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2020 (6) TMI 630 - AT - Income TaxExemption u/s 80P(2)(a)(i) - advancing of loan to Members of the Society is not at par with providing credit facility to its members and thus the assessee was not entitled to a claim of exemption - treating interest earned on Fixed Deposit and Savings account as income from other sources and not business income - HELD THAT:- Where a co-operative society is engaged in carrying on business of giving loans and accepting deposits from its members, the income which relates to the business of these facilities to its members or providing credit facilities to its members will be eligible for deduction u/s 80P(2)(a)(i). There is no prohibition u/s 80P not to allow deduction to such co-operative societies in respect of these facilities provided to its members. The provisions of Sec. 80P(2)(a)(i) are applicable to a co-operative society which is engaged in carrying on banking business facilities to its members if it is not a co-operative bank. The ratio laid down in the judgment of Totagars Co-operative Sale Society Ltd. vs. ITO [2010 (2) TMI 3 - SUPREME COURT] cannot apply in present case as the facts are different in that case. Thus, the CIT(A) wrongly applied the ratio in present case. Therefore, interest on saving bank account of the members is business income and cannot be termed as income from other sources as it has direct nexus of this income with the activity of business of providing credit facilities to its members who are banks. Hence, the CIT(A) was not correct in holding that the said interest is income from other sources. Section 80P(2)(i)(a) is very much applicable to the present assessee society. - Decided in favour of assessee.
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