Case Law Details
Ghatkesar Farmers Service Cooperative Society Limited Vs ITO (ITAT Hyderabad)
ITAT held that assessee being a primary agricultural co-operative society invested the own surplus funds with the Union Bank of India and, therefore, the assessee is entitled to claim the deduction under section 80P(2)(a)(i) of the Act.
It could be seen from the name of the assessee that it is a primary agricultural co-operative credit society and registered vide letter RC No. 18169/2007/IC-2(Spl.Cell), dated 18/11/2008. The by-laws of the society which are filed by way of paper book clearly show that the assessee is involved in advancing short term, medium term and long term loans to its members apart from gathering the seeds, fertilizers and pesticides for the sale to its members. So also, the assessee is involved in sale of rice, kerosene, sugar etc. A perusal of the balance sheet as on 31/03/2018 does not reveal any liability towards its members in respect of payment of any dues to them. All these things clearly establish that the funds deposited by the assessee with the Union Bank of India are undoubtedly the own funds of the assessee and none of such fund represents any liability of the assessee to its members or anyone else.
7. Coming to the objection of the authorities that any interest accrued from investment with a commercial bank and not attributable to the activities specified in section 80P(2)(a) of the Act, cannot be allowed as a deduction is concerned, this issue is no longer res integra. Hon’ble jurisdictional High Court considered the same in extenso in The Vavveru Co-operative Rural Bank Ltd. (supra). On a threadbare analysis of the provisions under section 80P of the Act in the light of various decisions including the decision of the Hon’ble Apex Court in the case of Totgars Cooperative Sale Society Ltd. (supra) and jurisdictional High Court in the case of CIT vs. Andhra Pradesh State Co-operative Bank Ltd [2011] 12 taxmann.com 66 (Andhra Pradesh), the Hon’ble High Court reached a conclusion that if the investment is made in fixed deposits in nationalised banks from out of the own funds of the assessee, the interest derived from such investment would be from the activities listed in clause (i) to (vii) of section 80P(2)(a) of the Act and would be eligible for deduction.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
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