SHRI BILURU GURUBASAVA SAHAKARI PATTINA SANGH NIYAMIT,BAGALKOT vs. INCOME TAX OFFICER, WARD-1, BAGALKOT

ITA 417/BANG/2025Status: DisposedITAT Bangalore16 September 2025AY 2020-21Bench: SHRI WASEEM AHMED (Accountant Member), SHRI KESHAV DUBEY (Judicial Member)19 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that interest earned on surplus funds, not immediately required for business operations and invested with the primary intention of earning interest, is not attributable to the core business activities of providing credit facilities. Therefore, such interest income is not eligible for deduction under Section 80P(2)(a)(i).

What were the facts?

The assessee, a co-operative society, claimed deduction under Section 80P(2)(a)(i) for interest income earned on investments made from surplus funds. The Assessing Officer (AO) disallowed this deduction, treating the interest as 'income from other sources'. The CIT(A)/NFAC upheld the AO's decision.

What were the issues?

Whether interest income earned by a co-operative society on surplus funds invested in banks is eligible for deduction under Section 80P(2)(a)(i) as business income, or is taxable as income from other sources.

Which sections of the Income-tax Act were involved?

Section 80P(2)(a)(i),Section 56

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Income Tax Appellate Tribunal, “B’’BENCH: BANGALORE

Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY

Hearing: 19.06.2025Pronounced: 16.09.2025

PER KESHAV DUBEY, JUDICIAL MEMBER:

These appeals at the instance of the assessee are directed against the orders of the ld. CIT(A)/NFAC both dated 16.01.2025 vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1072236566(1) for the AY 2020-21 & vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1072237006(1) for the AY 2022-23 passed u/s. 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2018-19. 2. The assessee has raised the following grounds of appeal in ITA No.417/Bang/2025 for the AY 2020-21:

1.

That the order of the learned Commissioner of Inc

The order continues below.

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