9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (4) TMI 1178 - AT - Income TaxBenefit of deduction u/s 80P2)(a)(i) - interest received on deposits with Sub-Treasuries - whether interest received on investments with sub-treasury is liable to be assessed under the head income from other sources or income from business - Held that - In view of the decision of the co-ordinate Bench of the Tribunal in the case of The Padne Service Co-operative Bank Ltd. (2018 (1) TMI 602 - ITAT COCHIN), we hold that the CIT(A) is justified in directing the A.O. to grant the benefit of deduction u/s 80P(2) of the I.T.Act in respect of interest income - Decided in favour of assessee.
Issues Involved:
1. Whether the CIT(A) is justified in directing the Assessing Officer to grant the benefit of deduction u/s 80P(2)(a)(i) of the I.T. Act. 2. Disallowance of interest income earned on FDs with Kaduthuruthy Urban Co-operative Bank. Issue-wise Detailed Analysis: 1. Deduction u/s 80P(2)(a)(i): The primary issue in both appeals concerns whether the CIT(A) was justified in directing the Assessing Officer to grant the benefit of deduction u/s 80P(2)(a)(i) of the I.T. Act to the assessee, a primary agricultural credit society registered under the Kerala Co-operative Societies Act, 1969. The assessee had claimed deductions for the assessment years 2012-2013 and 2013-2014, which the Assessing Officer denied, concluding that the assessee was engaged in the business of banking and thus not entitled to the deduction in view of section 80P(4) of the I.T. Act effective from 01.04.2007. The CIT(A) allowed the deduction, relying on the Kerala High Court's judgment in The Chirakkal Service Co-operative Bank Ltd. and Others vs. CIT, which held that primary agricultural credit societies registered under the Kerala Co-operative Societies Act are entitled to the deduction u/s 80P(2). The Tribunal upheld the CIT(A)'s decision, noting that similar grounds had been adjudicated in previous Tribunal orders, which followed the Kerala High Court's judgment. The Tribunal also referenced the Supreme Court's judgment in The Citizens Co-Operative Society Limited vs Assistant Commissioner of Income Tax, distinguishing it from the present case. The Tribunal concluded that the CIT(A) was correct in granting the deduction, as the assessee was a primary agricultural credit society providing credit facilities to its members for agricultural purposes. The Tribunal emphasized that the income tax authorities have no right to probe further into the classification of the society once the competent authority under the KCS Act has classified it as a primary agricultural credit society. 2. Disallowance of Interest Income: The second issue, specific to the assessment year 2012-2013, involved the disallowance of interest income of ?2,33,750 earned on FDs with Kaduthuruthy Urban Co-operative Bank. The Assessing Officer denied the deduction u/s 80P(2), stating that the deduction is intended to encourage investments in similar co-operative societies, not in banks or treasuries. The CIT(A) reversed this decision, holding that the interest income earned in the course of the assessee's banking business falls within the ambit of section 80P(2)(a)(i) of the I.T. Act. The CIT(A) relied on the Supreme Court's judgment in CIT v. Karnataka State Cooperative Apex Bank and the Tribunal's order in M/s. Puthupally Village Service Cooperative Bank Ltd. The Tribunal upheld the CIT(A)'s decision, referencing its own decision in The Padne Service Co-operative Bank Ltd., which held that interest earned on investments made in the course of normal banking business is business income and thus eligible for deduction u/s 80P(2)(a)(i). The Tribunal distinguished the Supreme Court's judgment in Totgars Cooperative Sales Society Ltd., noting that the facts of the present case align more closely with the Karnataka High Court's judgment in Tumkur Merchants Souharda Credit Co-operative Ltd., which supported the assessee's claim for deduction. Conclusion: The Tribunal dismissed the Revenue's appeals and the assessee's cross objections, upholding the CIT(A)'s decisions to grant the benefit of deduction u/s 80P(2)(a)(i) for both assessment years and to allow the deduction for interest income earned on FDs. The Tribunal's decisions were based on consistent judicial precedents and the specific facts of the case, affirming the assessee's entitlement to the claimed deductions.
|
