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2. The Ld. Counsel for the assessee submitted that apart from the grounds raised in the CO which supported the order of the CIT(A) allowing the deduction claimed by the assessee u/s. 80P of the Act, there was an additional ground of Cross Objection. As per the Ld. AR, through this additional ground, assessee had objected to the treatment of the treatment of the income arising from investments under the head 'income from other sources' as against 'income from business'. As per the Ld. AR, the Assessing Officer had relied on the judgment of the Hon'ble Supreme Court in the case of Totgar's Co-operative Sales Society vs. ITO (322 ITR 283) while coming to the conclusion that income from investments could not be considered as income arising from business of banking, but had to be treated as income from other sources, thereby denying the claim of deduction under section 80P(2)(a) (i) and section 80P(2)(b)(i) of the Act. Further, as per the Ld. AR, this Tribunal in the assessee's own case for A.Y. 2009-10vide its order dated 20th July, 2016 in I.T.A. No. 525/Coch/2014 had held that the judgment of the Apex Court in the case of Totgar's Co-operative Sales Society did not apply to certain Co-operative Banks which are Co-operative Societies carrying on the business of banking and not Co-operative Societies engaged in marketing the produce of its members. Thus as per the Ld. AR, CIT(A) erred when he denied the claim of deduction u/s. 80P(2) of the Act on the interest income.

3. Per contra, Ld. DR strongly relied on the judgment of the Hon'ble Apex Court in the case of Totgar's Co-operative Sale Society vs. ITO (supra).

4. We have perused the orders and heard the rival submissions. In assessee's own case for the assessment year 2009-10 in I.T.A. No.525/Coch/2014 dated 20th July 2016, this Tribunal in relation to the claim of the assessee held that income arising from investments in Treasury/Banks was eligible for deduction u/s. 80P(2) of the Act. It has held as under:

"5. We have considered the rival submission on either side and also perused the material available on record. We have also carefully gone through the order of the lower authority. No doubt, the latest judgment in Totgar's Co-operative Sale Society Ltd vs ITO (supra), the Apex court found that the deposit of surplus funds by the co-operative society is not eligible for deduction u/s 80P(2). In the case before the Apex Court in Totgar's Co-operative Sale Society Ltd vs ITO (supra), the assessee co-operative society was to provide credit facility to its members and market the agricultural produce. The assessee is not in the business of banking. Therefore, this Tribunal is of the opinion that the judgment of the Apex court in Totgar's Co- operative Sale Society Ltd (supra) is not applicable in respect of the co-operative society whose business is banking. Admittedly, the assessee has invested funds in state promoted treasury small savings fixed deposit scheme. Since Government of India has withdrawn India Vikas Patra, as a small savings instrument, funds invested at the discretion of the bank is one of the activities of the banking as per the Banking Regulation Act. Since the assessee co-operative society is in the 4 ITA No.372/Coch/2010 business of banking the investment in the state promoted treasury small savings fixed deposit certificate scheme is a banking activity, therefore, the interest accrued on such investment has to be treated as business income in the course of its banking activity. Once it is a business income, the assessee is entitled for deduction u/s 80P(2)((a)(i). therefore, this Tribunal is of the opinion that the judgment of the Larger Bench of the apex Court in Karnataka State Cooperative Apex Bank (supra) is applicable to the facts of this case. By respectfully following the judgment of the Apex court in Karnataka State Co- operative Bank (supra), the order of the Commissioner of Income-tax(A) is upheld."

7.3 In the instant case, the assessee is a cooperative Bank. The investment in treasury/banks and earning interest on the same is part of the banking activity of the assessee's cooperative bank. Therefore, the said income is eligible for deduction u/s 80P(2)(a)(i) of the Act. Therefore, the Income Tax Authorities were not justified in treating interest income received by the assessee as 'income from other source' and denying the benefit of section 80P(2) of the Act. It is ordered accordingly. 4.1 It has not been disputed by the Revenue that major portion of interest income arose to the assessee on its investments in Treasury and Banks for the impugned assessment year. Therefore, the decision of the Tribunal in assessee's own case for the assessment year 2009-10 is squarely applicable for the impugned assessment year also. We also find that the judgment of the Hon'ble Apex Court in the case of Totgar's Co-operative Sales Society vs. ITO (supra) was duly considered by the Tribunal while arriving at this decision. Therefore, we hold that the lower authorities were not justified in treating interest income received by the assessee as 'income from other sources' and denying it the benefit of deduction under section 80P(2) of the Act.