2014 (6) TMI 210

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....the facts and in the circumstances of the case and in law the learned CIT(A) erred in allowing exemption on recovery charges of Rs. 20,35,828 and service charges of Rs. 70,36,564 without appreciating the fact that the main activity of the assessee is providing credit facility to its members and the income earned on account of service charges and recovery charges is not earned in normal course of activity of the co-operative housing society. 2. On the facts and in the circumstances of the case and in law the learned CIT(A) erred in allowing exemption on recovery charges of Rs. 20,35,828 and services charges of Rs. 70,36,564 without appreciating the fact that such excess charges recovered from the members cannot be attributed to its main act....

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....e of the borrower and charge the service charges. This is also part & parcel of business income and the income is exempt u/s 80P of the Act." 3. The Assessing Officer, however, rejected the assessee's contention and held that insofar as the interest income is concerned, the same is not eligible for deduction under section 80P as these are earned out of funds kept with the banks other than co-operative housing societies and in mutual funds. As regards recovery charges and services charges, he noted that the assessee has recovered excess amount from its members and, therefore, such excess charges recovery cannot be attributed to its main activity and, hence, the same is not eligible for deduction under section 80P. 4. The learned Commission....