Interest Income from SBI Investments not attributable to Business of Taxpayer, Not Eligible for Deduction u/s 80P (2)(a)(i) of Income Tax Act: ITAT

The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) ruled that interest income from investments with State Bank of India (SBI) by Farmers Agriculture Credit Co-operative Society Ltd. was not eligible for deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961. \r

The tribunal noted that this income was taxable under "Income from Other Sources" as it was not directly related to the society's main business of providing credit facilities to members. Citing the Supreme Court's decision in M/s Totagar’s Co-operative Sales Society (2010), ITAT emphasized that deductions under Section 80P are limited to income attributable to core business activities. \r

However, ITAT also directed the assessing officer to consider allowing expenses incurred in earning the interest income, referring to financial statements showing funds exceeding investments with SBI. Thus, ITAT partially allowed the assessee's appeals, remanding the issue for determining allowable expenditure.