TMI Blog2021 (1) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... out of the surplus funds of the members retained by the society and were not immediately necessary for the business of the assessee therein. In the case before this Tribunal, the assessee society had to make the deposits into the Savings Bank A/c held with Kotak Mahindra Bank as a business requirement. Since the assessee s funds were available in the Savings Bank A/c, the assessee has earned certain interest income thereon. Thus, it can be seen that the interest income earned is not on fixed deposits, but it is on the funds which are available and which are required for the business purpose of the assessee. The decision of the Hon ble Supreme Court in the case of M/s Totgar s Co-Operative Sale Society Ltd is clearly not applicable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion called for by the AO. During assessment proceedings, the AO observed that the assessee has made deposits with Kotak Mahindra Bank and has earned interest income therefrom. AO held that such interest income cannot be treated as business income but has to be treated as income from other sources , and, accordingly, deduction u/s 80 P of the Act is not to be allowed. A Show Cause Notice was accordingly issued to assessee in response to which assessee vide letter dated 10.12.2018, filed the following reply. With regard to interest of ₹ 11,48,429/- on savings bank account, it is stated that the Society is allowed to open a savings bank account with bank to transact its activities, which in later years restricted to a current acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of surplus funds of Society is taxable under the provisions of S.56 of the Act. Accordingly, AO brought the sum of ₹ 11,48,437/- to tax. 2.2. Aggrieved, assessee preferred an appeal before the CIT(A), who confirmed the order of AO and the assessee is in second appeal before the Tribunal. 3. The Ld.Counsel for the assessee submitted that the amount deposited by the assessee into the S.B. account and the interest income earned has been offered to tax by assessee as business income. He prayed that since it has been accepted as business income, it has to be allowed as deduction u/s 80 P of the Act. 3.1. The Ld.DR, on the other hand, relied upon the decision of Hon ble Supreme Court and submitted that since interest is not earned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest income earned is not on fixed deposits, but it is on the funds which are available and which are required for the business purpose of the assessee. Therefore, the decision of the Hon ble Supreme Court in the case of M/s Totgar s Co-Operative Sale Society Ltd is clearly not applicable to the case before the Tribunal. Further the Hon ble Andhra Pradesh High Court in the case of CIT vs. Andhra Pradesh State Coop. Bank Ltd in ITA No.86/03 and others dated 7.6.2011 has clearly held that the interest income earned on deposits in the Bank is also in the nature of business income which is eligible as deduction u/s 80P(2) of the I.T. Act. 5. Respectfully following the above, I hold that the reliance of the AO and the CIT (A) on the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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