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2019 (8) TMI 508 - AT - Income TaxRevision u/s 263 - interest derived on the deposits of surplus funds with the bank is not entitled for deduction u/sec. 80P(2)(a)(i) and the same is wrongly allowed by the AO - HELD THAT:- In the present case, the assessee while carrying its activities i.e. extending credit facilities to its members, collected the deposits which are not immediately necessary to extend the credit facilities to its members, deposit in the bank and interest received. We find that there is proximity between the business carried by the assessee and the interest received. The above decision of the Hon'ble Andhra Pradesh High Court is squarely applies to the facts of the present case. Therefore respectfully following the decision in the case of Andhra Pradesh State Co-op Bank Ltd. [2011 (6) TMI 215 - ANDHRA PRADESH HIGH COURT] and also by following the decision of the coordinate bench of the tribunal in the case of M/s. Kakinada Co-op Building Society Ltd. [2016 (3) TMI 14 - ITAT VISAKHAPATNAM] we hold that the interest income received by the assessee by depositing the surplus funds collected from the members is eligible for deduction under section 80P(2)(a)(i). Insofar as the judgment of the Hon'ble Supreme Court in the case of Totgars Co-operative Credit Society Ltd. [2010 (2) TMI 3 - SUPREME COURT] is concerned, the Hon'ble Andhra Pradesh High Court has considered and discussed elaborately. In view of the above, the order passed by the ld. CIT(A) is to be reversed, accordingly we reverse the order passed by the ld. CIT(A). Thus, this appeal filed by the assessee is allowed. We find that the order passed by the AO is neither erroneous nor prejudicial to the interests of the Revenue. Therefore, the order passed by the ld. Pr. CIT is hereby quashed and the appeal filed by the assessee is allowed.
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