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2016 (3) TMI 14 - AT - Income TaxEligibility of deduction u/s 80P - Held that:- The assessee is Kakinada Co-operative Building Society engaged in the business of collecting the deposits, lending loans to its members for purchase of sites, buildings and construction of houses. When the assessee society receives the deposits from the members in the course of its business, if the deposits received is not necessary for immediate use of its business i.e. lend it to the members the same is deposited with the bank and interest income is earned. According to the A.O., the interest income earned by the assessee is an income from other sources and the same view has been confirmed by the CIT(A). After careful consideration of the orders of the authorities below and also considering the section 80P(2)(a)(i) of the Act, we find that the assessee has deposited some funds in the KCTB and DCCB and other banks when those funds are not necessary for the immediate business purpose. Therefore, they had deposited the money in a bank to earn the interest. The said interest income was attributable to the carrying of business of banking and therefore it was liable to be deducted in terms of section 80P(2)(a)(i) of the Act. The Hon’ble Karnataka High Court in case of Guttigedarara Credit Cooperative Society Ltd. Vs. ITO (2015 (7) TMI 874 - KARNATAKA HIGH COURT ) by following the decision of A.P. High Court in the case of CIT Vs. Andhra Pradesh State Co-operative Bank Ltd. (2011 (6) TMI 215 - ANDHRA PRADESH HIGH COURT ) has held that “interest earned on the deposits in the bank by the assessee cooperative society providing credit facility to its members would be quantified for deduction u/s 80P of the Act - Decided in favour of assessee
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