TaxTMI 
TaxTMI 
2012 (7) TMI 522
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.... in the circumstances of the case the Ld. ITAT is legally justified in holding that the income from Bank interest is exempt U/s 80P (2) and also relying on the decision of CIT v. Karnataka State Cooperative Apex Bank? (2) Whether on the facts and in the circumstances of the case the Ld. ITAT is legally justified in holding that the interest earned from post office is exempt and also relying on the decision of CIT v. Karnataka State Cooperative Apex Bank? (3) Whether on the facts and in the circumstances of the case, the Ld. Income Tax Appellate Tribunal is legally justified in holding that the interest earned on NSC is allowable.". The respondent assessee is a society registered under the Cooperative Societies Act. Its object and a....
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....compliance of Govt. direction and further that when the interest income earned in the deposits of the bank is allowed, on same analogy this interest income earned on NSCs can also be allowed as exemption. In the recent decision the Supreme Court in the case of CIT Vs. Karnataka State Cooperative Apex Bank (2001) 169 CTR (SC) 86, has made it clear that interest derived by a Cooperative Bank from investment of funds with RBI or SBI is exempt u/s 80P (a) (i) irrespective of the fact that investment is made out of the reserve funds or working capital. In view of the above decision of Apex Court, the assessee is entitled for exemption of the interest earned on NSCs. 12. The next dispute relates to interest earned from Post Office. This issue ....
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....operative Bank which is required to place a part of its funds with the SBI or RBI to enable it to carry on its banking business. The bank has earned interest income on those funds. The Hon'ble Supreme Court while confirming the decision of Karnataka High Court in the same case as well as following earlier decision in the case of CIT Vs. Bangalore District Cooperative Central Bank Ltd., 148 CTR (SC) 226 has clarified that interest income derived by the Cooperative Bank from investment of the funds with RBI or SBI is exempt u/s 80P(2) (a) (i) of the I.T. Act irrespective of the fact that investment is made out of reserve funds or working capital. We, therefore, do not find merit in the order of the CIT (A) on this issue. So we reverse it."....
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....t income of such society from amounts retained by it cannot be said to be attributable either to the activity mentioned in Section 80 P (2)(a) (i), or Section 80P (2) (a) (iii) of the Act. It was further held that Section 80 (P)(2) (a) (i) cannot be placed on a par with Explanation (baa) to Section 80HHC, Section 80HHD (3) and Section 80 HHE (5). This Court has followed the Supreme Court judgment in Totgar Cooperative Sale Society Ltd. case, in CIT v. M/s United Mercantile Coop. Bank Ltd., ITA No.396 of 2008 decided on 23.11.2011. In paragraphs 7 and 8 the Court drew a distinction between the cooperative societies, which are doing banking business, and the cooperative societies, which are engaged in giving credit and agricultural impleme....