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2022 (4) TMI 174 - AT - Income TaxDeduction u/s 80P - as per AO interest from Co-op bank is taxable u/s.56 - assessee was in the business of providing credit facilities to its member and earned entitled to deduction u/s.80P(2)(a)(i) itself of the Act - said interest was attributable to business carried on by the assessee and there was no investment out of surplus funds generated - HELD THAT:- Interest income received by the assessee society from its short term deposits with cooperative banks is not to be construed as income from its investments with any other co-operative society, conclude, that the interest income received by the assessee society on its investments/deposits with the Co-operative Banks would be eligible for deduction u/s 80P(2)(d) - Grounds of appeal No.(s) 1 and 2 are allowed in terms of our aforesaid observations. Interest income earned by the assessee society on its deposits with the banks is eligible for deduction u/s 80P(2)(a)(i) - Whether or not the interest income earned by the assessee society on its surplus funds, which, in the normal course of its business of providing credit facilities to its members was parked as short term deposits with the banks, i.e, at a point of time when there were no takers for the said funds, would be eligible for deduction u/s. 80P(2)(a)(i) of the Act? - We are of the considered view that as the amount deposited by the assessee society for a short term with the banks, i.e, Co-operative banks or nationalized banks in the course of its business of providing credit facilities to its members, was in the nature of a simplicitor parking of its surplus/excess idle funds for which there were no takers at the relevant point of time, therefore, the same, as stated by the ld. A.R, and rightly so, was inextricably inter-linked, or, in fact interwoven with its aforesaid primary activity, i.e, of providing credit facilities to its members. We are of the considered view, that as held in the case of Guttigedarara Credit Co-operative Society Ltd. [2015 (7) TMI 874 - KARNATAKA HIGH COURT] and Tumkur Merchants Souharda Cooperative Ltd. [2015 (2) TMI 995 - KARNATAKA HIGH COURT] the interest income earned by the assessee society on the surplus amount that was parked by it as short term deposits with the banks, i.e, Co-operative banks and nationalized banks would duly be eligible for deduction u/s.80P(2)(a)(i) - We, thus, in terms of our aforesaid observations set-aside the order of the CIT(Appeals), and direct the AO to allow the assessee’s claim for deduction u/s 80P(2(a)(i) qua the interest income received by it on deposits with the banks. Grounds of appeal No.(s) 3 and 4 are allowed in terms of our aforesaid observations.
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