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2023 (5) TMI 466 - AT - Income TaxDeduction u/s 80P(2)(a)(i) - interest derived by the assessee on deposits with banks/institutions - Claim denied by AO on the ground that the Union Bank of India from which the assessee derived such interest is not a co-operative bank - HELD THAT:- The assessee is involved in sale of rice, kerosene, sugar etc. A perusal of the balance sheet as on 31/03/2018 does not reveal any liability towards its members in respect of payment of any dues to them. All these things clearly establish that the funds deposited by the assessee with the Union Bank of India are undoubtedly the own funds of the assessee and none of such fund represents any liability of the assessee to its members or anyone else. On a threadbare analysis of the provisions under section 80P in the light of various decisions including the decision of Totgars Co-operative Sale Society Ltd. [2010 (2) TMI 3 - SUPREME COURT] and CIT vs. Andhra Pradesh State Co-operative Bank Ltd[2011 (6) TMI 215 - ANDHRA PRADESH HIGH COURT] the Hon’ble High Court reached a conclusion that if the investment is made in fixed deposits in nationalised banks from out of the own funds of the assessee, the interest derived from such investment would be from the activities listed in clause (i) to (vii) of section 80P(2)(a) of the Act and would be eligible for deduction. It is therefore, clear that the assessee being a primary agricultural co-operative society invested the own surplus funds with the Union Bank of India and, therefore, the assessee is entitled to claim the deduction under section 80P(2)(a)(i) of the Act. With this view of the matter, we direct AO to delete the addition made by disallowing the deduction claimed under section 80P(2)(a)(i) of the Act. Appeal of the assessee is allowed.
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