2020 (4) TMI 435

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....) has erred in confirming disallowance of exemption under section 80P(2)(a)(i) of the Act on interest income of Rs. 28,911/- received from Axis Bank on the saving bank account maintained by the assessee as well as interest income of Rs. 6,192/- on loan given to staff. 3. In response to the notice of hearing, Shri Pradeep G. Tulsian, Chartered Accountant and consultant of the assessee, filed an adjournment application pleading therein that senior partner, Shri Pradeep G. Tulsian is out of station in connection with marriage of one of family members from 1.2.2020 to 15.2.2020, therefore, hearing be adjourned. 4. With the assistance of the ld.DR, I have gone through the record carefully, and I find that a very small issue regarding disal....

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....from the claim of deduction under section 80P(2)(a)(i) of the Act. Dissatisfied with the assessment order, the assessee carried the matter in appeal before the ld.CIT(A). It has made detailed submissions, and made reference to a large number of decisions rendered by Hon'ble Andhra Pradesh High Court, Hon'ble Allahabad High Court, Hon'ble Supreme Court as well as decisions of the ITAT. The ld.CIT(A) examined all these decisions in detail, and thereafter concurred with the AO. 6. With the assistance of the ld.DR, I have gone through the record carefully. A perusal of the record would show that the ld.CIT(A) has mainly put reliance upon recent judgment of Hon'ble jurisdictional High Court in the case of State Bank of India Employees Co-op C....

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....s purpose at the given point of time. Therefore, in the facts and circumstances of the case, the court was of the view that such interest income falls in the category of 'Other income' which had rightly been taxed by the department under section 56. [Para 12] Thus, in case of a society engaged in providing credit facilities to its members, income from investments made in banks does not fall in any of the categories mentioned under section 80P(2)(a). In the case of Totgars Co-operative Sale Society (supra), the court was dealing with two kinds of activities: interest income earned from the amount retained from the amount payable to the members from whom produce was bought and which was invested in shortterm deposits/securiti....

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....ds not immediately required by the assessee for its business purposes and which has been invested in specified securities as 'investment' are ineligible for deduction under section 80P(2)(a)(i). [Para 13] Thus, in the light of the principles enunciated by the Supreme Court in Totgars Co-operative Sale Society (supra), in case of a society engaged in providing credit facilities to its members, income from investments made in banks does not fall within any of the categories mentioned in section 80P(2)(a). However, section 80P(2)(d) 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-o....