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TMI Blog2019 (1) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities were justified in not allowing the benefit of deduction u/s 80P(2)(a)(i) of the Income Tax Act, 1961 (in short 'the Act') to the Assessee on interest income of Rs. 10,76,140/- for Assessment Year 2010-11 and Rs. 19,96,430/- for Assessment Year 2013-14 which interest income was received by the Assessee on investment of their surplus funds. The Assessing Officer ('AO') denied the claim of the Assessee on the ground that interest income earned by making investment of surplus funds has to be assessed under the head "income from Other Sources" and not income from business and since interest income is not assessed as business income, the claim for deduction cannot be allowed. In coming to the above conclusion, the AO relied on the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in treating the interest received on bank deposits u/s 56 of the IT Act and not as income earned from carrying on the business of credit cooperative. 4. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered. 5. As far as Ground Nos. 2 and 3 are concerned, the learned AR, inter alia, also relied on the decision of the Hon'ble Karnataka High Court in the case of Tumukur Merchants Souharda Credit Co-operative Ltd. (supra). The DR relied on a subsequent decision of the Hon'ble Karnataka High Court in the case of PCIT Vs. Totgars Co-operative Sale Society Ltd. 395 ITR 611 (Kam.). We have carefully gone through the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est 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 liability was not subject matter of the decision of the Hon'ble Karnataka High Court in the decision cited by the learned DR. To this extent the decision of the Hon'ble Karnataka High Court in the case of Tumukur Merchants Souharda Co-operative Ltd. (supra) still h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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