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2017 (4) TMI 1545 - AT - Income TaxDeduction u/s. 80P - interest bearing funds for normal business activity of advancing credit to members - CIT(A) concluding that there is no nexus between the interest/dividend income earned from the co-op, societies and the interest expenditure incurred by the assesses on borrowed funds on the ground that there is no proof of the investment of such interest bearing funds to earn the said income without appreciating the fact that the assessee has failed to substantiate the above in full measure with proper evidences - HELD THAT:- We have noticed that the assessee has been statutorily investing its surplus fund from the year 1992 with other Cooperative Societies which include Co-operative Banks and on such investments, the appellant has been receiving interest and dividend which has been claimed as deduction u/s. 80P(2)(d) of the Act. Provision of section 80P(4) are not applicable to the assessee, because section 80P(4) says that provision of this section shall not apply in relation to Co-op Bank other than Primary Agricultural Credit societies or a Primary Co-op agricultural and Rural Development Bank. Regarding eligibility for receiving interest received from the co-operative bank we have noticed from the judicial pronouncement in the case of Surat Vankar Sahakari Sangh Ltd. v. Assistant Commissioner of Income Tax [2016 (7) TMI 1217 - GUJARAT HIGH COURT]. As noticed from the finding of the Ld.CIT(A) that the assessee has claimed the gross amount u/s. 80P(2)(d) which includes interest income and dividend income received from other Co-operative societies. However, in the computation of income, assessee has restricted the deduction which was net income. CIT(A) is justified in his decision that the net income in the case of assessee allowable as deduction u/s. 80P(2)(d). In view of the above stated facts and detailed findings of the Ld.CIT(A) given in his order, we disinclined to interfere in the decision of Ld. CIT(A) - Decided against revenue.
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