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2020 (3) TMI 619 - AT - Income TaxDeduction u/s. 80P(2)(a)(i) - interest income earned from commercial and co-operative bank - interest income accrued to the assessee on the funds invested with the bank was considered as income from other sources u/s. 56 - HELD THAT:- Disallowance of expenses u/s. 14A ITAT has held that assessee was having mixed funds and the interest funds were more than investment in cooperative bank and cooperative societies no disallowance was called for from eligible deduction u/s. 80P(2)(d). Disallowance of claim of deduction u/s. 80P(2)(d) on the basis of attracting provision of section 14A of the Act as narrated in the case of ACIT vs. Sabarkantha District Co-operative Milk Producers Union Ltd. [2013 (9) TMI 1114 - ITAT AHMEDABAD] - On the other hand, the issue involved in this case of the assessee is claim of deduction of interest income u/s. 80P(2)(d) of the act earned on idle funds placed with co-operative bank. However, on the issue of earning similar nature of interest from the commercial bank the Jurisdictional Hon’ble High Court in the case of SBI vs. CIT [2016 (7) TMI 516 - GUJARAT HIGH COURT] has held that interest income on deposit placed with the commercial bank is not entitled for deduction u/s. 80P(2)(a)(i) of the act. In the light of the above, we are of the view that the income by way of interest earned by deposit of idle fund does not change its character irrespective of the fact whether such income of interest is earned from a schedule bank or a co-operative bank. The identical issue on the similar facts has been adjudicated by the Co-ordinate Bench of the ITAT after considering the decision in the case of Pr. CIT s. Tatagars Co-operative Sale Society [2010 (2) TMI 3 - SUPREME COURT] . The Narsanda Mercantile Co.Op. Credit Society Ltd. [2018 (8) TMI 1844 - ITAT AHMEDABAD] has adjudicated the identical issue on similar fact and held that earning of interest income either from nationalized or co-operative bank is not entitled for deduction u/s. 80P(2)(d) - Decided against assessee.
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