TMI Blog2023 (12) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... interest paid on deposit made by members of the assessee cannot be allowed as cost of funds. HELD THAT:- Assessee is a co-operative society primarily engaged in providing credit facilities to its members. Naturally, the cost of funds will be primary cost for any entity engaged in such business / activities. It is well accepted that banking institutions which have similar operation to that of the assessee will also operate on net interest income which is arrived at by subtracting the interest they have to pay out of the interest income generated. The assessee had furnished detailed working with respect to the cost of funds which is coming to 77% of the interest income. The claim of assessee is backed by detailed workings which had no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the facts and in the circumstances of the appellant's case. 3. The learned CIT[A] ought to have appreciated that the cost of funds allowed at 15% of the interest income was erroneous and without any basis or rationale especially when the appellant had given details of the interest paid on deposits to the tune of Rs. 3,28,321/- and in the absence of any valid reasons for ejection of the said claim made by the appellant, the same ought to have been allowed under the facts and in the circumstances of the appellant's case. 4. Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the appellant denies itself liable to be charged to interest u/s.234-A, 234-B and 234-C of the Act, which under the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to furnish the cost of funds incurred for earning the interest on investments. Assessee provided the calculations for the cost of funds. The AO held vide order dated 11.06.2018 (order giving effect to CIT(A) s order) that cost of funds calculated by the assessee is not acceptable. The AO worked out the cost of funds by applying flat rate of 15% on ad-hoc basis on the interest income earned. 5. Aggrieved by the order of the AO dated 11.06.2018, assessee preferred appeal before the CIT(A). The CIT(A) confirmed the action of the AO in reducing the cost of funds to the extent of 15% of the amount of interest income earned and balance amount of Rs. 3,28,321/- was brought to tax. 6. Aggrieved by the order of the CIT(A), assessee has filed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration is with respect to deduction to be allowed under section 57 of the Act while computing interest income that is liable to be taxed under the head Income from Other Sources . Assessee is a co-operative society primarily engaged in providing credit facilities to its members. Naturally, the cost of funds will be primary cost for any entity engaged in such business / activities. It is well accepted that banking institutions which have similar operation to that of the assessee will also operate on net interest income which is arrived at by subtracting the interest they have to pay out of the interest income generated. The assessee had furnished detailed working with respect to the cost of funds which is coming to 77% of the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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