TMI Blog2023 (2) TMI 267X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome from investments made in banks does not fall within any of the categories mentioned in section 80P(2)(a) of the Act. However, section 80P(2)(d) of the Act specifically exempts interest earned from funds invested in co-operative societies. Therefore, to the extent of the interest earned from investments made by it with any co-operative society, a cooperative society is entitled to deduction of the whole of such income under section 80P(2)(d) of the Act. However, interest earned from investments made in any bank, not being a co-operative society, is not deductible under section 80P(2)(d) of the Act. The Assessee would therefore be not entitled to deduction u/s.80P(2)(a)(i) or Sec.80P(2)(d) of the Act on the interest income in question. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed that the aforesaid interest income is originally for a deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961 (hereinafter called the Act ). The claim of the assessee was rejected by the AO based on the decision of the Hon ble Karnataka High Court in the case of PCIT, Hubli Vs. Totgars Co-operative Sale Society Ltd., (2017) 83 Taxmann 140 (Karnataka). The alternative claim of the assessee for deduction under section 80P(2)(d) of the Act was also rejected by the AO by relying on the decision of the Hon ble Karnataka High Court in the case of Totgars Co-operative Sale Society Ltd., (supra). The CIT(A) confirmed the order of the AO. 3. Aggrieved by the order of the CIT(A), the assessee is in appeal before the Tribunal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) held that the ratio laid down by the Hon ble Karnataka High Court in the case of Totalgars Cooperative Sales Society in 395 ITR 611 (Karn) is that in the light of the principles enunciated by the Supreme Court in Totgars Co-operative Sale Society (supra), in case of a society engaged in providing credit facilities to its members, income from investments made in banks does not fall within any of the categories mentioned in section 80P(2)(a) of the Act. However, section 80P(2)(d) of the Act specifically exempts interest earned from funds invested in co-operative societies. Therefore, to the extent of the interest earned from investments made by it with any co-operative society, a cooperative society is entitled to deduction of the whole of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... next common issue relates to rejection of deduction claimed u/s 80P(2)(d) of the Act in respect of interest income earned from fixed deposits kept with bank. We noticed earlier that the A.O. has observed in Assessment Year 2015-16 that the interest income received by the assessee from deposits kept with banks is not eligible for deduction u/s 80P(2)(c) 80P(2)(d) of the Act since the assessee is not eligible for deduction u/s 80P(2)(a)(i) of the Act. In AY 2016-17, the AO assessed the interest income received on bank deposits under the head Income from other sources and denied deduction claimed u/s 80P(2)(d) of the Act. The Ld CIT(A) confirmed the action of the AO on this issue. 8. The Ld. A.R. submitted that the assessee is entitl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision rendered by Hon'ble High Court of Karnataka in the case of Totgars Co-operative Sale Society Ltd. Vs. ITO (2015) 58 taxmann.com 35 (Karn). Accordingly, we direct the A.O. to allow deduction of proportionate cost, administrative and other expenses, if the A.O. proposes to assess the interest income earned from bank deposits as income under the head other sources . 7. In the instant case, the assessee has earned both interest income and dividend income. In view of the decision rendered by the jurisdictional Hon'ble High Court of Karnataka, the assessee is entitled for deduction of proportionate cost, administrative and other expenses. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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