In Brief
The National Co-Operative Development Corporation (NCDC) appealed against an income tax order disallowing deductions for interest income and grant disbursements. The Supreme Court held that interest earned on funds held during disbursement as grants constitutes taxable business income, since the NCDC's core function is granting and lending to cooperative societies. Lack of profit motive is irrelevant—the statute itself restricts the NCDC's operations. Grant disbursements also qualify as legitimate business expenditure under the Income Tax Act, being integral to the NCDC's statutory mandate. The Court allowed the appeal."
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