Section 2(19) of the Income Tax Act
The decision most relied on for Section 2(19) is Pr. CIT v. Totagars (395 ITR 611), cited in 1,074 of the 318 judgments on BharatTax that turn on this section.
Leading authorities on Section 2(19)
Interest income earned by a cooperative society from surplus deposits or investments held with a cooperative bank is not eligible for deduction under Section 80P(2)(d) of the Act.
Section 80P(4) serves as a proviso to Section 80P(1) and (2), excluding only cooperative banks that are cooperative societies and possess an RBI license for banking business. Its purpose is to exclude cooperative banks operating like commercial banks that lend money to the public.
Income arising from a cooperative society's surplus funds invested in short-term deposits and securities is not attributable to the society's core activities and, therefore, is not eligible for exemption under Section 80P(2)(a)(i) of the Income-tax Act.
Interest income earned by a cooperative society from its investments or surplus deposits with a cooperative bank is eligible for deduction under Section 80P(2)(d) of the Income-tax Act, 1961.
When there is a conflict between the decisions of non-jurisdictional High Courts, the view that favors the assessee should be preferred.
A co-operative credit society engaged in banking business with the general public, accepting deposits from non-members and advancing loans to non-members, is treated as a co-operative bank. Such a society falls under the exclusionary clause of Section 80P(4) and is not eligible for deduction under Section 80P(2)(a)(i).
Interest income earned by a co-operative society from deposits or investments made in a co-operative bank is not eligible for deduction under Section 80P(2)(d) of the Income Tax Act, 1961, in view of Section 80P(4).
Interest income arising from investments made by banks, including co-operative banks, is attributable to their business of banking and is treated as profits and gains of business, qualifying for deduction under Section 80P(2)(a)(i).
The expression "attributable to" is wider in scope and import than the expression "derived from" when interpreting provisions related to profits and gains from a business or industrial undertaking. The legislature's deliberate use of these distinct phrases indicates a nuanced intent regarding the directness of the nexus between income and the source.
