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2021 (7) TMI 930 - AT - Income TaxDenial of exemption u/s 80P(2)(d) - interest income earned from Co-operative banks - HELD THAT:- In the case of Karkala Co-op. S. Bank Ltd. Vs. ITO [2021 (2) TMI 854 - ITAT BANGALORE] the Bangalore bench of Tribunal has considered issue of eligibility of the assessee to claim deduction u/s 80P(2)(d) and it was held that the assessee is eligible for deduction of expenses incurred for earning the interest income. We set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO with the direction to allow deduction of proportionate cost, administrative and other expenses, if the A.O. proposes to assess the interest income earned from bank deposits as income under the head -other sources. Denial of deduction u/s 80P of the Act in respect of commission income earned on sale of e-stamps - HELD THAT:- Perusal of provisions of sec.80P(2)(c) would show that there is no such restriction prescribed in it. Section 80P(2)(c) prescribes deduction in the case of a co-operative society engaged in activities other than those specified in clause (a) or clause (b). It further states that the deduction u/s 80P(2)(c) is allowable to so much of its Profits and gains attributable to such activities as does not exceed the amount prescribed. Thus the quantum of deduction is the amount of "profits and gains attributable to the activities" subject to the maximum amount prescribed therein. Hence, we are of the view that the assessee would be eligible for deduction u/s 80P(2)(c) of the Act in respect of commission income on sale of e-stamps, since it is not one of the activities mentioned in clause (a) or (b). We notice that it is necessary to first determine the profits and gains attributable to the "activities of earning commission income on sale of e-stamps" and then compute deduction u/s 80P(2)(c) subject to the limits prescribed in the said provision. Accordingly, this issue requires fresh examination at the end of AO. Appeal allowed for statistical purposes.
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