TMI Blog2014 (8) TMI 946X X X X Extracts X X X X X X X X Extracts X X X X ..... i) of the I.T. Act. In view of the above judgment of the Hon'ble Supreme Court in the case of Ramanathapuram District Co-op Central Bank Ltd. (2001 (10) TMI 9 - SUPREME Court), we are inclined to decide the issue in favour of the assessee. Interest earned on fixed deposits with the Co-operative Bank, cant be considered as business income. It is to be considered as income from other sources as held by the Hon'ble Supreme Court in the case of Totgars Co-operative Sale Society Ltd. v. ITO (2010 (2) TMI 3 - SUPREME COURT) wherein it was held that the assessee being Co-operative Society is engaged in providing credit facilities to its members or marketing agricultural produce of its members, interest earned by it by investing surplus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. AR submitted that this amount is directly linked to the business carried on by the assessee and this has to be considered as income from business so as to grant deduction u/s. 80P of the Act . According to the Ld. AR the grant received from the Coir Development Directorate as Market Development Allowance is business income and this was the subject matter of dispute before the Hon'ble Supreme Court in the case of CIT v. U.P. Co-operative Federation Ltd. (176 ITR 435). The Ld. AR also relied on the judgment of the Hon'ble Supreme Court in the case of CIT v. Ramanathapuram Distt. Co-op Central Bank Ltd. (255 ITR 423), wherein it was held that interest on securities, subsidies from the Government and dividend received by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strict Co-op Central Bank Ltd. (supra), we are inclined to decide the issue in favour of the assessee. This ground of the assessee is allowed. 6. The next ground in this appeal is with regard to disallowance of claim for deduction u/s. 80P(2)(d) of the I.T. Act on the reason that the assessee has received interest from the co-operative bank and not the co-operative society. 7. The Ld. DR relied on the decision of the CIT(A) and submitted that the benefit of section 80P(2)(d) of the Act is allowable only in respect of any income by way of interest derived by the Co-operative Society from its investments with any other Co-operative Societies. In the instant case, the deposit has been made with a Co-operative Bank and the Act has well di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or marketing agricultural produce of its members, interest earned by it by investing surplus funds in short term deposits would fall under the head income from other sources taxable u/s. 56 of the I.T. Act and it cannot be said to be attributable to the activities of the Society and therefore, the interest did not qualify for deduction u/s. 80P(2)(a)(i) of the I.T. Act. 9. In the present case, we find that the assessee has earned interest income on fixed deposits made by the assessee in a Co-operative Bank and the interest income earned on the surplus funds of the assessee cannot be considered as business income so as to be entitled for deduction u/s. 80p(2)(a)(i) of the I.T. Act. Thus, this ground of the assessee is dismissed. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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