Sec. 80P(2)(a)(i) of Income Tax Act, 1961— Exemption —Interest on saving bank account of the members is business income and cannot be termed as income from other sources as it has direct nexus of this income with the activity of business of providing credit facilities to its members who are banks.

Facts: Assessee went on appeal before Tribunal and raised the ground that "CIT(A) erred in holding that advancing of loan to Members of the Society is not at par with providing credit facility to its members and thus the assessee was not entitled to a claim of exemption u/s 80P(2)(a)(i) and confirmed the actions of the Assessing Officer in treating interest earned on Fixed Deposit and Savings account as income from other sources and not business income.

Held, that the provisions of Sec. 80P(2)(a)(i) are applicable to a co-operative society which is engaged in carrying on banking business facilities to its members if it is not a co-operative bank. Interest on saving bank account of the members is business income and cannot be termed as income from other sources as it has direct nexus of this income with the activity of business of providing credit facilities to its members who are banks. Hence, the CIT(A) was not correct in holding that the said interest is income from other sources. Section 80P(2)(i)(a) is very much applicable to the present assessee society. - BHARAT CO-OPERATIVE THRIFT AND CREDIT SOCIETY LTD. V/s ITO - [2020] 26 ITCD Online 096 (ITAT-DELHI)