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2014 (10) TMI 848 - AT - Income TaxEligibility for deduction u/s 80P - whether the interest income earned by the assessee society from making deposits in short term deposit in banks will qualify for exemption u/s 80P(2)(a)(i) - Held that:- The deposits which are made by the assessee are out of the deposit collected by the assessee from its members. The assessee society also provides loan and credit facilities to its members. When the funds are lying idle they are invested in the short term in bank deposits. In this view of the matter we find that assessee's contention is cogent that when the real income from the bank deposit has to be considered, it is to be seen in the light of the interest which the assessee has to pay to its members on its deposits and also the administration cost of making such deposits. This contention of the assessee has duly been accepted by the Revenue as is emanating from the order of AO in A.Yr.2009-10. In the said assessment order the AO had computed the gross interest on bank deposit at ₹ 1,24,16,335/-. From this the AO has allowed the interest paid by the assessee to its members amounting to ₹ 1,21,31,880/-. Only the resultant income from bank deposits amounting to ₹ 2,84,445/- was brought to tax. We do not find any reason as to why this principle should not be adopted in the current year. In our considered opinion the ld. CIT(A) has erred in not entertaining this plea of the assessee. We further find that the issue involved is covered in favour of the assesee by catena of decisions of the Tribunal in assessee's own case to held income from investment in banks and other financial institutions is the business income of the assessee society and it is eligible to get deduction under Section 80P(2)(a)(i) - Decided in favour of assessee
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