TMI Blog2023 (4) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... tionate expenditure on income, which was earned u/s. 57 of the Act. The assessee shall be entitled for proportionate expenditure cost incurred in mobilising the deposit placed in the bank. We fully relied on case of Totgars Co-operative Sale Society Ltd,[ 2015 (4) TMI 829 - KARNATAKA HIGH COURT ] - Related to the submissions of challan for deduction of tax at source is also liable for verification before the lower authority. We remit back the matter to the AO for further verification and allow the assessee for legitimate claim of expenses related to the income earned u/s. 57 -The ground relating to deduction u/s 80P(2)(a)(i) of the Act is remitted back to the file of AO for fresh consideration. Disallowance u/s 40(a)(ia) - Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder giving an unambiguous decision. 4) Without prejudice to ground 2 and 3 the disallowance u/.s 40(a)(ia) us untenable and unwarranted inasmuch as the Ld. CIT(A) failed to appreciate that the Tax on the audit fees and commission paid had been duly deducted and deposited. 3. The brief fact of the case is that assessee is a Credit Cooperative Society registered under Karnataka Cooperative Society Act, 1959. The assessee claimed deduction u/s. 80P and also disallowance was made u/s. 40(a)(ia) on account of allege of non-deduction of tax at source. The ld. CIT(A) vide disposing of the appeal not adjudicated the issue relating to section 40(a)(ia) of the Act and with regard to deduction u/s 80P of the Act, he relied on the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the directions of the Hon ble Supreme Court in the case of Mavilayi Service Co-op Bank Ltd. The claim of deduction related to bank interest U/s 80P(2)(d) is no more allowed. The assessee claimed that the interest income should be allowed after adjustment of expenditure. The assessee respectfully relied on the decision of Hon ble High Court of Karnataka in the case of Totgars Co-operative Sale Society Ltd., 231 Taxman 794. The Counsel has submitted a calculation for adjustment of interest which reproduced as below:- Particulars Interest from Banks Income from dealing with members and other Income Total Gross Income 2,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lan is enclosed with the Paper Book as proof of deduction of tax at source related to expenses which were disallowed u/s. 40(a)(ia). The Counsel mentioned that the challan was never be filed before any of the authority. So prayed for setting aside the matter before the AO. 5. The ld. DR argued vehemently and relied on the order of the Revenue Authority. 6. We heard the rival submissions and perused the documents available in the record. In section 80P(2)(a)(i), the assessee is entitled to deduction related interest earned from nominal member. The verification is required related to investment to nominal member as per the activity of the trust in purview of Karnataka Co-op Society Act. We remit back the issue to the AO for adjudication ..... X X X X Extracts X X X X X X X X Extracts X X X X
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