,CIR-1,JAIPUR 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, the same is upheld and the grounds raised by the Revenue are dismissed.’’ Even the Jaipur bench has considered this issue in favour of the assessee in the case of Royal Credit Co-operative Society Ltd., in and the relevant finding in that case is also reiterated here in below : 10. We have heard the rival contentions, perused the material placed on record and orders of the lower authorities. We have also perused the judicial pronouncements that have been pressed into service by both the parties to drive home to their respective contentions. The main issue in this case is the denial of deduction u/s.80 (P)(2)(a)(i) of I.T. Act, to the assessee to the extent of net profit of Rs.31,70,144/- earned by the assessee from carrying on business as Co- operative Society and the assessee claimed said amount as eligible for deduction u/s.80(P) of I.T. Act. It was also stated that the assessee's source of income is interest income arising while providing credit facilities to its members and as such it is entitled for deduction u/s 80P(2)(a)(i) of I.T. Act which was claimed in the return of income filed by the assessee. 10.1 We shall first advert to the assessee's grievance that the lower authorities had erred in declining its claim for deduction u/s. 80P(2)(a)(i) of the Act, i.e, as regards the interest income that was earned on the surplus funds which were deposited by it with Malviya Urban Co-operative Bank Ltd., i.e, a co-operative bank. After deliberating at length on the issue in hand, we find that the aforesaid claim of the assessee hinges around the aspect that as to whether or not the interest income earned by it on its surplus funds which were parked as deposits in the normal course of its business of providing credit facilities to its members, i.e., at the point of time when there were no takers for the said funds, was eligible for deduction u/s. 80P(2)(a)(i) of the Act. We have given a thoughtful 9 ITA NO. 416/JP/2023 THE BANK OF RAJASTHAN EMPLOYEES CREDIT THRIFT COOPERATIVE SOCIETY LTD. VS ACIT,CIR-1,JAIPUR consideration to the contentions advanced by the Ld. Authorized representatives for both the parties. 10.2 Before proceeding any further, we deem it fit to cull out the provisions of section 80P(2)(a)(i) of the Act, the scope and gamut of which is the primary bone of contention before us, which reads as under : "80P. (1) Where, in the case of an assessee being a co-operative society, the gross total income 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 to its members", and thus, would fall within the realm of the deduction contemplated in section 80P(2)(a)(i) of the Act. At this stage, we may herein observe, that it is the claim of the assessee, that as depositing of its surplus funds, i.e, the funds for which there were no takers at the relevant point of time, in the course of its business of providing credit facilities to its members, is inextricably interlinked; or in fact interwoven with its said stream of its business activity, therefore, the interest income received on such short-term deposits was duly eligible for deduction under the aforesaid statutory provision, i.e., sec. 80P(2)(a)(i) of the Act. We may herein observe, that though the assessee-society is engaged in providing credit facilities to its members. It is neither the case of the revenue nor a fact discernible from the record that the funds deposited by the assessee-society with the bank, viz.Malavia Urban Co- operative Bank Limited (supra) were the amounts that were payable by the society to its members, and the same having being retained were for the time being invested as a short-term deposit/security with the bank. If that would have been so, then, the interest income earned on such short-term deposit/security with the bank would not have been eligible for deduction u/s.80P(2)(a)(i) of the 10 THE BANK OF RAJASTHAN EMPLOYEES CREDIT THRIFT COOPERATIVE SOCIETY LTD. VS ACIT,CIR-1,JAIPUR Act. But then, as the amount deposited by the assessee-society with the bank, viz. Malavia Urban Co-operative Bank Limited (supra) was simpliciter surplus or idle funds of the assessee society, for which there were no takers for the time being in course of its business of providing credit facilities to its members. Therefore, depositing of the same by way of short-term deposits with the aforesaid bank, as stated by the ld. A.R, and rightly so, would clearly be inextricably interlinked, or in fact interwoven with its aforesaid primary business activity, i.e., providing of credit facilities to its members. At this stage, we may herein observe, that the Hon'ble Supreme Court in the case of Totgars Co- operative Sale Society Ltd. (supra), had held, that in a case where the assessee- cooperative society apart from providing credit facilities to its members was also in the business of marketing of agricultural produce grown by its members, and the sale consideration of the agricultural produce due towards its members was thereafter retained and invested as 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 business. The interest income earned by the assessee by providing credit facilities to its members is deposited in the banks for a short duration which has earned interest. Therefore, whether this interest is attributable to the business of providing credit facilities to its members, is the question. In this regard, it is necessary to notice the relevant provision of law i.e. section 80P(2)(a)(i): "80P. Deduction in respect of income of cooperative societies.—(1) Where, in the case of an assessee being a cooperative society, the gross total income 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— 11 THE BANK OF RAJASTHAN EMPLOYEES CREDIT THRIFT COOPERATIVE SOCIETY LTD. VS ACIT,CIR-1,JAIPUR (i) carrying on the business of banking or providing credit facilities to its members, or (ii) to (vii)** ** ** the whole of the amount of profits and gains of business attributable to any one or more of such activities."
