9911796707
TMI Blog1997 (11) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... Government, (iv) interest from other co-operative institutions and banks, (v) dividends received by the assessee was business income entitled to deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961 ?" The assessment years involved in the above tax cases reference are the years 1978-79 and 1979-80. The assessee is a co-operative society engaged in the business of banking and providing credit facilities to its members. The issues that arise in the above two tax cases are whether the following income can be treated as business income assessable under section 80P(2)(a)(i) of the Income-tax Act, 1961 : "1. Interest on securities ; 2. Income from house properties; 3. Subsidy from Government; 4. Interest from other co-operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 80P(2)(a)(i) of the Act. The assessee claimed that income from the meeting hall held by the assessee was assessable under the head "Income from business" and, therefore, claimed exemption under section 80P(2)(a)(i) of the Act. The Income-tax Officer in the assessment made for the assessment years 1978-79 and 1979-80 held that the assessee has let out the surplus assets and the assessee had no intention to earn income from business and the income from the meeting hall should be assessed under the head "Income from the house property". The assessee preferred appeals against the orders of assessment before the Commissioner of Income-tax (Appeals) for both the years. The Commissioner of Income-tax (Appeals) noticed that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, the assessee is not entitled to claim deduction under section 80P of the Act in respect of the rents from letting out the surplus space available with the assessee. Learned counsel for the Revenue also placed strong reliance on the decision of the Kerala High Court in the case of Kottayam Co-operative Land Mortgage Bank Ltd. v. CIT [1988] 172 ITR 443 wherein the Kerala High Court held that the income from letting out the surplus space available to the co-operative society cannot partake the character of the business income of the co-operative society and the assessee was not entitled to claim exemption under section 80P(2)(c) of the Act. Mr. P. P. S. Janarthana Raja, learned counsel for the assessee, on the other hand, submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was found that the building was a commercial asset during the relevant previous year, the income derived from letting out the commercial asset is properly assessable as business income in the hands of the assessee and, consequently, the assessee is entitled to claim the deduction under section 80P(2)(a)(i) of the Act. The decision of the Kerala High Court on which reliance has been placed by learned counsel for the Revenue is not applicable to the facts of the case as it dealt with a case of letting out a property which was a non-commercial asset, but, on the other hand, in the instant case, it was found that the property was a commercial asset and once it is found to be commercial asset, the income derived from letting out the commercia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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