INCOME TAX ACT, 1961

Section 80P(2)(d)

Deduction under section 80P(2)(d) - Allowability - Interest income claimed to have been earned out of loan funds obtained from govt. and kept in FDs till distribution to eligible receipients -

Assessee a cooperative society engaged in promotion of handicrafts and handloom of Odisha claimed deduction under section 80P(2)(d) AO re-computed amount deductible holding that interest income was to be treated as income from other sources instead of business income as claimed by assessee. Assessee submitted that interest earned by temporary exploitation of operational funds as mandated by the authorities was income from business and eligible for deduction under section 80P(2). Held: As submitted by assessee that assessee was obtaining loan from government for attaining the objects and kept the fund in fixed deposit till distribution of said funds to eligible recipients. However, it was not clear that how much amount was kept as surplus fund and how much amount had been kept for distribution to the eligible recipients and which had not been distributed till date was kept as fixed deposit out of loan funds. Therefore, matter was sent back to AO to determine as to whether assessee had actual surplus funds which had been made as fixed deposit. AO was also directed to examine source of fixed deposit. If it was found that fixed deposit had not been made from surplus funds or it had been made from the own funds which were kept for marketing assistance not immediately disposable in the form of marketing assistance to craftsmen and were also not available for otherwise use by assessee, AO was directed to give benefit of deduction under section 80P(2)(d).

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2014-15 & 2015-16

INCOME TAX ACT, 1961

Section 36(1)(va)

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