9911796707
TMI Blog2012 (9) TMI 1250X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 2004-05. The department has preferred the appeal on following substantial questions of law as follows:- (1) Whether on the facts and in the circumstances of the case, the Tribunal is justified in upholding the order of the CIT (A) in holding that interest earned out of surplus funds lying deposited with the post office, commercial banks and dividend other than co-operative societies qualify for deduction u/s 80-P (2) (d) of the Act as income derived from business and profession? (2) Whether on the facts and in the circumstances of the case, the Tribunal is justified in confirming the order of CIT (A) that the investments made in the post office, commercial banks, interest from FDR's and dividend are exempt u/s 80-P (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retained by it. In this case, we are concerned with the tax treatment of such amount. Since the fund created by such retention was not required immediately for business purposes, it was invested in specified securities. The question, before us, is - whether interest on such deposits/securities, which strictly speaking accrues to the members' account, could be taxed as business income under Section 28 of the Act? In our view, such interest income would come in the category of Income from other sources , hence, such interest income would be taxable under Section 56 of the Act, as rightly held by the Assessing Officer. In this connection, we may analyze Section 80P of the Act. This section comes in Chapter VI-A, which, in turn, deals with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bers, it earns interest income. As stated above, in this case, interest held as ineligible for deduction under Section 80P(2)(a)(i) is not in respect of interest received from members. In this case, we are only concerned with interest which accrues on funds not required immediately by the assessee(s) for its business purposes and which have been only invested in specified securities as investment . Further, as stated above, assessee(s) markets the agricultural produce of its members. It retains the sale proceeds in many cases. It is this retained amount which was payable to its members, from whom produce was bought, which was invested in short-term deposits/securities. Such an amount, which was retained by the assessee-Society, was a liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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