Treatment of interest received on fixed deposits while computing deduction u/s 80 p
This query is : Open
26 February 2016
My client is cooperative patsanstha. Its profit as per p&l account is 360987. It invested some amount with co-operative bank and some amount in nationalised bank as fixed deposit. It received interest of rs. 150000 from those deposits ( rs. 100000 from nationalised bank and rs. 50000 from co operative bank. Please guide what is the treatment of this interest while computing deduction u/s 80P
26 February 2016
If the investments made with the Banks are attributable to its banking or credit business then the whole interest is exempted u/s 80P(2)(a)(i).
27 February 2016
thank you sir
27 February 2016
interest received on loans given to members is exempt. what is treatment of interest on fixed deposits with banks. is it attributable to credit business or not
28 February 2016
Dear Santhosh,
The Hon apex Court in the case of Totgars' sale & consumer Co-operative society has held that the interest from investment is not eligible for deduction u/s 80P. The Hon High Courts have made it clear that the Apex Court was dealing with the case of a sales co-opeartive society and not a Credit co-operative Society. There are plethora of decisions of ITATs and High Court in which it was held that the interest from investment of all credit co-operative societies are eligible for deduction u/s 80P. One of such is the decision of Hon Gujarat HC in the case of Jafari momin credit co-operative society.
Also vide decison of Hon HC of Bombay & Goa in Quepam urban Co-operative Society, Karnataka HC in Bangalore commercial transport co-operative society and ITAT, Delhi in Jwala Co-op thrift & credit society etc.. These decisions distinguish the interest earned from investment by credit societies and other co-operatives and hold that ratio of totgar case is not applicable to credit co-operatives.
Still some of the Department officials blindly depends on the decision of Apex court to deny deduction u/s 80P to all co-operative societies.
The Hon apex Court in the case of Totgars' sale & consumer Co-operative society has held that the interest from investment is not eligible for deduction u/s 80P. The Hon High Courts have made it clear that the Apex Court was dealing with the case of a sales co-opeartive society and not a Credit co-operative Society. There are plethora of decisions of ITATs and High Court in which it was held that the interest from investment of all credit co-operative societies are eligible for deduction u/s 80P. One of such is the decision of Hon Gujarat HC in the case of Jafari momin credit co-operative society.
Also vide decison of Hon HC of Bombay & Goa in Quepam urban Co-operative Society, Karnataka HC in Bangalore commercial transport co-operative society and ITAT, Delhi in Jwala Co-op thrift & credit society etc.. These decisions distinguish the interest earned from investment by credit societies and other co-operatives and hold that ratio of totgar case is not applicable to credit co-operatives.
Still some of the Department officials blindly depends on the decision of Apex court to deny deduction u/s 80P to all co-operative societies.
28 February 2016
ok. thank you very much sir. Thanx for clarifying my doubt.
28 February 2016
thank you sir. thank you for clarifying my doubt.
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