TaxTMI 
TaxTMI 
2026 (7) TMI 554
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....tion of the ld. AO in treating the interest income of Rs.92,82,955/- received from the banks as income from other sources denying the benefit of deduction u/s 80P of the Act. The assessee has also challenged that the ld. CIT (A) ought to have considered the corresponding interest expenses, which are required to be allowed against the gross interest received from the banks. 3. The facts in brief are that the assessee is a credit co-operative society, engaged in the business of giving credit facility to its members and has filed the return of income on 09.10.2018, declaring the return of income as NIL, after claiming the deduction u/s 80P(2)(a)(i) of the Act amounting to Rs.92,82,955/-. The case of the assessee was selected for scrutiny un....
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....as business income and deduction u/s 80P(2)(a)(i) Act was claimed. According to the ld. AO, the said income his not a business income but income from other sources and therefore, deduction u/s 80P of the Act was denied. In our opinion, the assessee is engaged in the business of advancing credit facilities to its members being a credit co-operative society and accepting the deposits from its members only. Therefore, the income derived from the surplus funds kept in the co-operative bank / Scheduled banks, cannot be treated as income from other sources. The case of the assessee is squarely covered by the decision of Hon'ble Jurisdictional High Court in case of the West Bengal State co-operative Agriculture & rural Development Bank Ltd. Vs....
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....ince the statute does 2025:CHC-OS:145-DB not use the expression 'derived from', but uses the expression 'attributable to', accepted the contention of the petitioner therein that clause (a) should receive a wider interpretation. It was pointed out that the decision of the Hon'ble Supreme Court in Vavveru Co-operative (supra) can be relied upon by the revenue in cases where the amount payable to the members was retained for a short duration and invested by the society, as a consequence of which the amount so retained would be a liability for the society. The facts of the case on hand is entirely different as was the case in Vavveru Co-operative Rural Bank Ltd. Furthermore, it was pointed out that in Tumkur Merchants Souhar....
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.... members nor was it a liability to its members, same would quality for deduction under section 80P(2)(a)(i). 14. Thus, the above decisions which have been referred to would clearly apply to the facts and circumstances of the assessee's case and this will lead to the irresistible conclusion that the Assessing Officer, the CIT(A) as well as the Tribunal erred in not granting the deduction as claimed by the assessee under section 80P(2)(a)(i) of the Act and also erred in following the decision in Totgars Cooperative Sales Society Ltd. (supra) which is not applicable to the facts and circumstances of the case. Accordingly, the substantial questions of law (1), (2) and (3) are answered in favour of the appellant/assessee." 5.1. W....