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2024 (1) TMI 851 - AT - Income TaxDeduction u/s. 80P(2)(a)(i) - interest and dividend incomes received by the assessee, a primary agricultural credit society under the Kerala Co-operative Societies Act, 1969 (Kerala Act) from Ernakulam District Co-operative Bank as income from other sources u/s. 56 - HELD THAT - Revenue authorities have, we find, denied the assessee s claim in view of the decision in Totgar s Co-operative Sales Society Ltd. 2010 (2) TMI 3 - SUPREME COURT which, as argued by Shri Ramdas, the learned counsel for the assessee, stands considered in Peroorkkada Service Co-operative Bank Ltd. 2021 (12) TMI 1084 - KERALA HIGH COURT The entire premise of the decision in Totgars Co-operative Sales Society(supra), is whether the income arising to a society on it s deposits with other co-operative society/bank arises to it in the normal course of business or is on it s surplus funds for the time being. The Apex Court found it to be latter, so that the income was not assessable u/s 28, i.e., as business income, but only as income from other sources, as was by the Revenue u/s. 56. The issue of the same being, in the alternative, deductible u/s.80P(2)(d) of the Act did not come up for consideration before it. Even if, therefore, as the Revenue contends, the income arises to the assessee on it s surplus funds and, accordingly, is assessable u/s. 56 of the Act, the same, where otherwise eligible, stands to be deducted u/s.80P(2)(d) of the Act. Continuing further, whether assessable as business income or otherwise, where the same forms part of the gross total income, the same, on satisfaction of the condition/s therefor, would qualify for deduction under the relevant clause of section 80P of the Act. The matter has been explained by the Cochin Bench per it s decisions in Mundakkayam SCB Ltd. v. ITO 2024 (1) TMI 766 - ITAT COCHIN and ITO v. The Adichanalloor Farmers SCB Ltd. Ors 2023 (8) TMI 1417 - ITAT COCHIN also expressing it s view in its respect, even as the decision in Peroorkkada Service Co-operative Bank Ltd. 2021 (12) TMI 1084 - KERALA HIGH COURT would in any case hold. The impugned sum accordingly stand to be deducted u/s.80P(2)(d) of the Act.
Issues involved:
The judgment involves the issue of non-grant of deduction u/s. 80P(2)(a)(i) of the Income Tax Act on interest and dividend incomes received by the assessee, a primary agricultural credit society under the Kerala Co-operative Societies Act, 1969. Details of the Judgment: 1. The Assessee filed an Appeal against the Order by the Commissioner of Income Tax (Appeals) dismissing the appeal contesting its assessment under section 143(3) of the Income Tax Act for Assessment Year 2018-19. 2. The only issue in appeal was the denial of deduction u/s. 80P(2)(a)(i) on interest and dividend incomes received by the assessee, assessing them as income from other sources u/s. 56 of the Act. 3. The assessee contended that the incomes were deductible u/s. 80P(2)(d) of the Act, citing a High Court decision in a similar case. 4. The Revenue authorities denied the claim based on a Supreme Court decision, considering the income as arising on the assessee's surplus funds and assessable u/s. 56 of the Act. 5. The Tribunal held that even if the income was assessable under section 56, it would qualify for deduction u/s. 80P(2)(d) of the Act if eligible, as explained in previous decisions by the Cochin Bench. 6. The Tribunal decided in favor of the assessee, allowing the appeal and stating that the impugned sum should be deducted u/s. 80P(2)(d) of the Act. 7. The stay application filed by the assessee was dismissed as infructuous. Separate Judgment by the Judges: No separate judgment was delivered by the judges in this case.
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