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2020 (12) TMI 725 - AT - Income TaxDeduction u/s 80P(2)(d) - interest earned from Schedule bank or co-operative bank - 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) - TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LIMITED [2015 (2) TMI 995 - KARNATAKA HIGH COURT] followed the decision of the supreme Court in The Totgars Co-operative Sales Society Ltd.[2017 (7) TMI 1049 - KARNATAKA HIGH COURT] and held that interest earned from Schedule bank or co-operative bank is assessable under the head income from other sources and therefore the provisions of Sec.80P(2)(d) 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 Hon’ble 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 judgmentof The Totgars Co-operative Sale Society Ltd and Tumukur Merchnts Souharda Co-operative Ltd. (supra). AO will afford opportunity of being heard to the Assessee and filing appropriate evidence, if desired, by the Assessee to substantiate its case, before deciding the issue of deduction which was interest received by the Assessee from Apex Co-operative Bank and which was claimed as deduction u/s.80P(2)(a)(i) or (d).
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