9911796707
TMI Blog2012 (4) TMI 832X X X X Extracts X X X X X X X X Extracts X X X X ..... i) On Reserve Fund 1,54,781 iii) On Bad Debt Fund 1,99,593 v) On MSS Loan 1,48,752 II Other Receipts i) Subsidy 33,000 ii)Guest House Income(Net) 38,190 3. The brief facts of this issue are that while doing the scrutiny assessment the AO has disallowed the above interest and other receipts by observing as under :- i) Interest income on Fixed Deposit- General amounting to Rs. 30,00,659/- Interest of Rs. 1,48,752/- on M. S.S.S. as shown in the Profit Loss a/c has been received by the assessee as interest on investment of surplus fund parked in Fixed Deposit with Banks. From the details filed by the assessee during the course of scrutiny proceeding, it is found that the assessee has received interest on Fixed Deposit amounting to Rs. 31,49,411 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on Bad Debt Fund of Rs. 1,99,593/- and interest on SBF Loan of Rs. 988/- have been received from Banks on investment of surplus fund; Rs. 33,000/- has been received as subsidy and Rs. 38,190/- (Net) has been received from Guest House. 6. The Hon'ble Supreme Court of India in the case of Totgars' Co-operative Sale Society Ltd. Vs Income-tax Officer [2010] 188 Taxman 282 (SC), held that fund not required immediately for business of providing credit facilities and interest earned on such fund would come under the category of 'Income from Other Sources' taxable u/s 56 of the Income-tax Act, 1961 and the same would not qualify for deduction as business income u/s 80P(2)(a)(i) of the Income-tax Act, 1961. In view of the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich does not qualify for deduction u/s 80P(2)(a)(i). For similar reasons, .income from guest house and receipts on account of subsidy is taxable as other income which is not entitled for deduction u/s 8OP(2)(a)(i). The order of the AO is upheld. The grounds raised by the appellant are liable to be dismissed. 3.2. Aggrieved by this the assessee is in appeal before us. 4. After hearing the rival submissions and on careful perusal of materials available on record, including the decision of Hon'ble Apex Court in the case of The Totgars Co-operative Sale Society vs ITO (2010) 322 ITR 283 wherein both .AO as well as ld.CIT(A) has placed reliance. After careful perusal of material and the details of income as shown by the assessee, we observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds connote that the income in respect of which the deduction is sought must constitute operational income and not other income accruing to the society-- Therefore, the interest income of the assessee- society did not qualify for deduction under s. 80P(2)(a)(i) 4.1. Based on the above observations we are of the view that the Revenue is justified in disallowing the interest on Fixed Deposits amounting to Rs. 30,00,659/- but however, in respect of disallowance of the interest on reserve fund, Bad debt funds, SBF Loan, MSS loan, we are of the view that all these incomes are relating to the main activity of the asessee. Therefore they will not fall within the mischief of the Hon'ble Apex Court's direction. Similarly the net income from t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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