TMI Blog2019 (1) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... ARNATAKA HIGH COURT) held that interest earned from Schedule bank or co-operative 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. It is thus 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. 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-operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round that interest income earned by making investment of surplus funds has to be assessed under the head income from Other Sources and not income from business and since interest income is not assessed as business income, the claim for deduction cannot be allowed. In coming to the above conclusion, the AO relied on the decision of the Hon ble Supreme Court in the case of The Totgar s Co-operative Sales Society Ltd., Vs. ITO 322 ITR 283 (SC) wherein the Hon ble Supreme Court held that the benefit of deduction u/s 80P(2)(a)(i) of the Act 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 So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , also relied on the decision of the Hon'ble Karnataka High Court in the case of Tumukur Merchants Souharda Credit Co-operative Ltd. (supra). The DR relied on a subsequent decision of the Hon'ble Karnataka High Court in the case of PCIT Vs. Totgars Co-operative Sale Society Ltd. 395 ITR 611 (Kam.). We have carefully gone through the said judgment. The facts of the case before the Hon'ble Karnataka High Court was that the Hon'ble Court was considering a case relating to Assessment Years 2007-2008 to 2011- 2012. In case decided by the Hon'ble Supreme Court in the case of the very same Assessee, the Assessment years involved was AY 1991-92 to 1999-2000. The nature of interest income for all the AYs was identical. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore 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. (supra) still holds good. Hence, on this aspect, the issue should be restored back to the AO for a fresh decision after examing the facts in the light of these judgment of the Hon'ble Apex Court rendered in the case of The Totgars Cooperative Sale Society Ltd. (supra) and of Hon'ble Karnataka high Court rendered in the case of Tumukur Merchnts Souharda Cooperative Ltd. (supra). 6. The AO will afford o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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