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2018 (12) TMI 1662 - AT - Income TaxBenefit of deduction u/s 80P(2)((a)(i) - interest income earned on investment in Bagalkot District Central Co-operative Bank and interest earned on savings bank account, FD with Jamkhandi Sugars Ltd. - HELD THAT:- The claim of the Assessee was that Co-operative Bank is essentially a Co-operative Society and therefore deduction has to be allowed under Clause (d) of Sec.80P(2). The Tumukur Merchants Souharda Credit Cooperative 2015 (2) TMI 995 - KARNATAKA HIGH COURT followed the decision of the supreme Court in The Totgars Co-operative Sales Society Ltd. [2010 (2) TMI 3 - Supreme Court] and held that interest earned from Schedule bank or cooperative bank is assessable under the head income from other sources and therefore the provisions of Sec.80P(2)(d)of the Act was not applicable to such interest income. It is thus clear that the source of funds out of which investments were made remained the same in AY 2007-08 to 2011-12 and in AY 1991-92 to 1999-2000 decided by the Hon’ble Supreme Court. Therefore whether the source of funds were Assessee’s own funds or out of liability was not subject matter of the decision of the Totagars Co-Operative Sale Society - 2017 (7) TMI 1049 - KARNATAKA HIGH COURT in the decision cited by the learned DR. To this extent the decision of the Hon’ble Karnataka High Court in the case of Tumukur Merchants Souharda Co-operative Ltd. (supra) still holds good. Hence, on this aspect, the issue should be restored back to the AO for a fresh decision after examining the facts in the light of these judgment of the Hon’ble Apex Court rendered in the case of The Totgars Co-operative Sale Society Ltd. (supra) and of Hon’ble Karnataka high Court rendered in the case of Tumukur Merchnts Souharda Co-operative Ltd. (supra). Appeal by the Assessee is treated as allowed for statistical purpose.
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