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TMI Blog2020 (4) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... use it is not cooperative society. Similar is the position with regard to the interest income on the loans given to the staff. CIT(A) has rightly disallowed claim of the assessee for grant of exemption - Decided against assessee. - ITA No. 750/Ahd/2018 - - - Dated:- 5-2-2020 - Shri Rajpal Yadav, Vice-President For the Assessee : None For the Revenue : Shri Dilipkumar S.DR ORDER Assessee is in appeal before the Tribunal against order of the ld.CIT(A)-10, Ahmedabad passed for the Asstt.Year 2014-15. The assessee has taken four grounds of appeal, out of which ground no.2 is the substantial ground whereas in other grounds, it has raised peripheral arguments revolving around Ground no.2 2. In ground no.2, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.9.2014 declaring NIL income after claiming exemption under section 80P(2) on the amount of ₹ 45,71,917/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee. The ld.AO had issued a show cause notice to the assessee inviting its explanation as to why interest income of ₹ 28,911/- received from Axis Bank and interest income of ₹ 6,192/- earned on the loan given to the staff member should not be excluded from the computation of exemption claimed under section 80P(2)(a)(i) of the Act. In response to the query of the AO, Shri Dinesh J. Parmar, Secretary of the Society attended and submitted the explanation. After hearing the explanation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view that interest on such investments, therefore, cannot fall within the meaning of the expression 'profits and gains of business'. It was held that such interest income cannot be said to be attributable to the activities of the society, namely, carrying on the business of providing credit facilities to its members or marketing of the agricultural produce to its members. The court further held that the words 'the whole of the amount of profits and gains of business' emphasise that the income in respect of which deduction is sought must constitute the operational income and not the other income which accrues to the society. The court observed that in that particular case, the evidence showed that the assessee-society earned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tural products of its members. Therefore, the above decision is not restricted only to the investments made by the assessee therein from the retained amount which was payable to its members but also in respect of funds not immediately required for business purposes. The Supreme Court has held that interest on such investments, cannot fall within the meaning of the expression 'profits and gains of business' and that such interest income cannot be said to be attributable to the activities of the society, namely, carrying on the business of providing credit facilities to its members or marketing of agricultural produce of its members. The court has held that when the assessee-society provides credit facilities to its members, it earns ..... X X X X Extracts X X X X X X X X Extracts X X X X
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