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TMI Blog2016 (10) TMI 1195X X X X Extracts X X X X X X X X Extracts X X X X ..... he matter as expeditiously as possible in accordance with law, after affording reasonable opportunity of being heard to the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ty? 4.5 In considering the above question of law, the Hon'ble High Court rendered the following findings: "15. Appellants in these different appeals are indisputably societies registered under the Kerala co-operative societies Act, 1969, for sort, KCS Act and the bye-laws of each of them, as made available to this court as part of the paper books, clearly show that they have been classified as primary agricultural credit societies by the competent authority under the provisions of that Act. The parliament, having defined the term 'cooperative society' for the purposes of the BR Act with reference to, among other things, the registration of a society under any State law relating to co-operative societies for the time being; it cannot but be taken that the purpose of the societies so registered under the State Law and its objects have to be understood as those which have been approved by the competent authority under such State law. This, we visualise as due reciprocative legislative exercise by the Parliament recognising the predominance of decisions rendered under the relevant State Law. In this view of the matter, all the appellants having sbeen classified as primary agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of deduction u/s. 80P(2) of the Act. ii) Whether the interest received from the Government Treasury is to be included under the head "income from other sources" or "income from business 5. The CIT(A) decided the issue against the assessee by observing as under:- "4.2 Verification of assessment order shows that assessee received interest income of ₹ 1,53,311/- out of the deposits made in Treasury. The issue is similar to the case of Totgar's Co-operative Sale Society Ltd. vs. ITO (2010) (322 ITR 283), in which the Hon. Supreme Court held that the assessee being co-operative society is engaged in providing credit facilities to its members (or) marketing agricultural produce to its members, interest earned by it by investing surplus funds in short term deposits would fall under the head "income from other sources" taxable u/s. 56 of the Income Tax Act and it cannot be said to be attributable to the activities of society and therefore, the interest did not qualify for deduction u/s. 80P(2)(a)(i) of the Income Tax Act. The same issue has been upheld in favour of Revenue in the case of Mutholy Service Co-operative Bank in I.T.A. No. 11/Coch/2014." 5.1 We have heard bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to the facts of this case. By respectfully following the judgment of the Apex court in Karnataka State Cooperative Bank (supra), the order of the Commissioner of Income-tax(A) is upheld." 5.2 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. Thus this ground of the assessee is allowed. iii) Whether the CIT(A) is justified in confirming the disallowance of interest paid (Rs. 17,17,183) Briefly stated the facts of the issue are as follows: 6. For the year under consideration, the assessee had claimed interest expenditure to the tune of ₹ 3,43,43,667/- . In the course of assessment, the Assessing Officer issued notice u/s. 142(1) of the Act directing the assessee to furnish the details of interest paid. Since the assessee did not furnish the requisite details, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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