The word 'attributable used in the said section is of great importance. The Apex Court had an occasion to consider the meaning of the word 'attributable' as supposed to derive from its use in various other provisions of the statute in the case of Cambay Electric Supply Industrial Co. Ltd. v. CIT, Gujarat-II reported in ITR Vol.113 (1978) Page 842 at Page 93 as under: As regards the aspect emerging from the expression "attributable to" occurring in the phrase "profits and gains attributable to the business of" the specified industry (here generation and distribution 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 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.
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 members, they cannot keep the said amount idle. If they deposit this amount in bank so as to earn interest, the said interest income is attributable to the profits and gains of the business of providing credit facilities to its members only. The society is not carrying on any separate business for earning such interest income. The income so derived is the amount of profits and gains of business attributable to the 12 THE BANK OF RAJASTHAN EMPLOYEES CREDIT THRIFT COOPERATIVE SOCIETY LTD. VS ACIT,CIR-1,JAIPUR activity of carrying on the business of banking or providing credit facilities to its members by a co-operative society and is liable to be deducted from the gross total income under section 80P of the Act.
In this context when we look at the judgment of the Apex Court in the case of M/s. Totgars Co-operative Sale Society Ltd, on which reliance is placed, the Supreme Court was dealing with a case where the assessee co-operative society, apart from providing credit facilities to the members, was also in the business of marketing of agricultural produce grown by its members. The sale consideration received from marketing agricultural produce of its members was retained in many cases. The said retained amount which was payable to its members from whom produce was bought, was invested in a short-term deposit/security. Such an amount which was retained by the assessee-society was a liability and it was shown in the balance sheet on the liability side. Therefore, to that extent, such interest income cannot be said to be attributable either to the activity mentioned in section 80P(2)(a)(i) of the Act or under section 80P(2)(a)(iii) of the Act. Therefore, in the facts of the said case, the Apex Court held the Assessing Officer was right in taxing the interest income indicated above under section 56 of 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.
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 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, 13 THE BANK OF RAJASTHAN EMPLOYEES CREDIT THRIFT COOPERATIVE SOCIETY LTD. VS ACIT,CIR-1,JAIPUR 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, having heard learned counsel appearing on behalf of the respective parties, the issue involved in the present appeal is squarely covered against the Revenue in view of the decision of this Court in Mavilayi Service Cooperative Bank Limited and Others Vs. Commissioner of Income Tax, Calicut and Another (2021) 7 SCC 90. This Court, in the aforesaid decision has specifically observed and held that primary Agricultural Credit Societies cannot be termed as Co-operative Banks under the Banking Regulation Act and, therefore, such credit societies shall be entitled to exemption under Section 80(P)(2) of the Income Tax Act, 1961. Ms. Aakansha Kaul, learned counsel appearing on behalf of the appellant/Revenue has tried to submit that the respondent/Assessee will fall under the definition of Co-operative Bank as their activity is to give credit/loan. However, it is required to be noted that merely giving credit to its members only cannot be said to be the Co-operative Banks/Banks under the Banking Regulation Act. The banking activities under the Banking Regulation Act are altogether different activities. There is a vast difference between the credit societies giving credit to their own members only and the Banks providing banking services including the credit to the public at large also.There are concurrent findings recorded by CITA, ITAT and the High Court that the respondent/Assessee cannot be termed as Banks/Cooperative Banks and that being a credit society, they are entitled to exemption under Section 80(P)(2) of the Income Tax Act. Such finding of fact is not required to be interfered with by this Court in exercise of powers under Article 136 of the Constitution of India. Even otherwise, on merits also and taking into consideration the CBDT Circulars and even the definition of Bank under the Banking Regulation Act, the respondent/Assessee cannot be said to be Co-operative Bank/Bank and, therefore, Section 80(P)(4) shall not be applicable and that the respondent/Assessee shall be entitled to exemption/benefit under Section 80(P)(2) of the Income Tax Act. In view of the above and for the reasons stated hereinabove, the present appeal deserves to be dismissed and is accordingly dismissed, answering the question against the Revenue and in favour of the Assessee.
10.5 In the backdrop of the aforesaid discussion and judicial decision discussed we are of a considered view, that as in the case of the assessee before us the surplus funds parked by way of short-term deposit with the co-operative bank, viz. Malavia Urban Co-operative Bank Limited are inextricably interlinked, or in fact interwoven with its business of providing credit facilities to its members, 14 THE BANK OF RAJASTHAN EMPLOYEES CREDIT THRIFT COOPERATIVE SOCIETY LTD. VS ACIT,CIR-1,JAIPUR therefore, the same as claimed by the Ld. AR, and rightly so, would duly be eligible for deduction u/s. 80P(2)(a)(i) of the Act. We, thus, in terms of our aforesaid observations, direct the Assessing Officer to allow deduction of Rs.31,70,144/- u/s. 80P(2)(a)(i) of the Act on the interest income earned by the assessee society on its deposits with the co-operative bank. In the results appeal of the assessee in ITA No. 221/JPR/2023 is allowed.