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2023 (9) TMI 828 - AT - Income TaxDeduction u/s 80P(2)(a) - interest income by the assessee from its funds parked with nationalized and commercial banks - HELD THAT:- As deposit of funds by the assessee society with the nationalized/commercial banks, earning interest thereon with total cost of investment shows that the investment made by the assessee society was in compliance to the mandatory provisions of Maharashtra Co-operative Society Act thus integral part of its business and profession. When the assessee is wholly and exclusively doing its business for its members, the earning of interest on FDs with the banks is incidental to the assessee society’s business of accepting the deposit and provision of credit facilities from/to its members. Hence, the interest income has rightly been treated as business income by the assessee society and assessed to tax under the head “profit and gains of business”. We are of the further view that in the present scenario parking of funds with nationalized and commercial banks is safe and easy for ease of business of the assessee society because many of co-operative banks have crumbled during the last many years. We are of the considered view that the CIT(A) has erred in disallowing the deduction claimed by the assessee society u/s 80P(2)(a)(i) and consequently we direct the AO to allow the deduction claimed by the assessee society.
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