TMI Blog2018 (3) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... then the interest on same is eligible for deduction u/s. 80P (1) as per the judgment in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (2015 (2) TMI 995 - KARNATAKA HIGH COURT) but if it is found that the deposit in bank is out of the fund available with the society in the form of liability then the same is not eligible for deduction u/s. 80P (2) of IT Act as per the judgment rendered in PCIT and Another vs. Totagars Co-operative Sale Society (2017 (7) TMI 1049 - KARNATAKA HIGH COURT). Hence, the facts of the present case has to be looked into and since the facts of the present case are not readily available and there is no finding of any of the authorities below in respect of these facts, set aside the orders of CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions shall not be considered as income from business or profession. 4. The Ld CIT(A) and AO has failed to acknowledge the facts that, the interest income considered as business income and eligible for deduction under Section 80HHC of the Act, since the interest income is considered to be incidental to carrying the main activities of the business. Applying the same principles to the present case, the Appellant interest and dividend income earned by the Appellant is also incidental to carrying on the main objects of the Society and interest and dividend should be considered as income from business or profession only. Accordingly benefits of Section 80P should be extended to interest and dividend also. Each of the above grounds is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same principles to the present case, the Appellant interest and dividend income earned by the Appellant is also incidental to carrying on the main objects of the Society and interest and dividend should be considered as income from business or profession only. Accordingly benefits of Section 80P should be extended to interest and dividend also. Each of the above grounds is independent and without prejudice to the other grounds of appeal preferred by the Appellant. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing, of the appeal, so as to enable the Honorable Income Tax Appellate Tribunal to decide this appeal according to law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of all, I reproduce the relevant Para from the judgment of Hon'ble Karnataka High Court rendered in the case of PCIT and Another vs. Totagars Co-operative Sale Society (supra) being second Para on page 616 of 395 ITR. The same is as under. Further, as state above, the assessee(s) markets the agricultural produce of its members. It retains the sale proceeds in many cases. It is this 'retained amount' which was payable to its members, from whom produce was bought, which was invested in short-term deposits/ securities. Such an amount, which was retained by the assesseesociety, was a liability and it was shown in the balance-sheet on the liability-side. Therefore, to that extent, such interest income cannot be said to be attri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The impugned order is hereby set aside. Parties to bear their own cost. 7. When I go through both these judgments of Hon'ble Karnataka High Court, I find that there is no contradiction in both these judgments. Both these judgments are on the same line that if the deposits in bank are out of own funds of society then the interest on same is eligible for deduction u/s. 80P (1) and if the deposit in bank is out of the fund available with the society in the form of liability then the same is not eligible for deduction u/s. 80P (2) of IT Act. The conclusion is dif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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