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2015 (7) TMI 237 - AT - Income TaxEntitlement to exemption claimed under Section 80P(2)(a)(i) - whether interest income earned by the co-operative societies from bank deposits cannot be regarded as income earned from business of providing credit facilities to its members and are therefore not entitled to deduction under Section 80P(2)(a)(i)? - Held that:- Respectfully following the order in the case of Tumkur Merchants Souharda Credit Co-operative Society Ltd. (2015 (2) TMI 995 - KARNATAKA HIGH COURT) we hold that the learned CIT (Appeals) erred in refusing to allow the assessee's claim for deduction under Section 80P(2)(a)(i) of the Act in respect of interest income of ₹ 5,95,037 for Assessment Year 2009-10 and ₹ 7,58,464 for Assessment Year 2010-11 earned by the assessee. The judgment of the Hon'ble Apex Court in the case of Totagars Co-operative Sale Society Ltd. (2010 (2) TMI 3 - SUPREME COURT ) relied on by the learned CIT (Appeals) has been considered and distinguished by the Hon'ble High Court of Karnataka in the case of Tumkur Merchants Souharda Credit Co-operative Society Ltd. (supra). We find that the facts of the case on hand to be similar to the facts of the aforesaid case decided by the Hon'ble High Court of Karnataka. Thus we hold that the assessee is entitled to deduction under Section 80P(2)(a)(i) of the Act in respect of interest income earned on fixed deposits with banks out of surplus funds from business, as it forms part of the business income earned by the assessee and the same is not to be taxed under the head “Other Sources”. In this view of the matter, the deduction claimed by the assessee under Section 80P(2)(a)(i) of the Act in respect of interest earned form investment in fixed deposits with banks and government securities out of surplus funds from business is allowed. - Decided in favour of assessee.
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