Case Law Details
ITO Vs The New India Assurance Co. Ltd. Employees’ Co-op. Credit Society Ltd. (ITAT Kolkata)
Apex Court in the case of M/s. Totagars Co-operative Sale Society Ltd., on which reliance is placed, the Supreme Court was dealing 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, ‘as 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.
Hon’ble Supreme Court in the case of M/s. Totagars Co-operative Sale Society Ltd. is binding on the revenue authority for the proposition that the interest income arising out of surplus fund invested in short term deposits and securities is the income from other sources. It did not agree with the contention of assessee therein that the interest earned by the assessee from investment is also attributable to the business of providing credit facilities to its members.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
This appeal by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals), 10, Kolkata dt. 09-11-2015 for the A.Y 2012-13.
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