TaxTMI 
TaxTMI 
2021 (7) TMI 491
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....ome-tax Act,1961 ['the Act' for short]. (b) Rejection of deduction u/s 80P(2)(d) of the Act in respect of interest income earned on fixed deposits with other cooperative societies. 2. The Ld A.R submitted that the assessee is a credit cooperative society engaged in the business of accepting deposits from and lending loans to its members. The assessee filed its return of income claiming deduction u/s 80P of the Act. The Ld. AO rejected the claim on the reasoning that the assessee is a bank, and hence provisions of 80 P are not applicable. The assessee had earned interest from deposits/investment kept with other co-operative societies. The AO held that the assessee is not eligible to claim deduction u/s 80P(2)(d) of the Ac....
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....passed by authorities below. We have perused the record based on the submissions advanced by both sides. 4.5. The first issue relates to the claim of deduction u/s 80P(2)(a)(i) of the Act. We notice that, an identical issue has been considered by the co-ordinate bench in the case of Karkala Co-op Bank Ltd (supra), wherein an identical issue has been restored to the file of Ld.AO for examining it afresh. For the sake of convenience, we extract below the relevant observations made by the co-ordinate bench:- "4. The Ld. A.R. submitted that the law on deduction of 80P(2)(a)(i) of the Act available to credit co-operative societies has since been settled by Hon'ble Supreme Court in the case of Mavilayi Service Co-operative Bank ....
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.... that the issue of deduction u/s 80P(2)(a)(i) of the Act requires fresh examination at the end of the A.O. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue in both the years under consideration and restore them to the file of the A.O. in both the years for examining it afresh as discussed above." 4.6. Since the facts are identical, following the decision rendered by the co-ordinate bench, we restore this issue to the file of the Ld.AO with similar directions. 5. The next issue relates to the deduction claimed by the assessee u/s.80P(2)(d) of the Act in respect of interest income. Identical issue has been considered by the co-ordinate bench in the case of Karkala Co-op Bank Ltd (supra). For the sake of convenie....
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....n raised by the assessee to the file of Hon'ble High Court of Karnataka. Consequent thereto, the Hon'ble High Court of Karnataka has passed the order in the case reported in 58 taxmann.com 35 and held that the Tribunal was not right in coming to the conclusion that the interest earned by the appellant is an income from other sources without allowing deduction in respect of proportionate cost, administrative expenses incurred in respect of such deposits. Accordingly, the Ld. A.R. prayed that the A.O. may be directed 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". 9. We heard Ld. D.R. on ....