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TMI Blog2023 (7) TMI 1260X X X X Extracts X X X X X X X X Extracts X X X X ..... banks - debatable issue - HELD THAT:- As relying on TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LIMITED [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] interest income earned on fixed deposits with bank partake of the business income which is eligible for deduction u/s 80P(2)(a)(i) of the Act. The above discussion clearly brings out the fact of existence of debate on the issue of taxability of the interest income earned on the deposits made with other co-operative banks or other banks. Therefore, in the light of the law settled by the Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] the power of revision cannot be exercised by the ld. PCIT in exercising of power vested with him u/s 263 in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Maryadit, Jijamata Mahila Nagari Bigarsheti Sahakari Patsanstha Maryadit, Kirkee Cantonment Board Employees Credit Cooperative Society Ltd., Shree Choudeshwari Togatveer Kshatriya Nagari Sahakari Patpedhi Maryadit, Ichalkaranji Vyapari Sahakari Patsanstha Ltd., Jay Bajarang Gram Bigarsheti Sah Patsanstha Maryadit, Shree Kedareshwar Nagari Sahakari Patsanstha Maryadit, Kamal Mahila Nagari, Kamal Nagari Sahakari Patsanstha Ltd., Keshavsmruti Nagari Sahakari Patpedhi Ltd., Shree Ghadgenath Gramin Bigar Sheti Sahakari Patsanstha Maryadit, Kadepathar Gramin Bigar Sheti Sahakari Path Sanstha Maryadit, Versus PCIT-3, Pune. For the Assessee by : Shri Prateek Jha (Sl. No. 1) Shri Manoj R. Jain (Sl. No. 2) Shri Bhuvnesh Kankani (Sl. No. 3) Smt. De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come, the assessee co-operative society had sought the exemption of income earned on deposits made with other co-operative banks or other banks made out of the surplus funds from tax u/s 80P(2)(a)(i)/80P(2)(d) of the Income Tax Act, 1961 ('the Act'). The said claim came to be allowed by the Assessing Officer while completing the assessment u/s 143(3) of the Act. 5. Subsequently, on review of the assessment records, the ld. PCIT was of the opinion that the interest income earned by the assessee co-operative society from the deposit made with other cooperative banks or other banks does not qualify for exemption u/s 80P(2)(a)(i) of the Act. In the opinion of the ld. PCIT, the said interest income was earned from the third party or non-members ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the issue of exemption of interest income earned by the assessee cooperative society from other co-operative banks or other banks. There is a cleavage of judicial opinion among several High Courts on the issue of eligibility of this kind of income for exemption u/s. 80P(2)(a)(i) of the Act. The Hon'ble Punjab & Haryana High Court in the case of CIT vs. Punjab State Cooperative Federation of Housing Building Societies Ltd. 11 taxmann.com 448, the Hon'ble Gujarat High Court in the case of State Bank of India Vs. CIT 389 ITR 578 (Guj.), the Hon'ble Delhi High Court in the case of Mantola Co-operative Thrift & Credit Society Ltd. Vs. CIT 50 taxmann.com 278, the Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Punjab State Cooperativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Coordinate Bench of the Tribunal, I am of the considered opinion that the interest income earned on fixed deposits with bank partake of the business income which is eligible for deduction u/s 80P(2)(a)(i) of the Act. 9. The above discussion clearly brings out the fact of existence of debate on the issue of taxability of the interest income earned on the deposits made with other co-operative banks or other banks. Therefore, in the light of the law settled by the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT, 243 ITR 83, the power of revision cannot be exercised by the ld. PCIT in exercising of power vested with him u/s 263 in respect of debatable issue. 10. Even assuming for a moment, there is failure on the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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