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TMI Blog2019 (12) TMI 767X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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, AO 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. X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Act by the Commissioner, Income Tax (Appeals), is perse illegal, arbitrary, unjust and the same is liable to be set aside. B. It is submitted that Section 80P has been incorporated in the Income Tax Act with the purpose of encouraging the Co-operative Sector in the country. As per Section 80P of the Income Tax Act, the Cooperative Societies are entitled to deduct the income generated from the business of banking or providing credit facilities to its members. Section 80P(2)(a)(i) speaks about two kinds of income, one is the Income generated from banking and the income generated from providing credit facilities to its members. As per the new provision of Section 80P(4) of the Act, the provisions of Section 80P shall not apply in relation to any Co-operative Bank other than a primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank. The certificate issued by the Joint Registrar of Cooperative Societies, clearly indicates that the appellant society is a registered Co-operative Society and it has been classified as a primary Agricultural Credit Society under Rule 15(1)(A)(3)(a)·of the Kerala Co-operative Societies Rules. Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2015-16 on 5-3-2019, ought not have been rectified on 3-9- 2019, on basis of a dictum laid down in a later decision rendered by this Hon Court. G. It is further submitted that as against the judgment in Mavilayi Service Co-operative Bank, rendered by the Full Bench of this Hon Court, several primary agricultural credit societies have already approached the Hon 'ble Supreme Court by filing appeals and all the appeals have been admitted. Therefore, the issue which was raised. decided, has not attained finality and therefore, no rectification or ought to have been passed by the Commissioner, Income Tax (Appeals). H. The other grounds will be raised at the time of hearing." 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 case of Chirakkal Service Co-operative Co-operative Bank Ltd. v. CIT [(2016) 384 ITR 490 (Ker.)] had held that when a certificate has been issued to an assessee by the Registrar of Co-operative Societies characteriz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Section 80P of the Income Tax Act, by reason of sub-section (4) thereof, the Assessing Officer has to co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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