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2016 (3) TMI 14 - ITAT VISAKHAPATNAM

2016 (3) TMI 14 - ITAT VISAKHAPATNAM - TMI - Eligibility of deduction u/s 80P - Held that:- The assessee is Kakinada Co-operative Building Society engaged in the business of collecting the deposits, lending loans to its members for purchase of sites, buildings and construction of houses. When the assessee society receives the deposits from the members in the course of its business, if the deposits received is not necessary for immediate use of its business i.e. lend it to the members the same is .....

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they had deposited the money in a bank to earn the interest. The said interest income was attributable to the carrying of business of banking and therefore it was liable to be deducted in terms of section 80P(2)(a)(i) of the Act.

The Hon’ble Karnataka High Court in case of Guttigedarara Credit Cooperative Society Ltd. Vs. ITO (2015 (7) TMI 874 - KARNATAKA HIGH COURT ) by following the decision of A.P. High Court in the case of CIT Vs. Andhra Pradesh State Co-operative Bank Ltd. (201 .....

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A RAO, Judicial Member: These two appeals are filed by the assessee, one against the order of CIT(A), Visakhapatnam dated 22.3.2013 for the assessment year 2007-08 and the second against the order of CIT(A)-11, Mumbai Camp Office Visakhapatnam dated 26.2.2013 for the assessment year 2009-10. The cross appeal was filed by the revenue for the assessment year 2007-08 against the order of CIT(A), Visakhapatnam. 2. Facts are in brief that the assessee is a Co-operative Building Society Limited, engag .....

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e carried matter in appeal before the CIT(A) and raised mainly two grounds of appeals. The first ground relating to deduction u/s 80P of the Act and the second relating to taxability of interest income. 3. It was submitted before the Ld. CIT(A) that by mistake the assessee credit society did not claim the deduction u/s 80P of the Act and requested the A.O. to allow the deduction u/s 80P of the Act. The A.O. rejected the request of the assessee on the ground that the assessee did not file a revis .....

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e allowed deduction u/s 80P of the Act and contended that the A.O. did not consider deduction on technical grounds and also submitted that for the assessment year 2009-10, A.O. has granted exemption u/s 80P of the Act. The Ld. CIT(A) after considering the explanation of the assessee he has observed that I find from the assessment order that the deduction u/s 80P of the Act was not allowed as it was not claimed in the return of income filed. He further observed that the assessee being a cooperati .....

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ct to verification of eligibility conditions contained in section 80P of the Act. 4. In so far as taxability of interest on fixed deposit is concerned, it was submitted before the Ld. CIT(A) that the assessee collects the deposits from members and lends money to members for interest and while carrying out such activity, it has parked certain funds as a fixed deposits in the banks. Therefore, merely because the funds were parked in a bank deposit, the income generated from such deposits could not .....

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efore the Tribunal against the order of the CIT(A) in respect of interest income. The revenue also carried matter in appeal against the order of CIT(A) in respect of allowability of deduction u/s 80P of the Act. 6. The Ld. Counsel for the assessee has submitted that the assessee collects the deposits from the members and lends money to members for interest and this is the activity of the assessee and therefore the interest income earned by the assessee has to be treated as a business income of t .....

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not an income from other sources. 7. On the other hand, the Ld. D.R. has submitted that the interest income earned by the assessee is income from other sources not the business income and strongly supported the order passed by the A.O. 8. The Ld. Counsel for the assessee has submitted that the issue involved in this appeal squarely covered by the jurisdictional High Court in the case of CIT Vs. Andhra Pradesh State Co-operative Bank Ltd. (2011) 336 ITR 516 (AP) and also relied on the Hon ble Ka .....

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ers in the course of its business, if the deposits received is not necessary for immediate use of its business i.e. lend it to the members the same is deposited with the bank and interest income is earned. According to the A.O., the interest income earned by the assessee is an income from other sources and the same view has been confirmed by the CIT(A). After careful consideration of the orders of the authorities below and also considering the section 80P(2)(a)(i) of the Act, we find that the as .....

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