INCOME TAX ACT, 1961

Section 80P(2)

Deduction under section 80P(2) - Co-operative society - Interest on surplus lying with bank - Assessee being under legal obligation to keep 25% of its profits of reserved

Assessee-society claimed deduction under section 80P(2) as regards interest earned on surplus lying with banks. AO denied deduction on the ground that said income could not be termed as 'business income'.Held: It was undisputed fact that assessee society was required to deposit 25% of its profit as mandated by section 43(2) of MP Chattisgarh Societies Act, 1960. Accordingly, assessee was under legal obligation to keep 25% of its profits as reserves and interest accrued thereon certainly-partook character of business income of assessee, hence, it was eligible for deduction under section 80P(2).

REFERRED : Guttigedarara Credit Co-operative Society Ltd. v. ITO (2015) 377 ITR 464 (Karn) : 2015 TaxPub(DT) 4004 (Karn-HC),Tumkur Merchants Souharda Credit Co-operative Ltd. v. ITO (2014) 90 CCH 471 (Karn) : 2015 TaxPub(DT) 2857 (Karn-HC), Jafari Momin Vikas Co-operation. Credit Society Ltd. ITA No. 1491/Ahd/2012, Totgars Co-operative Sale Society v. ITO, Karnataka (2010) 322 ITR 283 (SC) : 2010 TaxPub(DT) 1466 (SC) and Totgars Co-operative Sale Society Ltd. v. ITO (2010) 322 ITR 272 (Karn) : 2010 TaxPub(DT) 216 (Karn-HC).

FAVOUR : In assessee's favour.

A.Y. : 2013-14 & 2014-15

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