TMI Blog2020 (12) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act on interest received on investments made in co-operative bank. This decision was however not followed in the subsequent judgment in case of Pr. CIT vs Totgars Co-operative Sale society [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] . - We therefore restore the issue back to Ld. AO for fresh consideration. - Decided in favour of assessee for statistical purposes. - ITA No. 286/BANG/2020 - - - Dated:- 19-11-2020 - Chandra Poojari, Member (A) and Beena Pillai, Member (J) For the Appellant : Sandeep C., C.A. For the Respondents : R. Premi, JCIT (DR) ORDER Beena Pillai, Member (J) Present appeal has been filed by assessee against order dated 08/01/2020 passed by Ld. CIT(A)-3, Bangalore for assessment year 2016-17 on following grounds of appeal: 1. That the order of the learned Commissioner Income Tax (Appeals), in so far it is prejudicial to the interests of the appellant, is bad and erroneous in law and against the facts and circumstances of the case. 2. That the learned Commissioner Income Tax (Appeals) erred in law and on facts in not allowing the deduction of ₹ 64,40,358/- claimed u/s. 80P(2)(a)(i) on the ground that the appellant is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for claim of deduction under section 80 P of the Act. He placed reliance on decision of coordinate bench of this Tribunal in case of M/s. Udaya Souhardha Credit Co-operative Society Ltd., dated 17/08/2018. 5. Ld. AO thus denied, entire deduction claimed by assessee under section 80 P and added back to the income of assessee. 6. Aggrieved by order of Ld. AO, assessee preferred appeal before Ld. CIT(A). 7. Ld. CIT(A) after going through the submissions filed by assessee and the assessment order. Ld. CIT(A) upheld disallowance of interest income earned by assessee from nationalised/other co-operative banks by holding that, deduction can only be allowed to co-operative societies registered under cooperative societies Act. He also placed reliance on decision of coordinate bench of this Tribunal in case of M/s. Udaya Souhardha Credit Co-operative Society Ltd., (supra). 8. Ld. CIT(A) upheld disallowance of deduction claimed under section 80 P in toto by relying on coordinate bench of this tribunal in case of M/s. Udaya Souhardha Credit Co-operative Society Ltd., (supra). 9. Aggrieved by order passed by Ld. CIT(A), assessee is in appeal before us now. 10. At the outset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Karnataka Co-operative societies act 1959. Ld. AO placed reliance on decision of Hon'ble Karnataka High Court in case of DCIT vs Totgars co-operative society (supra). On perusal of the said decision we note that Hon'ble court has held that interest on investments retained the character of income from other sources and therefore deduction under section 80 P (2) (a) (i) of the act will not be available because the income was not attributable to business of providing credit facilities to members. Hon'ble court thus denied the deduction under section 80 P (2) (a) (i) of the act. 16. Ld. AR before us has placed reliance on following decisions by coordinate bench of this Tribunal wherein, the issue was restored to Ld. AO for fresh consideration: Nagpur Credit Co-operative Society vs ITO in ITA No. 2405/Bang/2019 by order dated 31/08/2020; Banashankari Credit Co-operative Society Ltd. vs ITO in ITA No. 2874/be/2017 by order dated 12/03/2018 17. This Tribunal observed as under: 10. We have heard the rival submissions and we find that there are contrary judgments of Hon'ble High Court of Karnataka on this issue. This aspect has been discussed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld 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. 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-operative Ltd. (supra) 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 Cooperative Ltd. (supra). 5. We find that in that case, the matter was restore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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