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TMI Blog2021 (12) TMI 929X X X X Extracts X X X X X X X X Extracts X X X X ..... 80P(2)(a)(i) - the profits and gains attributable to non-members arising as a result of advancement of loans was held to be not an allowable deduction under Section 80P(2)(a)(i) of the Act. In view of the above, we do not find any merits in the argument advanced by the learned counsel for the assessee. Determine the income which is not eligible for deduction under section 80P(2)(a)(i) - Assessee is not maintaining any separate books of accounts qua the income from nonmembers as discussed above. The income on the deposits from the non-members has been treated as income from other sources but the gross income cannot be excluded from the deduction available to the assessee under the provisions of section 80P(2)(a)(i) of the Act. It is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see for the different assessment years against the separate orders of the Learned Commissioner of Income Tax (Appeals)-5, Vadodara, of even date 06/05/2019 arising in the matter of assessment order passed under s. 143(3) of the Income Tax Act, 1961 (here-in-after referred to as the Act ) relevant to the Assessment Years 2014-15 2015-16. First we take up ITA No. 1308/AHD/2019 for A.Y. 2014-15 2. The only issue raised by the assessee is that the learned CIT-A erred in confirming the order of the AO by sustaining the addition of ₹ 4,65,000.00 by disallowing the deduction claimed under section 80P(2)(a)(i) of the Act. 3. The facts in brief are that the assessee in the present case is a co-operative society and engaged in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gible for deduction under section 80P(2)(a)(i) of the Act. If there is any income arising to the co-operative society from the non-members that will not be subject to deduction under section 80P(2)(a)(i) of the Act. In holding so we draw support and guidance from the judgment of the Hon ble Gujarat High Court in the case of State Bank of India versus CIT reported in 72 Taxmann.com 64 wherein it was held as under: The Income Tax Appellate Tribunal was also justified in holding that interest income of ₹ 16,14,579/- and ₹ 32,83,410/-respectively on deposits placed with State Bank of India was not exempt under section 80P(2)(a)(i) of the Income Tax Act, 1961. 8. In view of the above, it is only the interest derived from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 80P(2)(a)(i) of the Act. The pertinent observation of the Hon'ble Court is reproduced as under: Clearly, therefore, once section 80P(4) is out of harm's way, all the assessees in the present case are entitled to the benefit of the deduction contained in section 80P(2)(a)(i), notwithstanding that they may also be giving loans to their members which are not related to agriculture. Also, in case it is found that there are instances of loans being given to nonmembers, profits attributable to such loans obviously cannot be deducted. 9.1 Thus, the profits and gains attributable to non-members arising as a result of advancement of loans was held to be not an allowable deduction under Section 80P(2)(a)(i) of the Act. In view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for the purpose of earning such income. Thus we direct the AO to work out the interest income from the non-members after deducting the corresponding expenses incurred by the assessee in generating the interest income. To our understanding such expenses have to be brought on record by the assessee based on cogent materials. Furthermore, if the assessee has made deposits in the banks out of the money borrowed from the members, then the corresponding interest cost borne by the assessee should be allowed as deduction. 9.4 Thus, we hold that there is no infirmity in the order of the learned CIT (A), requiring any interference. Hence, we uphold the same. Hence, the ground of appeal of the assessee is dismissed in terms of above direction. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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