Interest on deposit received by Co-Op Bank made in ordinary course of business is Business Income

Anand People Co-op Bank Ltd. Vs DCIT (ITAT Ahmedabad)

The issue under consideration is that the Income of interest received on advances should be considered as income from other sources or not?

The brief facts of the case is that assessee has filed return of income declaring total income at Rs. NIL on 13.10.2015. The case of the assessee was subject to scrutiny and notice under Sec. 143(2) of the Act was issued on 01.08.2016. The assessee was engaged in the banking business, however, no banking activities was carried out during the year under consideration as the assessee bank was in the liquidation. During the assessment the AO has that assessee has received interest on advances at Rs. 9,88,259/-. The AO has asked the assessee to explain why not the aforesaid interest on advances should be treated as income from other sources. The assessee has responded that interest income of Rs. 9,88,259/- was pertained to amount received from the particular borrower against its outstanding balance, therefore, the same cannot be assesseed as income from other sources looking to the provisions of Sec. 176(3A) of the Income Tax Act.

In this regard, ITAT have noticed that Ld. CIT(A) has given specific finding that assessee has not demonstrated with relevant details that aforesaid deposit was made in the ordinary course of the business and the income earned from such deposit was shown in the preceding year in its total income. With the assistance of the Ld. Representative we have gone through the material on record and observed that assessee has not demonstrated with any supporting evidences that it had shown any income earned from such deposit in the preceding years. In order to facilitate to adjudicate the impugned issue on merit ITAT consider it appropriate to restore this issue to the file of the Ld. CIT(A) for adjudicating afresh after examination and verification of the relevant supporting detail to be furnished by the assessee. Therefore, this ground of appeal of the assessee is allowed for statistical purpose.

In the result, the appeal of the assessee is partly allowed.

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