TaxTMI 
TaxTMI 
2015 (12) TMI 194
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....uce grown by its member agriculturists. 3. The solitary issue involved in this appeal is on denial of deduction claimed u/s 80P(2)(a)(i) on the interest income earned on the deposits with Karnataka Bank Limited. As seen from the order in this case the original assessment was concluded u/s 143(3) on 26.11.2012. Subsequently, the same was reopened to bring to tax this interest income on the ground that the same falls under 'Income from other sources' not eligible for deduction u/s 80P which was not considered in the original assessment. 4. Notice u/s 148 was issued on 9.1.2014. Subsequently, the case was selected for scrutiny and notice u/s 143(2) was served on the assessee. The assessment was completed u/s 143(3) r.w.s 147 of the IT Act, 1....
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....I find that this is a covered issue in the decision of Hon'ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. Vs. ITO 188 Taxman 282 (SC). In fact, on similar issue, Hon'ble jurisdicitnal ITAT 'C' Bench, Bangalore in ITA No.1526/Bang/2013 vide their order dt. 19.9.2014 in the case of M/s Guttigedarara Credit Co-op Society Ltd. Vs. ITO, relying on the decision of the Hon'ble ITAT, Bangalore in the case of M/s Tumkur Merchants Souhardha Credit Co-op Society Ltd. Vs. ITO in ITA No.1622/Bang/2012, this view was upheld relying on the decision of the Hon'ble Supreme Court in the case of Totgars Co-operative Society Ltd., cited supra. Under these circumstances, the AO is directed to exclude this interest income from the claim....
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.... when we look at the judgment of the Apex Court in the case of M/s.Totagars Co-operative Sale Society Ltd, on which reliance is placed, the Supreme Court was dealing with a case where the assessee-Co-operative Society, apart from providing credit facilities to the members, was also in the business of marketing of agricultural produce grown by its members. The sale consideration received from marketing agricultural produce of its members was retained in many cases. The said retained amount which was payable to its members from whom produce was bought, was invested in a short-term deposit / security. Such an amount which was retained by the assessee - Society was a liability and it was shown in the balance sheet on the liability side. Therefo....
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.... substantial question of law is answered in favour of the assessee and against the revenue. Hence, we pass the following order. Appeal is allowed". 6.3.2 Respectfully following the decision of the Hon'ble High Court of Karnataka in the case of Tumkur Merchants Souharda Credit Co-operative Society Ltd.(Supra), we hold that the learned CIT(A) was not correct in denying the assessee the deduction claimed under section 80P(2)(a)(i) of the Act in respect of Rs. 26.16,800/- earned by the assessee. The judgment of the Hon'ble Apex Court in the case of Totgar's Cooperative Sale Society Ltd (Supra) relied upon by the learned CIT(A) has been considered and distinguished by the Hon'ble High Court on Karnataka in the case of Tumkur Merchants Souh....