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2020 (6) TMI 97 - AT - Income TaxDeduction u,/s. 80P(2)(a)(i) - AO observed that the interest earned by the co-operative society from its investments in co-operative society shall only qualify for deduction under Section 80P and interest earned by the co-operative society from its scheduled banks does not qualify for deduction - HELD THAT:- As decided in M/S. THE JAYANAGAR CO-OPERATIVE SOCIETY LTD. VERSUS THE INCOME TAX OFFICER, WARD – 7 [2] [1] , BANGALORE. [2019 (7) TMI 1219 - ITAT BANGALORE] benefit of deduction u/s 80P(2)(a)(i) is only on income which is assessable under the head “Income from Business”. Interest earned on investment of surplus funds not immediately required in short term deposits and securities by a Co-operative Society providing credit facilities to members or marketing agricultural produce to members is not business income but income from other sources and the society is not entitled to special deduction. 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 of the Hon'ble Apex Court rendered in the case of The Totgars Co-operative Sale Society Ltd.(supra) and of Hon'ble Karnataka high Court rendered in the case of Tumukur Merchants Souharda Co-operative Ltd.(supra) - Assessee appeal allowed for statistical purposes
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