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2017 (11) TMI 1558 - AT - Income TaxDisallowance of a deduction u/s 80P(2) - whether the assessee could be considered as a co-operative bank? Held that:- Nothing was brought on record by the Revenue to show that the Reserve Bank of India declared it as a co-operative bank. Neither was the assessee a primary agricultural credit society nor was it a primary co-operative agricultural and rural development bank. The hon'ble Karnataka High Court in the case of CIT v. Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha Bagalkot [2015 (1) TMI 821 - KARNATAKA HIGH COURT] has clearly held that for a co-operative society to be considered as a co-operative bank, it was necessary that the Reserve Bank of India should have given such a classification to the said co-operative society. In the circumstances, we are of the opinion that section 80P(4) had no application in the case of the assessee. We do not find any reason to interfere with the order of the Commissioner of Income-tax (Appeals) in this regard. Appeal of the Revenue is thus dismissed. Treatment of interest under the head "income from other sources" instead of "income from business" - Held that:- It has not been disputed that interest income earned by the assessee were from deposits placed by it in banks. The contention of the assessee is that such interest should be considered only as part of its business income since the deposits were placed for meeting the requirements of statutory reserves under the Multi State Co-operative Societies Act, 2002. No doubt, in the case of Totgar's Co-operative Sale Society Ltd. (2010 (2) TMI 3 - SUPREME COURT) had held that interest received on deposits created out of sale proceeds received from the members not immediately disbursed to such members, was to be considered under the head "income from other sources". However, in the case before us, admittedly, the deposits were not out of sale proceeds from the members of the assessee-society. The Revenue has not rebutted the claim of the assessee that deposits on which interest was earned was for meeting investment requirement on statutory reserves under the Multi State Co-operative Societies Act, 2002. Clearly it was out of compulsions of business that the deposits were placed by the assessee in the banks. Earning of interest therefrom, in our opinion, could only be treated as income from its business. Thus we are of the opinion that the interest earned by the assessee could not have been treated under the head "Income from other sources" but only as a part of its business income. - Decided in favour of assessee.
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