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TMI Blog2012 (7) TMI 522X X X X Extracts X X X X X X X X Extracts X X X X ..... RT]that interest derived by a Cooperative Bank from investment of funds with RBI or SBI is exempt u/s 80P (a) (i) irrespective of the fact that investment is made out of the reserve funds or working capital. Interest earned on deposits in Post Office - Claim of exemption u/s 80P (2) - Held that:- The income earned on the leftover balances in the bank accounts of the society has a direct nexus with the main activity of the assessee for providing credit facilities to its member - income from post office is exempt under Section 10 (15)as also the CBDT Circular No.410 dated 12.2.1985, made it clear that the interest earned on saving account or CTD (Cumulative Time Deposit), the same would exempt from the income - income tax appeal is partly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 1985-86, the respondent assessee claimed deduction of income under Section 80P (2) (a) (i) on interest income earned from National Saving Certificate as well as the income from the interests on deposits in the post office. The Assessing Officer did not allow the exemption of income from interest on such deposits. The Appellate Authority partly allowed the appeal. On the question of income of interest the Appellate Authority found that Section 80P (2) (c) specifies and the deductions to the cooperative society on activities other than those specified in Clause (a) and Clause (b), independently of, or in addition to all or any of the activities specified. The expression 'attributable to', is much wider than the expression derived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim of the assessee. The CIT (A) also upheld the same. Sh. Anil Sharma the ld. AR of the assessee submitted that interest on deposit with Post Office was exempt u/s 10 (15) of the I.T. Act. He also said that the CBDT by its Circular No.410 dt. 12/2/1985 made it clear that the interest earned on saving account or CTD (Cumulative Time Deposit), the same would exempt from the income. The ld. AR of the assessee referred the Circular compiled at page 29 of the paper book. 20. On careful considerations of submissions from both sides and the material available in the appeal records, we find that the orders of the CIT (A) for respective assessment years on this issue are not justified. The income earned on the leftover balances in the bank accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from NSC is exempt under Section 80P (2) (a) (i) of the Act irrespective of the fact that investment is made out of reserve funds or working capital. So far as income from post office is concerned, it was held in para 13 that the interest from post office is exempt under Section 10 (15) of the IT Act as also the CBDT Circular No.410 dated 12.2.1985, which exempted the income on 7 accounts or CTD (Cumulative Time Deposit). Shri Sambhu Chopra, learned counsel for the department submits that the legal position has now been settled in Totgar Cooperative Sale Society Ltd. V. ITO, (2010) 322 ITR 283 (SC). The Supreme Court held that the interest income arising to a Cooperative Society carrying on business of providing credit facilities to its m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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