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2020 (7) TMI 192 - AT - Income TaxExemption u/s 80P(2)(d) - society has interest income on fixed deposits with Co-operative Banks and Karnataka State Co-operative Apex Bank Ltd. - as per AO interest earned on surplus funds are taxable and not eligible for deduction under Section 80P(2)(d) - society has invested/deposited funds which are not required for business being surplus funds and interest on deposits cannot be considered as income from other sources and observed that the interest income is not covered under Section 80P(2)(d) - HELD THAT:- As relying on M/S. THE JAYANAGAR CO-OPERATIVE SOCIETY LTD. [2019 (7) TMI 1219 - ITAT BANGALORE] we restore the disputed issue to the file of the CIT (Appeals) to consider the submissions of the assessee for fresh adjudication in light of the judicial decisions of Hon’ble Supreme Court in the case of Totgars Co-operative Sale Society [2010 (2) TMI 3 - SUPREME COURT] and Tumkur Merchants C-operative Society [2015 (2) TMI 995 - KARNATAKA HIGH COURT] and the assessee should be provided adequate opportunity of hearing and shall co-operate in submitting the documents and allow grounds of appeal of the assessee for statistical purposes. Deduction u/s 80P(2)(a)(i) denied as the assessee society accept the deposits from general public being Nama Matra Sadasyaru/Nominal Members and the identity was not established in respect of ordinary members and nominal members in the assessment proceedings - We find nominal members are part of the society for earning surplus/income to the society. Accordingly, we set aside the order of the CIT (Appeals) on this issue and restore this disputed issue to the file of CIT(A) for fresh adjudication on the four categories of members and eligibility of nominal members under Karnataka State Co-operative Societies Act, 1959 and pass a speaking order. Further the assessee should be provided adequate opportunity of hearing and shall co-operate in submitting the information and allow the grounds of appeal of the assessee for statistical purposes.
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