Case Law Details
Vanam Mahila Sangam Limited Vs ITO (ITAT Hyderabad)
Only issue before the Tribunal is whether the interest income earned by the assessee firm from the deposits in the Savings Bank is eligible for deduction u/s 80P(2) of the I.T. Act. The AO and the CIT (A) have relied upon the decision of the Hon’ble Supreme Court in the case of M/s Totgar’s Co-Operative Sale Society Ltd to deny the However, I find that the said decision is distinguishable on facts and is not applicable to the facts of the case before this Tribunal. In the case of M/s Totgar’s Co-Operative Sale Society Ltd, the interest income was earned on short term bank deposits and securities which were made out of the surplus funds of the members retained by the society and were not immediately necessary for the business of the assessee therein. But in the case before this Tribunal, the assessee society had to make the deposits into the Savings Bank A/c held with Kotak Mahindra Bank as a business requirement. Since the assessee’s funds were available in the Savings Bank A/c, the assessee has earned certain interest income thereon. Thus, it can be seen that the interest income earned is not on fixed deposits, but it is on the funds which are available and which are required for the business purpose of the assessee. Therefore, the decision of the Hon’ble Supreme Court in the case of M/s Totgar’s Co-Operative Sale Society Ltd is clearly not applicable to the case before the Tribunal. Further the Hon’ble Andhra Pradesh High Court in the case of CIT vs. Andhra Pradesh State Coop. Bank Ltd in ITA No.86/03 and others dated 7.6.2011 has clearly held that the interest income earned on deposits in the Bank is also in the nature of business income which is eligible as deduction u/s 80P(2) of the I.T. Act.
Respectfully following the above, I hold that the reliance of the AO and the CIT (A) on the decision of the Hon’ble Supreme Court is misplaced and the assessee is eligible for deduction u/s 80P(2) of the Act on the interest income earned from the Savings Bank A/c held with the Kotak Mahindra
FULL TEXT OF THE ITAT JUDGEMENT
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