2018 (12) TMI 2040

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.... in denying the benefit of deduction on interest income of Rs.1,49,51,464 received on deposits with Co-operative banks u/s.80P(2)(d) of the Income Tax Act, 1961 (Act) and deduction on interest income of Rs.46,74,662/- being interest on deposits other than co-operative banks, u/s.80P(2)(a)(i) of the Act. 3. The AO denied the benefit of deduction as claimed by the Assessee for the reason that principle of mutuality was not satisfied in as much as there was no identity between the contributors and participants of surplus generated. The AO in this regard referred to decision of Hon'ble Supreme Court in the case of M/s. Bangalore Club Vs. CIT Civil Appeal No.124 of 2007. 4. On appeal by the Assessee, the The CIT(A) was of the view that int....

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.... income of Rs.1,49,51,464 received on deposits with Co-operative banks u/s.80P(2)(d) of the Act and deduction on interest income of Rs.46,74,662/- being interest on deposits other than co-operative banks, u/s.80P(2)(a)(i) of the Act. 6. We have heard the rival submissions. The learned AR relied on the decision of the Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Cred Co-operative Society Ltd. Vs. ITO 230 taxman 309 (Karn) wherein the Hon'ble Karnataka High Court considered the decision of the Hon'ble Apex Court in the case of The Totgar's Co-operative Sales Society (supra) and held that interest income in respect of temporary parkiong of own surplus funds not immediately required is eligible for deduction u/s.80P(....

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.... is essentially a Co-operative Society and therefore deduction has to be allowed under Clause (d) of Sec.80P(2) of the Act. The Hon'ble Karnataka High Court followed the decision of the supreme Court in The Totgars Co-operative Sales Society Ltd. (supra) and held that interest earned from Schedule bank or co operative bank is assessable under the head income from other sources and therefore the provisions of Sec.80P(2)(d)of the Act was not applicable to such interest income. It is thus clear that the source of funds out of which investments were made remained the same in AY 2007-08 to 2011-12 and in AY 1991-92 to 1999-2000 decided by the Hon'ble Supreme Court. Therefore whether the source of funds were Assessee's own funds or out of liabili....