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2012 (11) TMI 428 - AT - Income TaxDeduction u/s 80P(2)(a)(i) - rental income received by the taxpayer - Held that:- As decided in M/s. The Totgars' Cooperative Sale Society Limited Versus Income Tax Officer, Karnataka [2010 (2) TMI 3 - SUPREME COURT] the source of income is relevant for deciding the applicability of section 80P. Weightage should be given to the words "the whole of the amount of profit and gain of business" attributable to one of the activities specified in section 80P(2)(a). The income in respect of which deduction is sought must constitute the operational income and not the other income which accrues to the society. Unless and until the letting out of property falls within the definition of banking activity, the rental income received by the taxpayer cannot be construed as operational income. At no stretch of imagination it could be said that rental income is attributable to banking business. In the present case the taxpayer has let out the building. It is nobody's case that the commercial asset was exploited in the course of its banking activity or providing credit facility to its members. Therefore, letting out of the property is other than one specified in section and u/s 80P(2)(a)(i) and 80P(2)(c). Therefore, the rental income received by the taxpayer has to be assessed as "Income from house property" and it is not eligible for deduction u/s 80P(2)(a)(i) of the Act - in favour of revenue.
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