2018 (7) TMI 2302 - AT - Income Tax

Eligibility of deduction u/s. 80P(2)(a)(i) - assessee is a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969 - HELD THAT - In view of the judgment of Chirakkal Service Co-op Bank Ltd. 2016 (4) TMI 826 - KERALA HIGH COURT wherein held primary agricultural credit societies, registered as such under the KCS Act; and classified so, under that Act, including the appellants are entitled to such exemption - we hold that the assessee - Society is entitled to the benefit of deduction u/s. 80P(2) of the Act for both the assessment years. It is ordered accordingly. Interest earned on investment made with sub-treasuries and bank deposits - Tribunal had decided the issue in favour of the assessee in assessee s own case 2016 (7) TMI 1405 - ITAT COCHIN concerning the assessment year 2009-10 - we hold that the CIT(A) is justified in directing the Assessing Officer to grant deduction in respect of interest income earned on investment in sub-treasuries and bank deposits u/s. 80P(2)(a)(i) Appeals filed by the Revenue are dismissed.

Summary

Issues:
- Whether the CIT(A) was justified in directing the Assessing Officer to grant deduction u/s. 80P(2)(a)(i) of the I.T. Act to the assessee-Society.
- Eligibility of deduction u/s. 80P(2)(a)(i) on the interest earned on investment made with sub-treasuries and bank deposits.

Analysis:

Issue 1: Deduction u/s. 80P(2)(a)(i) of the I.T. Act
The case involved appeals by the Revenue against orders of the CIT(A) regarding the deduction u/s. 80P(2)(a)(i) of the I.T. Act for the assessment years 2011-12 and 2012-13. The Assessing Officer had disallowed the deduction, claiming the assessee was primarily engaged in banking and not entitled to the deduction. However, the CIT(A) relied on the judgment of the Jurisdictional High Court and allowed the deduction, stating that a primary agricultural credit society is entitled to the benefit of deduction u/s. 80P(2). The High Court held that societies classified as primary agricultural credit societies under the Kerala Cooperative Societies Act are entitled to the exemption under section 80P of the IT Act. Consequently, the Tribunal upheld the CIT(A)'s decision and allowed the deduction for both assessment years.

Issue 2: Deduction on interest earned on investments
The second issue pertained to the eligibility of deduction u/s. 80P(2)(a)(i) on interest earned on investments with sub-treasuries and banks. The Tribunal had previously ruled in favor of the assessee in a similar case concerning the assessment year 2009-10. Therefore, in line with the Tribunal's earlier decision, the CIT(A) was justified in directing the Assessing Officer to grant deduction for the interest income earned on investments in sub-treasuries and bank deposits u/s. 80P(2)(a)(i) of the Act. As a result, the appeals filed by the Revenue were dismissed, and the decisions of the lower authorities were upheld.

In conclusion, the judgment by the Appellate Tribunal ITAT Cochin affirmed the entitlement of the assessee-Society to the deduction u/s. 80P(2)(a)(i) of the I.T. Act and upheld the eligibility of deduction for interest earned on investments made with sub-treasuries and bank deposits. The decision was based on legal precedents and statutory provisions, ensuring that the assessee received the appropriate tax benefits as per the law.