Assessee allowed deduction of interest income from investment with banks
Assessee allowed deduction of interest income from investment with banks
Assessee was a credit co-operative society, providing credit facilities to its members. It declared total income at NIL. AO held that interest income derived by assessee from State Bank of India was taxable u/s 80P(2)(a)(i) (of Income Tax Act, 1961) and 80P(2)(d). Accordingly, AO did not grant deduction of Rs.9,76,625. CIT(A) upheld AO's order. ITAT held that assessee was entitled for deduction of interest income derived from investment of surplus funds with banks also.-501440
1. The assessee was a credit co-operative society. It provided credit facilities to its members. It has filed its return of income declaring total income at NIL. According to the AO, the assessee-society had derived interest income at Rs.2,21,43,270/-, out of which, Rs.9,76,625/- was derived from State Bank of India. The ld.AO observed that as per provisions of section 80P(2)(a)(i) (of Income Tax Act, 1961) and 80P(2)(d) interest income earned out of investment/deposits with cooperative society were only eligible for deduction. The interest incomes earned from other than cooperative society were not eligible for deduction. Accordingly, the ld.AO did not grant deduction of Rs.9,76,625/-.
2. CIT(A) upheld the order of the AO.
3. On appeal, the ITAT held as under:
4. The Tribunal has placed its reliance upon the decision of the Hon'ble Karnataka High Court in the case of Guttigedarar Credit Co-op. Society Ltd. Vs. ITO (supra) which has considered the decision of the Hon'ble Supreme Court in the case of The Totgars' Cooperative Sales Society Ltd. Vs. ITO. Therefore, respectfully following the order of the Co-ordinate Bench, we are of the view that the assessee is entitled for deduction of interest income derived from investment of surplus funds with banks also. We allow the appeal of the assessee and delete the disallowance.
5. In the result, the appeal of the assessee is allowed.”
Case Reference- Mahidharpura Urban Credit Society Ltd. Vs. DCIT
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA.No.3312/Ahd/2015 /Asstt. Year: 2012-2013
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