2023 (2) TMI 1328 - AT - Income Tax

Deduction u/s 80P - amount of interest received on deposits in savings bank account with Axis Bank - AO made addition observing that the assessee society also received interest on account of staff loan of an amount which is not admissible for the deduction u/s 80P(2)(a)(i) HELD THAT - The fact remains that the assessee Co-operative Society has maintained its account with Axis Bank which is not a Co-operative Bank but the interest income derived on savings Bank account maintaining with Axis bank as business income of the assessee. But as per the decision in case of Totgar s Co-operative Sales Society Limited 2010 (2) TMI 3 - SUPREME COURT the surplus fund which immediately not required for business purpose has been invested for the short period and such investment upon which interest is derived is not eligible for deduction u/s 80P of the Act. In the present case, the assessee Cooperative Credit Society has those savings bank account with Axis Bank and, therefore, the interest income received thereon is eligible under Section 80P of the Act. As regards interest derived from loan given to staff, the same is also eligible for deduction u/s 80P of the Act as the staffs are the members of Co-operative Credit Society as they are employees of Axis Bank. Thus, AO as well as the CIT(A) was not right in rejecting the deduction u/s 80P of the Act. Appeal of the assessee is allowed.

Summary

The appeal was filed by the Assessee against the order dated 24.01.2018 passed by the CIT(A)-10, Ahmedabad for the Assessment Year 2014-15. The Assessee challenged the denial of deduction under Section 80P of the IT Act and the addition of Rs.35,103. The Assessee, a Co-operative Society, received interest on deposits with Axis Bank. The Tribunal allowed the appeal, stating that the interest income is eligible for deduction under Section 80P of the Act.