TaxTMI 
TaxTMI 
2017 (4) TMI 652
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....he record. 3. Solitary grievance of the Revenue is that the ld.CIT(A) has erred in granting exemption under section 80P(2)(a)(i) of the Income Tax Act, 1961 to the assessee. 4. Brief facts of the case are that the assessee has filed its return of electronically on 20.7.2010 declaring total income at NIL. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee. On scrutiny of the accounts, it revealed to the AO that the assessee has made fixed deposits in various nationalized banks. It has earned interest income on these FDs., and since it is doing business of banking including providing credit facilities to the members, it is not entitled for deduction under....
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....007 read as under: 'The provision of this section shall not apply in relation to any co-op.bank other than a primary Agricultural Credit Society or a Primary co-op. Agricultural and Rural Development Bank" 6. A perusal of the above paragraph would indicate that the ld.AO was totally confused about whether he was treating the assessee as cooperative bank or cooperative credit society. He has not worked out what is the exact amount of interest earned by the assessee on the FDRs., with the nationalized banks. The ld.AO ought to have taken note of the total interest income shown by the assessee in the accounts i.e. income earned from its members by providing credit facilities as well as the income earned from FDRs., with nationalized ....
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....f controversy in hand, the question no.2 is the relevant question. It reads as under: "Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in holding that interest income of Rs. 16,14,579/- on deposits placed with State Bank of India was not exempt under section 80P(2)(a)(i) of the Income Tax Act, 1961? 8. Brief facts in this case are that the assessee society was registered under Gujarat Cooperative Societies Act, 1961. It was constituted with object of accepting deposits from salaried persons of the State Bank of India, Gujarat region with a view to encourage thrift and providing credit facility to them. The assessee society has launched various deposits schemes such as term dep....
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....ssessee that it was carrying on the business of providing credit facilities to its members and therefore, the appellant-society being an assessee engaged in providing credit facilities to its members, the interest received on deposits in business and securities is attributable to the business of the assessee as its job is to provide credit facilities to its members and marketing the agricultural products of its members. This court is, therefore, of the view that the above decision is not restricted only to the investments made by the assessee therein from the retained amount which was payable to its members but also in respect of funds not immediately required for business purposes. The Supreme Court has held that interest on such investmen....
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....ny of the categories mentioned in section 80P(2)(a) of the Act. However, section 80P(2)(d) of the Act specifically exempts interest earned from funds invested in co-operative societies. Therefore, to the extent of the interest earned from investments made by it with any co-operative society, a co-operative society is entitled to deduction of the whole of such income under section 80P(2)(d) of the Act. However, interest earned from investments made in any bank, not being a co-operative society, is not deductible under section 80P(2)(d) of the Act." 10. A perusal of this judgment would suggest that deduction under section 80P(2)1) is not available on the interest income earned on surplus money deposited with Nationalised Banks. But if asse....