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2018 (1) TMI 1670 - ITAT CHENNAIDeduction u/s 80P - interest income earned on staff advances - HELD THAT:- It is not disputed that assessee was given deduction u/s.80P(2)(a)(i) of the Act on interest earned by it from its business of providing credit facility to its members. Such deduction was denied only on the interest received by the assessee on advances given to employees and interest earned on the deposits in savings bank account. In so far as interest earned from employees are concerned, contention of the assessee is that this was to be construed as a part of its main business activity of providing credit facility to its members. Certificate of registration of the assessee issued by the office of the Central Registrar of Cooperative Societies, which is available on record, clearly indicate that it is a Multi State Co-operative Society. It is obviously not a society engaged in the business of banking. As noted by the Hon'ble Apex Court in the case of The Citizen Co- operative Society Ltd [2017 (8) TMI 536 - SUPREME COURT] there are two classes of businesses mentioned in the above clause. First class is those Co-operative societies carrying on business of banking and second class is Co-operative societies providing credit facilities to its members. Assessee falls in the second class. While holding that liberal interpretation has to be given for Sec.80P(2)(a)(i) of the Act, since said Section was enacted for encouraging its Co-operative Sector, their lordships took a view that interest earned by a Co-operative Societies providing credit facilities to its Associate Members would not be eligible for deduction u/s. 80P(2)(a)(i) of the Act. If interest earned from credits provided to Associate Members is not eligible for claiming the benefit of Section 80P(2)(a) (i) of the Act, it will nigh be impossible to give such benefit to interest earned on advances given to staff. Considering the view taken by Hon'ble Apex Court on the extent of applicability Sec. 80P(2)(a)(i) of the Act, on a Co-operative Society providing credit facilities to its members, the decision of Jaipur Bench of the Tribunal in the case of Jalwar Sahkari Bhoomi Vikas Bank Ltd . [2015 (3) TMI 1411 - ITAT JAIPUR] relied on by the ld. Authorised Representative, in our opinion pales into insignificance. Availability of such deduction on interest earned from deposits with savings bank account - Except for stating that the bank account on which it had earned interest was maintained with Schedule bank to enable it to carry out day to-day business, nothing has been brought on record by the assessee to show how such bank account was used for its business. What I notice is that interest was earned was savings bank account and saving bank accounts are not generally used for regular business activity. Assessee was also unable to demonstrate that what was parked by it in its saving bank account was only temporary surplus. Coming to the decision of Bangalore Bench of the Tribunal in the case of M/s. KPTC & HESCOM Employees Co-Op Credit Society Ltd. [2015 (10) TMI 941 - ITAT BANGALORE] strongly relied on by the ld. Authorised Representative, money which was deposited was surplus remaining with the concerned assesses since there were no takers for loans. Against this, as mentioned be me nothing was brought on record by the assessee to show that deposits in the savings bank were money meant for lending remaining surplus because there were no takers. No reason to interfere with the order of the ld. Commissioner of Income Tax (Appeals) on both the issues raised by the assessee
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