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TMI Blog2019 (12) TMI 502X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer. AO shall examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) of the I.T.Act. Interest on the investments with Cooperative Banks and other Banks , the co-ordinate Bench order of the Tribunal in the case of Kizhathadiyoor Service Cooperative Bank Limited [ 2016 (7) TMI 1405 - ITAT COCHIN] had held that interest income earned from investments with treasuries and banks is part of banking activity of the assessee, 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 on such interest income, the Assessing Officer shall follow the law laid down in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) and examine the activities of the assessee-society before granting deduction u/s 80P of the I.T.Act on such interest income. It is ordered accordingly. - ITA No.603/Coch/2019, SA No.78/Coch/2019 - - - Dated:- 9-12-2019 - Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank Ltd. v. CIT [ITA No.97/2016 order dated 19th March, 2019]. The assessee objected to the issuance of notice. However, the CIT(A) rejected the objections raised by the assessee and passed an order u/s 154 of the I.T.Act, disallowing the claim of the assessee u/s 80P(2) of the I.T.Act. 5. Aggrieved by the order of the CIT(A), the assessee has filed this appeal before the Tribunal raising the following grounds:- A. The Orders of the assessing officer as well as the appellate authority passed u/s 154 of the Act to the extent of objections made herein after, are against the facts and circumstances of the case and is opposed to the provisions of law. B. The authority below went wrong in initiating proceedings u/s 154 on the basis of the subsequent decision of the jurisdiction of the High Court. The appellate authority had invoked the jurisdiction u/s 154 disregarding the fact that the department have the right of appeal against the order passed u/s 250, and without verifying whether the department had filed an appeal against the order. The assessing authority had filed appeal against the order of the CIT Appeal before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciety from its investments with any other co-operative bank being a Central Society as defined u/s 2(d) of the KCS Act, the authorities below committed a gross mistake in holding that District Co-operative Bank is not a co-operative society as envisaged u/s 80P(2). I. Without prejudice to the above grounds it is respectfully submitted that even though the authority below relied on the decision of the High Court of Kerala (Full Bench) in the case of Mavilayil Service Co-operative Bank Ltd., did not followed the directions in the decision regarding the determination of the classification. For the reasons stated in the above and also the grounds urged at the time of final hearing, it is just and necessary to set aside the Annexure A1 Assessment Order as well as Annexure A3 Order in Appeal to the extent of objections made herein above. 6. The learned AR relied on the grounds raised. The learned Departmental Representative, on the other hand, strongly supported the orders of the Income-tax authorities. 7. We have heard the rival submissions and perused the material on record. The Hon ble jurisdictional High Court in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having been classified as Primary Agricultural Credit Societies by the competent authority under the KCS Act, it has necessarily to be held that the principal object of such societies is to undertake 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) of the I.T.Act. 7.2 As regards the interest on the investments with Cooperative Banks and other Banks, the co-ordinate Bench order of the Tribunal in the case of Kizhathadiyoor Service Co-operative Bank Limited in ITA No.525/Coch/2014 (order dated 20.07.2016), had held that interest income earned from investments with treasuries and banks is part of banking activity of the assessee, 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 of the I.T.Act on such interest income, the Assessing Officer shall follow the law laid down by the Larger Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) and examine the activities of the assessee-society before granting deduction u/s 80P of the I.T.Act on such interest income. It is ordered accordingly. 8. Since we have disposed of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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