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TMI Blog2022 (3) TMI 968X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in affirming with the Ld. AO disallowing interest outgo on bank loans/ overdrafts as business expense amounting to Rs. Rs. 49,42,618/-. 2. The Ld. CIT(A) has erred affirming with Ld. AO in not considering the additions amounting to Rs Rs. 49,42,618/- as part of total income of the coop credit society and hence allowable as deduction u/s 80P(2)(a)(i). 3. The appellant further reserves the right to add, amend or alter the aforesaid grounds of appeal as they may think fit by themselves or by their representatives." 2. The fact in brief is that return of income declaring total income of at Rs.nil was filed on 26.11.2014. The return was subject to scrutiny assessment and notice u/s 143(2) of the Act was issued on 28.08.2015. In spite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the lower authorities. 5. Heard both the side and perused the material on record. The assessee is a cooperative society having business of accepting deposit and lending money to the members of the society. The assessee filed its Income Tax return for A.Y. 2014-15 declaring total income of Rs. 30,97,061/- and claimed deduction u/s 80P(2)(a)(i) of the I.T. Act, 1961. Since, the A.O passed an order u/s 144 of the Act, therefore, claim of deduction u/s 80P(2)(a)(i) of Rs. 30,97,061/- was disallowed. The A.O has also added the amount of interest paid by the assessee to its members of Rs. 1,05,25,990/- and amount of Rs. 49,42,618/- as interest of bank loan/overdraft to the bank. The A.O has disallowed the entire expenses and also disallowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who in return paid interest on the advances and income had been generated to the society. Thus, the AO accepted that there was no direct income generated from the deposits but only by utilizing that money for making advances to its members. The income contemplated u/s 80P(2)(a)(i) & (iv) is the income from carrying on the business of banking or providing credit facilities to its members or income earned by the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members. The source of funds utilized for earning these incomes cannot be a basis for making disallowance under these provisions. The business of banking cannot be restricted to carrying on activiti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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