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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 ..... may be deleted. 2 That the Honorable CIT(A)-XVII has erred in law and on facts in sustaining the treatment of interest income on FDR of Rs. 14,99,913.00 and saving bank account of Rs. 49,984.00 as income from other source instead of income from business on illegal and untenable grounds. Hence, the direction should be given to treat as business income. 3 That the the Honorable CIT(A)-XVII has erred in law and on facts in sustaining the disallowing of deduction under 80P(2)(a)(i) of Rs. 15.49.897.00 on illegal and untenable grounds. Hence, the deduction of Rs. 15.49897.00 may be allowed. 4 Without prejudice to the above grounds, the Honorable CIT(A)-XVII has erred in law and on facts in not allowing expenses directly linked to the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different members for necessary purpose and to undertake thrift and credit business. He held, the banks, wherein, assessee has invested in FDRs and saving bank accounts and earned interest income thereon, are not members of the assessee society. Further, he observed, providing loans and advances to banks and earning interest on the same is not part of business activity of the assessee. Thus, he held that the interest income earned by the assessee cannot be treated as 'income from business or profession' but has to be assessed under the head 'income from other sources'. Further, referring to the provision contained under section 80P(2)(d) of the Act, he observed, deduction under section 80P(2)(a)(i) would be available to the assessee only if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbers. Therefore, the interest earned on FDRs and savings bank accounts cannot be considered in isolation of its business activity. Thus, he submitted, the interest income earned has to be assessed under the head 'income from business or profession'. He submitted, the decision relied upon by the departmental authorities are factually distinguishable, hence, inapplicable to assessee's case. Thus, he submitted, interest income should be assessed as business income and assessee's claim of deduction under section 80P(2) should be allowed. Without prejudice, he submitted, since the investments made in FDRs and savings bank accounts are out of funds taken on interest paid to member and there are another administrative expenses incurred on it, pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n my view, the aforesaid contention of the assessee merits consideration. When it is an accepted position that assessee is lending to its members for which it borrows funds, it has to be held that the unutilized borrowed funds temporarily parked as investments in FDRs and savings bank accounts has to be considered to be in the process of its business activity. More so, when the interest income earned merges with its funds utilized for lending to member. In case of National Co-operative Development Corporation (Supra), the Hon'ble 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 generati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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