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TMI Blog2021 (9) TMI 401X X X X Extracts X X X X X X X X Extracts X X X X ..... The appeal was allowed in favour of the Appellant and the substantial question of law involved in the matter, which was common to both AYs was decided in favour of the Appellant. However, one of the grounds of appeal raised and argued before the Hon'ble Tribunal as regards ITA No. 129/Bang/2020 has not been adjudicated. This appears to have been left out inadvertently. Therefore, the Appellant begs to present this miscellaneous application for adjudication of one of the grounds urged and argued before the Hon'ble Tribunal. 2. For the sake of easy reference Ground No. 3, urged before the Hon'ble Tribunal in ITA No. 129/Bang/2020 which has not been adjudicated, is reproduced here below: "3. The Learned CIT(A) has erred in conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 322 ITR 283 (SC) held that interest on security and deposits not relatable to the business of the assessee is not eligible for deduction u/s.80P(2)(d) or 80P(2)(a)(i) of the Act whereas the submission of the ld. AR is that in the case of the assessee, interest was received on deposits relatable to the business of the assessee and was therefore eligible for deduction u/s.80P of the Act. 5. The Hon'ble Karnataka High Court in the case of Principal Commissioner of Income Tax And Another Vs. Totgars Co-Operative Sale Society 395 ITR 0611 (Karn) took a view and held that interest income earned on deposits whether with any other bank will be in the nature of income from other sources and not income from business and therefore the deduction u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal as well as CIT (Appeals) were justified in holding that such interest income was 100% deductible under Section 80P(2)(d) of the Act?" 6. The Hon'ble Court held that such interest income is not income from business but was income chargeable to tax under the head income from other sources and therefore there was no question of allowing deduction u/s.80P(2)(d) of the Act. The following points can be culled out from the aforesaid decision: (1) What Section 80P(2)(d) of the Act, which was though not specifically argued and canvassed before the Hon'ble Supreme Court, envisages is that such interest or dividend earned by an assessee co-operative society should be out of the investments with any other co-operative society. The wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in Section 80P(2)(d) of the Act is sufficient to deny the claim of the respondent assessee for deduction under Section 80P(2)(d) of the Act. The only exception is that of a primary agricultural credit society. (Paragraph-14 of the judgment) (3) The amendment of Section 194A(3)(v) of the Act excluding the Cooperative Banks from the definition of "Co- operative Society" by Finance Act, 2015 and requiring them to deduct income tax at source under Section 194A of the Act also makes the legislative intent clear that the Co-operative Banks are not that specie of genus co-operative society, which would be entitled to exemption or deduction under the special provisions of Chapter VIA in the form of Section 80P of the Act. (Paragarph 15 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar as applicability of Section 80P(2) of the Act is concerned, the applicability of the Supreme Court's decision cannot be restricted only if the income was to fall under Section 80P(2)(a) of the Act and not under Section 80P(2)(d) of the Act.(Paragraph-18 of the Judgment) (7) The Court finally concluded that it would not make a difference, whether the interest income is earned from investments/deposits made in a Scheduled Bank or in a Co-operative Bank. Therefore, the said decision of the Co-ordinate Bench is distinguishable and cannot be applied in the present appeals, in view of the binding precedent from the Hon'ble Supreme Court." (Paragraph 19 of the Judgment). 7. The Hon'ble Karnataka High Court in the aforesaid decision a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lities to its members, the interest received on deposits in business and securities is attributable to the business of the assessee as its job is to provide credit facilities to its members and marketing the agricultural products of its members. The Hon'ble Gujarat High Court therefore held that decision in the case of Totgar Co-operative Sales Society rendered by the Hon'ble Supreme Court is not restricted only to the investments made by the assessee therein from the retained amount which was payable to its members but also in respect of funds not immediately required for business purposes. The Supreme Court has held that interest on such investments, cannot fall within the meaning of the expression "profits and gains of business" and that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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