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2017 (11) TMI 571 - HC - Income TaxPenalty levied u/s 271(1)(c) - eligible for deduction u/s 80P(2)(a)(i) denied - interest paid to the cooperative society exceeds the interest received from the bank on investments - Held that:- Sec.80P(2)(d) of the Act allows whole deduction of an income by way of interest or dividends derived by the cooperative society from its investment with any other cooperative society. This provisions does not make any distinction in regard to source of the investment because this Section envisages deduction in respect of any income derived by the cooperative society from any investment with a cooperative society. It is immaterial whether any interest paid to the cooperative society exceeds the interest received from the bank on investments. The Revenue is not required to look to the nature of the investment whether it was from its surplus funds or otherwise. The Act does not speak of any adjustment as sought to be made out by learned counsel for the Revenue. The provision does not indicate any such adjustment in regard to interest derived from the cooperative society from its investment in any other cooperative society. Therefore, we do not agree with the argument advanced by the learned counsel for the Revenue. In our opinion, the learned Tribunal was right in allowing deduction under Sec.80P(2)(d) of the Income Tax Act, 1961. ince, the issue on merit has been decided in favour of the assessee no penalty can be levied and as such the Tribunal has committed no error of law in setting aside the penalty under Section 271 (1)(c) of the Income Tax Act. - Decided in favour of assessee.
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