2023 (4) TMI 481

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....essee preferred these appeals. For the sake of convenience, we dispose of these appeals by this common order. 2. Only question that falls my consideration in these three appeals for the assessment years 2016-17 to 2018-19 is the allowability of interest under section 80P(2)(a)(i) of the Income Tax Act, 1961 ('the Act'), derived by the assessee on the deposits in the Andhra Bank and the Indian Bank on the credit balance available therein. 3. Undisputed facts of the case are that the assessee is an Employees Co-operative Credit Society carrying on the business of extending the loan facilities to its members and in that process, the assessee routes both the disbursement of loan and repayment thereof through its accounts with the Andhra Bank ....

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....ti state operations. He, accordingly, while placing reliance in Totgars Co-operative Sale Society Ltd. (supra) and other decisions, dismissed the appeal. 6. Learned AR submitted that the line of decisions relied upon by the authorities below have no application to the facts of the case on hand because in this case, no investment as such is made in any bank, but it is only out of the regular business transactions involving the bank accounts, the credit balances arose on which the bank credited the interest quarterly. He, therefore, submits that in such circumstances, it cannot be said that such interest has to be taxed as income from other sources. 7. Learned DR vehemently placed reliance on the orders of the authorities below and the deci....

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.... the reason that the assessee did not pay to its members the proceeds of the sale of their produce, but invested the same in banks. As a consequence, the investments were shown as liabilities, as they represented the money belonging to the members. The income derived from the investments made by retaining the monies belonging to the members cannot certainly be termed as profits and gains of business. This is why Totgar's struck a different note." 9. In the case on hand, undisputedly, the interest arose on the credit balances with reference to the regular course of business of the assessee. On this aspect, the Hon'ble jurisdiction High Court in Vavveru Co-operative Rural Bank Ltd. (supra), held that, if the original source of the invest....