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2021 (10) TMI 566 - AT - Income TaxDisallowance of deduction u/s 80P - assessee was having more than 15% members as associate / nominal members, which violates the provisions of Karnataka Co-operative Societies Act, 1959 - HELD THAT:- The Division Bench of the Tribunal in the case of M/s.Ravindra Multipurpose Co-operative Society Limited [2021 (9) TMI 342 - ITAT BANGALORE] had remanded the identical issue to the files of the A.O. for de novo consideration. The Tribunal directed the A.O. to follow the dictum laid down by the Hon’ble Apex Court in the case of M/s.Mavilayi Service Co-operative Bank Ltd. v. CIT [2021 (1) TMI 488 - SUPREME COURT]. In view of the order of the ITAT, which is identical to the facts of the instant case, restore the issue of claim of deduction u/s 80P of the I.T.Act to the files of the A.O. for de novo consideration. Claim of deduction u/s 80P(2)(d) - CIT(A) has not adjudicated the same for the reason that the assessee has violated the principle of mutuality. If the assessee receives / earns interest / dividend income out of investments with co-operative society, the same is entitled to deduction u/s 80P(2)(d) of the I.T.Act. With these observations, we direct the A.O. to examine the claim of deduction u/s 80P(2)(d) of the I.T.Act, afresh. Deduction u/s 57 in respect of expenditure for earning the interest income - Inspite of such plea not being raised before the lower authorities, since the fundamental principle under Income-tax Act being that only net income has to be taxed and not the gross income, this plea of the assessee has to be necessarily entertained, especially in the light of the judgment of the Hon’ble jurisdictional High Court in the case of Totgars Sales Co-operative Society Limited [2015 (4) TMI 829 - KARNATAKA HIGH COURT]. Accordingly, the issue of deduction u/s 57 of the I.T.Act is restored to the files of the A.O. The A.O. is directed to examine whether assessee has incurred any expenditure for earning interest income, which is assessed under the head `income from other sources’. If so, the same shall be allowed as deduction u/s 57 of the I.T.Act. The assessee is directed to co-operate with the department and furnish the necessary evidence for expeditious disposal of the matter. Appeal filed by the assessee is allowed for statistical purposes.
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