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2015 (12) TMI 194 - ITAT BANGALORE

2015 (12) TMI 194 - ITAT BANGALORE - TMI - Denial of deduction claimed u/s 80P(2)(a)(i) on the interest income earned on the deposits with Karnataka Bank Limited - Held that:- Since the facts in the present case before us is identical to that of the case which is decided by for the assessment year 2009-10, which follows the decision of the Hon’ble High Court of Karnataka in the case of CIT Vs Grain Merchants Co-operative Bank Ltd., [2003 (10) TMI 21 - KARNATAKA High Court] and Tumkur Merchants S .....

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- Decided in favour of assessee. - ITA No. 1028/Bang/2015 - Dated:- 20-11-2015 - Smt. Asha Vijayaraghavan, Judicial Member And Shri Inturi Rama Rao, Accountant Member For the Appellant : Shri Suresh Muthukrishnan For the Respondent : Smt. Neera Malhotra, CIT ORDER Per Smt. Asha Vijayaraghavan, Judicial Member This appeal is directed against the order of Commissioner of Income-tax (Appeals), Mangalore dated 27.8.2014 for the assessment year 2010-11. 2. The assessee is a primary agricultural credi .....

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on the ground that the same falls under Income from other sources not eligible for deduction u/s 80P which was not considered in the original assessment. 4. Notice u/s 148 was issued on 9.1.2014. Subsequently, the case was selected for scrutiny and notice u/s 143(2) was served on the assessee. The assessment was completed u/s 143(3) r.w.s 147 of the IT Act, 1961. 5. It is noticed by the AO that the appellant earned interest income of ₹ 25 lakhs on deposits kept with M/s Karnataka Bank Ltd. .....

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ssed the interest income of ₹ 28,75,000/- and denied deduction u/s 80P on the same. 6. On appeal the CIT(A) observed that in the case of Tumkur Merchants Souharda Credit Co-op Ltd., Hon ble Karnataka High Court analysed the case of M/s Totgars Co-op Sales Society Ltd., and observed that in that case apart from providing credit facilities to the members it was also in the business of marketing of agricultural produces grown by its members. Under these circumstances, the facts were distingui .....

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. Vs. ITO 188 Taxman 282 (SC). In fact, on similar issue, Hon ble jurisdicitnal ITAT C Bench, Bangalore in ITA No.1526/Bang/2013 vide their order dt. 19.9.2014 in the case of M/s Guttigedarara Credit Co-op Society Ltd. Vs. ITO, relying on the decision of the Hon ble ITAT, Bangalore in the case of M/s Tumkur Merchants Souhardha Credit Co-op Society Ltd. Vs. ITO in ITA No.1622/Bang/2012, this view was upheld relying on the decision of the Hon ble Supreme Court in the case of Totgars Co-operative S .....

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circumstances of the case. (2) The learned CIT(A) is not justified in holding that the income earned by the assessee on Fixed Deposits requires to be assessed under the head OTHER SOURCES and not as part of the business of providing credit facilities and thereby holding that the appellant is not entitled to deduction u/s 80P[2][a][i] of the Act as claimed by the appellant in the return of income under the facts and in the circumstances of the assessee s case. (3) For the above and other grounds .....

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., Vs. ITO. The relevant portion of the order has been extracted herein below; 9. In this context when we look at the judgment of the Apex Court in the case of M/s.Totagars Co-operative Sale Society Ltd, on which reliance is placed, the Supreme Court was dealing with a case where the assessee-Co-operative Society, apart from providing credit facilities to the members, was also in the business of marketing of agricultural produce grown by its members. The sale consideration received from marketin .....

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section 80P(2)(a){!ii) of the Act. Therefore in the facts of the said case, the Apex Court held the Assessinq Officer was right in taxing the interest income indicated above under Section 56 of the Act. Further they made it clear that they are confining the said judgment to the facts of that case. Therefore, it is clear, Supreme Court was not laying down any law. 10. In the instant case, the amount which was invested in banks to earn interest was not an amount due to any members. It was not the .....

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e Andhra Pradesh High Court in the case of CIT III, Hyderabad Vs. Andhra Pradesh State Co-operative Bank Ltd., reported in (2011) 200 Taxman 220112. In that view of the matter, the order passed by the appellate authorities denying the benefit of deduction of the aforesaid amount is unsustainable in law. Accordingly it is hereby set aside. The substantial question of law is answered in favour of the assessee and against the revenue. Hence, we pass the following order. Appeal is allowed . 6.3.2 Re .....

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