TaxTMI 
TaxTMI 
2017 (1) TMI 385
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.... is a housing Co-operative society. The assessee in its return of income for the assessment year 2010-11 claimed deduction u/s. 80P(2)(c) on interest earned on deposits with Cooperative Banks. The assessee has also claimed deduction of Rs. 50,000/- u/s. 80P(2)(d) on interest earned on fixed deposits with Scheduled Banks. During the course of scrutiny assessment proceedings the Assessing Officer disallowed the claim of deduction u/s. 80P(2)(d) vide order dated 27-11-2010. The assessee carried the matter in appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) upheld the findings of Assessing Officer and dismissed the appeal of the assessee. Now, the assessee is in second appeal before the Tribunal. ....
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....come from deposits with the nationalized banks. The assessee is a housing Co-operative society. The assessee had parked its surplus funds with Co-operative Banks as well as nationalized banks. The Assessing Officer disallowed Rs. 50,000/- u/s. 80P(2)(d) in respect of interest income earned from funds deposited with the nationalized banks on the pretext that such interest income is assessable under the head 'Income from other source' and cannot be considered as profits and gains attributable to the activities of the assessee society. Before we proceed to decide this issue, it would be relevant to refer to the provisions of section 80P(2)(c) & (d) of the Act. The relevant extract of the provisions of section 80P(2)(c) & (d) are reproduced he....
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....ties other than those specified in clause (a) or clause (b) of section 80P(2) of the Act. 6. In the present case we observe that the assessee is claiming deduction on interest income earned on funds deposited with nationalized banks. The interest income on deposits with nationalized banks neither falls in clause (d) nor it partakes the character of profits and gains 'attributable' to the activities of the assessee to fall within the ambit of clause (c) of section 80P(2). The assessee is a Co-operative housing society, therefore, interest income on bank deposits cannot be considered as income 'attributable' to the activities of the assessee. To be eligible to claim deduction u/s. 80P(2)(c) the assessee has to show direct or proximate connec....
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....id provision is in the nature of basic exemption granted to a co-operative society." We are of the considered view that the aforementioned judgment would not help the assessee. The interest income was allowed in the said case because the factory was in pre-operative stage. The interest was earned on excess funds invested with bank/post office during preoperative period. It is also not the case of assessee herein that the housing project is under construction therefore the idle funds are parked in bank to earn interest income. Thus, the ratio of said judgment would not apply in the present case. 8. The ld. AR has also placed reliance on the order of Tribunal in the case of Film Nagar Co-operative Housing Society Ltd. Vs. Income Tax Office....