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2019 (1) TMI 282 - AT - Income TaxDeduction u/s.80P(2)(a)(i) - supply of food grain seeds was done under Public Distribution System (PDS) and not to its members and therefore the deduction claimed cannot be allowed - Held that:- The claim of the Assessee was that Co-operative Bank is essentially a Co-operative Society and therefore deduction has to be allowed under Clause (d) of Sec.80P(2). The Hon’ble Karnataka High Court followed the decision in The Totgars Co-operative Sales Society Ltd. [2017 (7) TMI 1049 - KARNATAKA HIGH COURT] held that interest earned from Schedule bank or cooperative bank is assessable under the head income from other sources and therefore the provisions of Sec.80P(2)(d) of the Act was not applicable to such interest income. Clear that the source of funds out of which investments were made remained the same in AY 2007-08 to 2011-12 and in AY 1991-92 to 1999-2000 decided by the Hon’ble Supreme Court [2010 (2) TMI 3 - SUPREME COURT]. Therefore, whether the source of funds were Assessee’s own funds or out of liability was not subject matter of the decision of the Hon’ble Karnataka High Court in the decision cited by the learned DR. To this extent the decision of the Hon’ble Karnataka High Court in the case of Tumukur Merchants Souharda Co-operative Ltd. [2015 (2) TMI 995 - KARNATAKA HIGH COURT] still holds good. - Hence, on this aspect, the issue should be restored back to the AO for a fresh decision after examining the facts in the light of these judgment Claim for deduction on a sum u/s.80P(2)(a)(iv) income derived from purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, will be eligible for deduction - CIT(A) did not allow the claim of the Assessee for the reason that the Assessee made a prayer for remand to the AO and submitted that not all income that was claimed as deduction u/s.80P(2(a)(iv) of the Act was income from public distribution system and to the extent it was trading with members, the deduction claimed should be allowed. DR submitted that in any event the deduction claimed cannot be over and above what is allowed u/s.80P(2)(c). We are of the view that the prayer made is reasonable and accordingly, we set aside the order of CIT(A) on this issue for the limited purpose of examining the claim of the Assessee u/s.80P(2)(a)(iv) to the extent of profits derived from dealing with members alone. Appeals by the assessee are treated as allowed for statistical purpose.
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