TMI Blog2018 (7) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to be maintained by the assessee society then the interest earned on such bank deposits made out of these funds is liable to be assessed as income from other sources u/s 56 of the Act. Direct the Assessing Officer to conduct necessary inquiry in this matter and also direct the assessee to produce the relevant documents, records, bylaws as well as rules and regulations of cooperative society to demonstrate that the fixed deposits which have been made are for the funds statutorily required to be maintained by the society and to this extent if the assessee is able to demonstrate this fact, the benefit of section 80P(2)(a)(i) may be given to it. The Assessing Officer is directed to examine the material produced by the assessee before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has earned interest income of ₹ 1,24,67,426/- from the fixed deposit receipts with various banks wherein surplus funds were kept by the society. He further noticed that the assessee derives income from money lending to the members of the society which is mainly the business operation of the society and, therefore, took a view that interest from banks which is earned on surplus funds lying in the bank cannot be treated as business income and should be taxed as Income from other sources u/s 56 of the Act. The learned Assessing Officer denying the benefit of deduction u/s 80P of the Act on alleged interest on FDR added the interest income of ₹ 1,24,67,426/- under the head income from other sources and completed the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court (2010) 322 ITR 283. 5. On the other hand, the learned DR vehemently argued supporting the orders of the authorities below. 6. We have heard both the parties and perused the material available on record. The only issue before us is whether the lower authorities were justified in treating the interest income from bank deposits of ₹ 1,24,67,426/- as income from other sources thereby denying the benefit under section 80P(2)(a)(i) of the Act. We find that the assessee society is mainly engaged in the business of borrowing and lending money to its members. This fact is not in dispute that the alleged interest of ₹ 1,24,67,426/- has not been earned out of the business operation of lending money to its members. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 201125 Dividend fund 5061214 Profit fund 1517177 Credit fund 1517182 Festival fund 215458 Profit and loss account 10439468 Dead Stock fund 542688 126430656 7. We observe that during the course of hearing the assessee referred to the relevant sections of the manual meant for cooperative societies registered under the Madhya Pradesh. On perusal of the relevant sections we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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