Abhinandan Gramin Bigar Sheti SAhakari Patsanstha Maryadit Kumbhoj Vs ITO (ITAT Pune)
In the matter abovementioned ITAT Pune after relying upon the decision of jurisdictional HC held that assessee was eligible for deduction u/sec.80P(2)(a) (i) on the Interest earned by assessee.
Assessee is a Co-operative Society filed its return of income at nil, after claiming deduction u/sec.80P(2)(a)(i) amounting to Rs.48,49,669/-. Assessee made investment in various co-operative banks and earned interest of Rs.38,81,431/- which was claimed u/s 80P(2)(a)(i). The said deduction was disallowed by AO who held that interest earned by assessee is taxable as income from other sources. CIT (A) confirmed the action of the AO.
As there was no representation on behalf of assessee hence ITAT obserevd from the statement of facts filed by assessee that assesssee makes investment to maintain the Statutory Liquidity Ratio (SLR) in the prescribed modes which include deposit with banks. The Society is governed by its bye-laws as well as rules and regulations as per the Maharashtra State Co-operative Societies Act,1960. The assessee society in order to maintain the required SLR is legally bound to invest funds in Maharashtra State Bank, District Co-operative Bank and the Other Co- operative Banks. All transactions were subject to audit in the last preceding 3 years. Thus the income from interest on investment with banks is income from regular business activity and hence is eligible for deduction u/s 80P(2)(a)(i). Reliance was placed on the decision of ITAT Pune in the case Niphad Nagari Sahakari Patsanstha Ltd.
