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TMI Blog2022 (2) TMI 1449X X X X Extracts X X X X X X X X Extracts X X X X ..... ational Co-operative Development Corporation[ 2020 (9) TMI 496 - SUPREME COURT] while considering a similar nature of dispute has held that when fund not immediately required for utilization is invested for a short period so that the fund does not lie idle and the income generation from such investment is necessarily interlinked to the business of the assessee, would thus fall under the head of profit and gains from business or profession - thus to hold that the interest income earned by the assessee has to be assessed under the head business income. Eligibility to claim deduction u/s 80P(2)(i)(a) - It needs to be factually verified wherefrom the assessee has earned the interest income. If the interest earned is from fixed deposits and savi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIT(A)-XVII has erred in law and on facts in not allowing expenses directly linked to the interest earned on FDR and saving account by the appellant. Hence, the deduction of same may be allowed. 3. Ground No. 1, being a general ground, does not require adjudication. 4. In Ground no. 2, the assessee has challenged the assessment of interest income earned on FDRs and saving bank account as income from other sources instead of business income. 5. Briefly the facts are, the assessee is a registered co-operative credit society. In the assessment year under dispute, the assessee filed its return of income on 29.03.2016 declaring nil income after claiming deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961 (hereinafter referred to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved, deduction under section 80P(2)(a)(i) would be available to the assessee only if the interest or dividend income is derived from other co-operative society and not from any bank. Thus, he held that the assessee would also not be eligible for claiming deduction under section 80P(2)(a)(i) of the Act. While coming to such conclusion, he relied upon the decision of the Hon ble Supreme Court in case of Totgars Cooperative Sale Society Ltd., 322 ITR 283 (SC) and Kherva Cooperative Credit Society Vs. ITO (citation not provided). Thus, ultimately, he assessed the interest income under the head income from other sources and consequently disallowed assessee s claim of deduction under section 80P(2)(a)(i) of the Act. Though, the assessee challenge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid to member and there are another administrative expenses incurred on it, proportionate expenses should be allowed under section 57(iii) of the Act. In support of his contention, learned counsel relied on the following decision: 1. National Co-operative Development Corporation Vs. CIT, Civil Appeal Nos. 5105-5107 of 2009, dated 11.09.2020 (Supreme Court). 2. Kherava Co-operative Credit Society Ltd. Vs. ITO, ITA No. 2704/Ahd./2015., dated 11.02.2016. 7. The learned Departmental Representative strongly relied upon the observations of departmental authorities. 8. I have considered rival submissions and perused the materials on record. The dispute in the present appeal is within a narrow compass. Firstly, whether the interest income earned on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... short period so that the fund does not lie idle and the income generation from such investment is necessarily interlinked to the business of the assessee, would thus fall under the head of profit and gains from business or profession. In my considered opinion, the aforesaid decision of the Hon ble Apex Court settles the issue in favour of the assessee. Therefore, I hold that the interest income earned by the assessee has to be assessed under the head business income. 9. Insofar as, assessee s claim of deduction under section 80P(2)(a)(i), it needs to be factually verified wherefrom the assessee has earned the interest income. If the interest earned is from fixed deposits and savings bank accounts held in other cooperative banks, then the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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