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2018 (9) TMI 1300 - AT - Income TaxEntitled to deduction u/s 80P(2) - Whether the interest income received from investments with co-operative banks is entitled to deduction u/s 80P(2)(a)(i) of the I.T.Act? - Held that:- In the case of ITO v. The Chengala Service Co-operative Bank Ltd. [2018 (4) TMI 339 - ITAT COCHIN] after elaborately considering all the judicial pronouncements had decided the issue in favour of the assessee. As regards the interest received on investments with cooperative Banks, we are of the view that the deduction u/s 80P(2)(d) can be granted only if the interest income is received out of investments made with co-operative societies. In the instant case, it is not clear that the interest income was received out of investments made with co-operative societies. Therefore, we are of the view that deduction u/s 80P(2)(d) of the I.T.Act cannot be granted. Further, we find that the investments are made by the assessee-society in the course of its banking business / providing credit facilities to its members and hence such income will form part of banking activities of the assessee and same is entitled to deduction u/s 80P(2)(a)(i) of the I.T.Act. On identical facts, the Cochin Bench of the Tribunal in the case of The Azhikode Service Cooperative Bank Ltd. & Ors.[2017 (7) TMI 1138 - ITAT COCHIN] after considering all the judicial pronouncements had decided the issue in favour of the assessee. Co-operative societies engaged in providing credit facilities to its members had in course of business made investments with treasury, bank etc. and earned interest income, such income was eligible for deduction u/s 80P(2)(a)(i). See Saveru Co-operative Rural Bank Ltd. v CIT [2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT]. In the instant case the assessee had made investments with co-operative banks in the course of its business of banking / providing credit facilities to its members. Therefore, it was entitled to deduction u/s 80P(2)(a)(i) of the I.T.Act in respect of interest income that was received on such investments in view of the above judicial pronouncements. - Decided against revenue.
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