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2022 (8) TMI 1016 - AT - Income TaxDeduction u/s 80P(2)(a)(i) - AO held that the assessee has violated the principle of mutuality since it was dealing with non-members - contended that majority of the interest income is earned out of investments made with Central Co-operative Banks and is in compliance with the requirement under the Karnataka Co-operative Societies Act and Rules - HELD THAT:- If the amounts are invested in compliance with the Karnataka Co-operative Societies Act, necessarily, the same is to be assessed as income from business, which entails the benefit of deduction u/s 80P(2)(a)(i) of the I.T.Act. Insofar as deduction u/s 80P(2)(d) of the I.T.Act is concerned, we make it clear that interest income received out of investments with co-operative societies is to be allowed as deduction. Hon’ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd. & Ors. [2021 (1) TMI 488 - SUPREME COURT] had settled various issues for claiming deduction u/s 80P(2)(a)(i). Thus the matter needs to be examined afresh by the A.O. de hors the observations of the CIT. The A.O. is directed to follow the dictum laid down by the Hon’ble Apex Court in framing the fresh assessment. Thus, this issue is remitted to the files of the A.O. for fresh consideration in the light of our above observation. Interest income earned from other sources from deposits with banks are not entitled to deduction u/s 80P(2)(a)(i) - HELD THAT:- As the assessment year involved in the present appeal is A.Y. 2017-2018 and the judgment of the Hon’ble Kerala High Court in the case of Chirakkal Service Cooperative Bank Ltd. v. CIT [2016 (4) TMI 826 - KERALA HIGH COURT] is directly on the issue. Being so, the judgment of the Hon’ble Madras High Court in the case of Veerappampalayam Primary Agricultural Cooperative Credit Society Limited [2021 (4) TMI 1169 - MADRAS HIGH COURT] which is relating to assessment year 2018-2019, cannot be applied to the present case, and accordingly, the argument put forth by the learned DR is rejected. Unexplained cash deposit u/s 69A - HELD THAT:- As in the interest of justice and equity, we remit the matter to the files of the A.O. to give directions to the assessee to furnish PAN and name and address of the respective members who deposited the amount into the account of the assessee. Accordingly, we direct the A.O. to consider the issue afresh after affording a reasonable opportunity of being heard to the assessee.
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