{"id":1394,"date":"2010-02-11T16:22:27","date_gmt":"2010-02-11T10:52:27","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=1394"},"modified":"2010-02-11T16:22:27","modified_gmt":"2010-02-11T10:52:27","slug":"the-totgars-cooperative-vs-ito-supreme-court-interest-on-surplus-funds-is-other-income-and-not-eligible-for-dedn-us-80p","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/the-totgars-cooperative-vs-ito-supreme-court-interest-on-surplus-funds-is-other-income-and-not-eligible-for-dedn-us-80p\/","title":{"rendered":"The Totgars’ Cooperative vs. ITO (Supreme Court)"},"content":{"rendered":"\n\n
Click here to download the judgement (totgars_coop_society_interest_surplus_80P.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n

Interest on surplus funds is \u201cother income\u201d and not eligible for dedn u\/s 80P<\/strong><\/p>\n

The assessee, a co-op credit society, was engaged in providing credit facilities to its members and also marketing the agricultural produce of its members. The assessee had surplus funds which it invested in short-term deposits with banks and govt securities. The question arose whether the said interest earned on the said deposits was \u201cbusiness profits\u201d and eligible for deduction u\/s 80P(2)(a)(i). The assessee argued that its activity of providing credit facilities to its members was an \u201celigible activity\u201d u\/s 80P(2)(a)(i) and that as the investments were made as per statutory requirement, the benefit was allowable from the gross total income. HELD deciding against the assessee: <\/p>\n

(i) S. 80P(2)(a)(i) allows a deduction in the case of a co-op society engaged in carrying on the business of providing credit facilities to its members of the whole of the amount of profits and gains of business attributable to such activity. The words \u201cprofits and gains of business\u201d means \u201cbusiness profits\u201d and not \u201cIncome from other sources\u201d<\/strong>; <\/p>\n

(ii)The interest on surplus invested in short-term deposits<\/strong>, not being attributable to the business of providing credit facilities to the members or marketing of agricultural produce of the members, is assessable as \u201cother income\u201d and not as “business profits”<\/strong>; <\/p>\n

(iii) The words \u201cthe whole of the amount of profits and gains of business\u201d attributable to one of the activities specified in s. 80P (2)(a) mean that the source of income is relevant<\/strong> and that the income must be \u201coperational income\u201d<\/strong>. <\/p>\n","protected":false},"excerpt":{"rendered":"

The interest on surplus invested in short-term deposits, not being attributable to the business of providing credit facilities to the members or marketing of agricultural produce of the members, is assessable as \u201cother income\u201d and not as “business profits”. The words \u201cthe whole of the amount of profits and gains of business\u201d attributable to one of the activities specified in s. 80P (2)(a) mean that the source of income is relevant and that the income must be \u201coperational income\u201d.<\/p>\n

Read more ›<\/a><\/div>\n

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