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TMI Blog2019 (5) TMI 1189X X X X Extracts X X X X X X X X Extracts X X X X ..... ssifying the assessee-society as a cooperative society. Each assessment year is separate and eligibility shall be verified by the Assessing Officer for each of the assessment years. Thus the issue of deduction u/s 80P(2)(a)(i) is restored to the Assessing Officer. The Assessing Officer shall examine the activities of the respective assessee and determine whether their activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and grant deduction u/s 80P(2) in accordance with law. Whether the interest income received on investments can be treated as income from business and granted deduction u/s 80P- HELD THAT:- In the case of Kizhathadiyoor Service Cooperative Bank Limited [ 2016 (7) TMI 1405 - ITAT COCHIN] held that interest income earned from investments with treasuries and banks is part of banking activity of the assessees, and therefore, the said interest income was eligible to be assessed as `income from business instead of `income from other sources . However, as regards the grant of deduction u/s 80P(2) on such interest income, the Assessing Officer shall examine the assessee s activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income from business and granted deduction u/s 80P of the I.T.Act. 3. Brief facts of the case are as follows: The assessees in these cases are registered as cooperative societies under the Kerala State Co-operative Societies Act, 1969. The assessments were completed in the assessees cases by denying deduction claimed u/s 80P of the I.T.Act. The Assessing Officer for denying the claim of deduction u/s 80P of the I.T.Act, treated the assessees as a co-operative bank and not a co-operative society. Further the interest received from the investments were denied deduction u/s 80P of the I.T.Act by treating the same as income from `other sources . 4. Aggrieved by the orders of the assessment, the assessees filed appeals before the first appellate authority. The CIT(A) by following the judgment of the Hon ble jurisdictional High Court in the case of Chirakkal Service Co-operative Bank Ltd. (384 ITR 490) allowed the claim of deduction u/s 80P of the I.T.Act. As regards interest received on investments, the CIT(A) held that the same should be assessed as `income from business since these investments were made in the course of business of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) is correct in not duly considering the judgement of Honble Supreme Court in the case of Citizen Co-operative society Ltd Vs ACIT, Circle-9(1), Hyderabad dated 08.08.2017 reported in 397 ITR I(SC), wherein it has been held that if a cooperative society is violating the principle of mutuality in the grab of persons who actually are not real members and indulging in banking business per se that it cannot claim the benefit of section 80P(2)(a)(i). (vi) the order of CIT(A) is correct in not duly considering following case laws: (a) 203 ITR 1027 (SC) in the case of Sabargantha Zilla Kharid Vechar Sangh Ltd. (b) 363 ITR 68(Kerala) in the case of Perunthalmanna Service Corporative Bank. (c) 234 ITR 201 (Kerala) in the case of CIT V s Kerala State Co-operative Marketing Federation (d) 322 ITR 283 in the case of M/s Totgars Cooperative Sales Society. For these and other grounds that may be advanced at the time of hearing the order of the learned Commissioner of Income-tax (Appeals), Trivandrum on the above points may be set aside and that of the Assessing Officer restored. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndertake agricultural credit activities and to provide loans and advances for agricultural purposes, the rate of interest on such loans and advances to be at the rate to be fixed by the Registrar of Co-operative Societies under the KCS Act and having its area of operation confined to a Village, Panchayat or a Municipality and as such, they are entitled for the benefit of sub-section (4) of Section 80P of the IT Act to ease themselves out from the coverage of Section 80P and that, the authorities under the IT Act cannot probe into any issues or such matters relating to such societies and that, Primary Agricultural Credit Societies registered as such under the KCS Act and classified so, under the Act, including the appellants are entitled to such exemption. 34. In Chirakkal [384 ITR 490] the Division Bench expressed a divergent opinion, without noticing the law laid down in Antony Pattukulangara [2012 (3) KHC 726] and Perinthalmanna [363 ITR 268]. Moreover, the law laid down by the Division Bench in Chirakkal [384 ITR 490] is not good law, since, in view of the law laid down by the Apex Court in Citizen Co-operative Society [397 ITR 1], on a claim for deduction under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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