Interest from deposits is income; Land acquisition for residential development deemed legitimate. Legal precedents cited.

The court held that interest earned by a co-operative house building society from fixed deposits or savings accounts is considered income. The society's use of funds for purchasing agricultural land and developing it into residential plots was deemed legitimate as it was linked to land acquisition and development. Legal precedents were cited to support the decision, emphasizing that settled legal principles do not raise substantial legal questions. Consequently, the judgment was in favor of the co-operative house building society.

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Issues:
1. Treatment of interest as income earned from fixed deposits or savings bank account.
2. Utilization of moneys received from members by a co-operative house building society for purchasing agricultural land and developing it into residential plots.

Issue 1: Treatment of interest as income earned from fixed deposits or savings bank account

The judgment refers to the observations made by the Supreme Court in Tuticorin Alkali Chemicals and Fertilizers Ltd. v. CIT [1997] 227 ITR 172, stating that interest is always considered as income, whether earned from fixed deposits or savings bank accounts. In this case, the assessee is a co-operative house building society with a specific objective of purchasing agricultural land for development into plots allotted only to its members. The agreement between the society and the Government of Haryana mandated keeping a portion of the amount realized from plot holders in a deposit for internal development work. The Income-tax Appellate Tribunal and the Commissioner of Income-tax (Appeals) concluded that the moneys kept in the savings bank account were directly linked to the acquisition of land and its development into residential plots, as acknowledged by the Revenue.

Issue 2: Utilization of moneys received from members by a co-operative house building society

The judgment discusses various legal precedents, including Tuticorin Alkali Chemicals and Fertilizers Ltd. v. CIT [1997] 227 ITR 172 (SC), CIT v. Bokaro Steel Ltd. [1999] 236 ITR 315 (SC), and CIT v. Kamal Co-operative Sugar Mills Ltd. [2000] 243 ITR 2 (SC). It also refers to the decision in Krishan Kumar Aggarwal v. Assessing Officer [2004] 266 ITR 380, highlighting that once a question has been settled by the apex court, its application in a specific factual scenario does not constitute a substantial question of law. Consequently, the judgment was dismissed.

This judgment emphasizes the treatment of interest as income and the utilization of funds by a co-operative house building society for land acquisition and development, providing a detailed analysis of the legal aspects and precedents considered in arriving at the decision.

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