2019 (1) TMI 851

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.... For The Revenue : Shri B.P. Srivastava, Sr.DR ORDER PER RAJPAL YADAV, JUDICIAL MEMBER : Present appeal is directed at the instance of the assessee against order of ld.CIT(A)-3, Baroda dated 31.5.2017 passed for the Asstt.Year 2014-15. 2. In the appeal, assessee is aggrieved by the action of the ld.CIT(A) in confirming disallowance of interest income of Rs. 15,56,555/- earned on fixed deposits....

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....the assessee-society, the ld.AO show caused the assessee as to why the interest income should not be added back to the total income of the assessee. Assessee, inter alia, submitted that parking surplus money not immediately required for the day-to-day activities of the assessee is an integral part of its business activity, and therefore, eligible for exemption under section 80P(2) of the Act, and ....

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....(i) of the Income Tax Act. This claim was denied by the AO on the ground that assessee being a cooperative credit society engaged in providing credit facilities to its members deposits its surplus fund in FDRs accounts with nationalized bank and earn interest out of such deposits, then such interest income would not qualify for deduction under the relevant provisions appended to section 80P(2) of ....

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....he assessee for earning such income could be allowed to it. In other words, the ld.AO has to determine the net interest income earned by the assessee on such investment with bank, and only thereafter that income has to be excluded from the admissibility of deduction under section 80P(2) of the Act. 5. So far as earning of interest income of Rs. 12,995/- under section 244A of the Act is concerned,....