TaxTMI 
TaxTMI 
2020 (6) TMI 630
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.... not at par with providing credit facility to its members and thus the assessee was not entitled to a claim of exemption u/s 80P(2)(a)(i) of the Income Tax Act, 1961: 2. confirming the following actions of the Assessing Officer : a) In treating interest earned on Fixed Deposit and Savings account in a sum of Rs. 1,70,12,018/- and Rs. 1,52,187/- as income from other sources and not business income; b) in not allowing exemption u/s 80P(2)(i) of the Act in a sum of Rs. 18,53,405/- Both the above actions being arbitrary, erroneous and unlawful must be quashed with directions for appropriate relief." 3. The assessee is a registered cooperative society. The business activities of the society are giving loans and accepting deposits from t....
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.... or debited the source of funds of the Society is borrowing from members on which interest is paid. The total interest paid on deposits is Rs. 64,85,123/-against the total fund value of Rs. 10,83, 12,000/-. The average cost of funds placed in FDR (Rs. 1,88,21,976/-) would work out to Rs. 11,26,870/-. Thus, the assessee submitted that the assessee is eligible for deduction u/s 80P (1) for interest earned from banks on FDRs. The Assessing Officer made an addition of Rs. 17,01,218/- treating the income of the assessee received from interest on FDR and Rs. 1,52,187/- as interest from saving bank account. The assessment was completed on 28/10/2016. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(....
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....imed by the Society. The Society went in appeal against the order of the Assessing Officer before the CIT(A). The CIT(A) vide order dated 8/6/2018 agreed with the contentions of the Assessing Officer and dismissed the appeal. The Ld. AR submitted that the action of the authorities below is misconceived, erroneous, improper and unjust. However, when interest income is computed from money lending entities, the assessment is done under other sources for the reason that it is the prescribed head for incomes like interest. That does not means that the general conditions for allowing deduction against the other sources income would apply to such a situation also. When it is business income though it is an assessed under other sources, the princip....
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....sessing Officer wrongly denied exemption with regard to the interest earned from a cooperative bank. As to the earning of interest from Yes Bank and Catholic Syrian Bank principal of proportionate allocations has been evolved by the Tribunal. This done in terms of the order in case of the Mantola Thrift and Credit Society Ltd.. This order of the Tribunal was the subject matter of further appeal before the Hon'ble Delhi High Court. The Revenue's appeal filed in this regard was dismissed with the observations. On the basic point as to whether the assessment of interest income in the case of a Thrift and Credit Society Ltd. has to be done in the same manner as is done for the orthodox income under other sources. Thus, the Ld. AR pleaded that ....
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....ilities to its members or (b) co-operative society engaged in providing credit facilities to its members. Both the activities can be carried on by the co-operative society for its members. If a co-operative society is engaged in carrying on these activities/facilities for the persons other than its members, the co-operative society will not be eligible for deduction u/s 80P(2)(a)(i) on the income which it derives from carrying on the activities not relating to its members. Therefore, where a co-operative society is engaged in carrying on business of giving loans and accepting deposits from its members, the income which relates to the business of these facilities to its members or providing credit facilities to its members will be eligible f....