Case Law Details
Interest income on investments of Service Co-operative Banks is business income eligible for deduction u/s 80P(2)(a)(1) and not income from other sources.
Brief Facts of the Case
The assessee is a cooperative society. The return of income for the AY 2009-10 was filed on 25.3.2010 declaring net income of Rs. ‘Nil”, after claiming deduction u/s 80P(2) of the I T Act. The AO had treated the assessee’s income from investment amounting to Rs. 8,42,219/- as income from other sources. The assessee had claimed the said income as income from business of banking and was eligible for deduction u/s 80P(2)(a)(i) of the I T Act. The AO placed reliance on the judgment of the Hon’ble Apex Court in the case of Totgar Cooperative Sale Society Ltd vs ITO reported in 322 ITR 283 in taking the above stand. The relevant findings of the AO in treating the interest income amounting to Rs. 8,42,219/- as ‘income from other sources’ read as follows:
“It is also observed that apart from interest on loan it is getting interest from deposits with other banks. These cannot be categorized as providing credit facility as envisaged in 80P(4)(a) and (b) of the Income Tax Act. Thus the assessee is having deposits with the following banks etc.:
Sub Treasury Meenachil
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