TMI Blog2015 (4) TMI 829X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 80P(2). Upon the pronouncement of the order by the Apex Court, in these appeals referred to supra, the income earned on the interest is declared as "other income" falling under Section 56 of the Income Tax Act. Then the next immediate question that follows is as to whether the entire fund i.e., in deposit with the Bank is taxable or the proportionate expenditure incurred by the appellant requires deduction. It is logical that when the Revenue is permitted to assess and recover taxes from assessee under Section 56 by treating the income earned by interest as income from "other sources", the appellant shall be entitled for proportionate expenditure cost incurred in mobilizing the deposit placed in the Bank/s. What can be taxed is only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2). No regular assessment was conducted, but a notice under Section 148A of Income Tax Act ( Act' for short) was issued by the respondent. Appellant raised an objection that Notice under Section 148 could not have been issued as prior consent of the Additional Commissioner was necessary. The appellant requested the respondent to accept the original returns and also filed one more return as a technical compliance and furnished the information called for. On completion of assessments, order dated 20.01.2003 came to be issued. However, pursuant to certain directions issued by the Additional Commissioner of Income Tax Range-1, Hubli under Section 144A for the assessment years 1991-92 to 1999-2000, the benefit of deduction under Section 80P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efit of deduction of interest came up for consideration before the Hon'ble Supreme Court in Civil Appeal Nos.1622/2010 to 1629/2010 filed by the Appellant and by order dated 08.02.2010 the said appeals have been disposed off by recording a finding as follows: The words the whole of the amount of profits and gains of business emphasise that the income in respect of which deduction is sought must constitute the operational income and not the other income which accrues to the Society. In this particular case, the evidence shows that the assessee-Society earns interest on funds which are not required for business purposes at the given point of time. Therefore, on the facts and circumstances of this case, in our view, such interest inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant further submits that the Assessing Officer has erred in coming to the conclusion that the appellant who is involved in the business of marketing of agricultural produce of its members are not exposed to any element or risk when funds are placed in bank deposits, bond and securities and on this premise, the Assessing Authority has wrongly held that the income so earned is income from other sources and therefore, disallowed the exemption under Section 80P(1)(i). He submits that in view of the fact that the issue has been answered by the Hon'ble Supreme Court holding that the appellant earns interest on funds which are not required for business purposes at the given point of time and further that in the facts and circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome falling under Section 56 of the Income Tax Act. Then the next immediate question that follows is as to whether the entire fund i.e., in deposit with the Bank is taxable or the proportionate expenditure incurred by the appellant requires deduction. It is logical that when the Revenue is permitted to assess and recover taxes from assessee under Section 56 by treating the income earned by interest as income from other sources , the appellant shall be entitled for proportionate expenditure cost incurred in mobilizing the deposit placed in the Bank/s. What can be taxed is only the net income which the appellant earns after deducting cost and expenditure incurred and administrative expenses incurred by the assessee. 13. Accordingly, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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