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2012 (7) TMI 522 - HC - Income TaxClaim of exemption u/s 80P (2) - interest earned on NSC & income from Bank interest - assessee is a Cooperative Society - Held that:- The investment is in NSC which is a government security. The income earned thereon can very well be eligible for exemption for the obvious reason that it has been done in compliance of Govt. direction and further that when the interest income earned in the deposits of the bank is allowed, on same analogy this interest income earned on NSCs can also be allowed as exemption - As decided in CIT Vs. Karnataka State Cooperative Apex Bank [2001 (8) TMI 9 - SUPREME COURT]that interest derived by a Cooperative Bank from investment of funds with RBI or SBI is exempt u/s 80P (a) (i) irrespective of the fact that investment is made out of the reserve funds or working capital. Interest earned on deposits in Post Office - Claim of exemption u/s 80P (2) - Held that:- The income earned on the leftover balances in the bank accounts of the society has a direct nexus with the main activity of the assessee for providing credit facilities to its member - income from post office is exempt under Section 10 (15)as also the CBDT Circular No.410 dated 12.2.1985, made it clear that the interest earned on saving account or CTD (Cumulative Time Deposit), the same would exempt from the income - income tax appeal is partly allowed.
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