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TMI Blog2020 (3) TMI 712X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the dictum laid we restore the issue of deduction u/s 80P(2) to the files of the Assessing Officer to 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 Co-operative Banks and other Banks - Tribunal in the case of Kizhathadiyoor Service Co-operative 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 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt judgment of the Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT [ITA No.97/2016 order dated 19th March, 2019]. The assessee objected to the issuance of notices. However, the CIT(A) rejected the objections raised by the assessees and passed orders u/s 154 of the I.T.Act, disallowing the claim of the assessees u/s 80P(2) of the I.T.Act. 5. Aggrieved by the orders of the CIT(A), the assessees have filed these appeals before the Tribunal raising the following identical grounds:- A. The Commissioner (Appeals) Kottayam ought to have considered that the issue whether the assessing officer shall probe into the activities of a Co-operative society to find out whether it is eligible for deduction u/s 80P of the Income Tax Act 1961 or will it be hit by Section 80P(4) is a matter to be decided by the Hon'ble Supreme Court in the appeals [SLP (Civil) Diary No. 27628/2019) filed by the Co-operative Societies in Kerala, against the reference order dated 19-03- 2019 of the full bench of Hon'ble High Court of Kerala in the case Mavilayi Service Co-operative Bank Ltd., vs Income Tax Officer, Kannur and that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Palhawas Primary Agriculture Co-op. Society Ltd. Palhawas Distt., I.T.A.No.2368/Del/2011 (p) ITAT, Delhi - Dharuhera Primary Agriculture Coop. society -I.T.A.No.2371/Del/2011 (q) ITAT, Mumbai - The Income Tax officer, Ward- 20(2)(1), Mumbai -ITA No. 1820/MUM/2017 dated 02- 08-2018 D. When there is no dearth of decisions of various High Courts and ITATs in India in which detailed discussions were made and conclusion arrived on the subject matter of eligibility for deduction u/s 80P, disallowance of claim under the said Section made by the Assessing Officer and the CI.T. (Appeals) relying on unrelated decisions is denial of natural justice to the appellant. E. The Appellant prays that the general outlook in the decisions of various High courts and ITATs across the country on the disallowance of claim for deduction u/s 80(P), adopted on the basis of CBDT clarification No. 133/06/2006-07 dated 19-05-2007 shall be taken into consideration while disposing this appeal petition. F. The Assessing Officer ought to have seen that Appellant was eligible for deduction u/s 80P(2)(d) and 80P(2)(a)(i) in respect of interest income from investments with other Cooperative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereunder. On such a claim for deduction under Section 80P of the IT Act, the Assessing Officer has to conduct an enquiry into the factual situation as to the activities of the assessee society and arrive at a conclusion whether benefits can be extended or not in the light of the provisions under sub-section (4) of Section 80P. 33. In Chirakkal [384 ITR 490] the Division Bench held that the appellant societies 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 soci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee society to determine the eligibility of deduction u/s 80P of the I.T.Act. In view of the dictum laid down by the Full Bench of the Hon ble jurisdictional High Court (supra), we restore the issue of deduction u/s 80P(2) to the files of the Assessing Officer. The Assessing Officer shall examine the activities of the assessees 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. 7.2 As regards the interest on the investments with Co-operative 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 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 of the I.T.Act on such interest income, the Assessing Officer shall follow the law l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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