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TMI Blog2020 (12) TMI 843X X X X Extracts X X X X X X X X Extracts X X X X ..... nt deduction u/s. 80P(2) of the I.T. Act. Disallowance of claim for deduction u/s. 80P made in respect of income from banking and credit business with members - HELD THAT:- 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'. 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. vs. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT] 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. Thus, the appeal filed by the assessee is allowed for statistical purposes. - ITA No. 78/Coch/2020 and S.P. No. 46/Coch/2020 - - - Dated:- 5-10-2020 - Chandra Poojar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amitha Bagalkot on 5th February 2014. (d) High Court of Bombay at Goa - Quepem Urban Co-operative Credit Society Ltd. Vs. Assistant Commissioner of Income-tax on 17-04-2015. (e) Madras High Court - The Commissioner of Income Tax vs. NIC Employees Co-operative Society on 10 august 2016. (f) ITAT, Panaji - Athani Taluka Primary Teachers Co-operative Credit Society Ltd. ITA No. 06/PNJ/2014 on 04/07/2014 (g) ITAT, Poona- Jankalyan Nagri Sahakari Pat Sanstha Ltd. Reported in 24 Taxmann.com (Pune Tribunal) 127. (h) ITAT, Ahmedabad - Jafri Momin Vikas Co-op Credit Society on 31 October, 2012. (i) ITAT, Indore - Bhee Thrift Credit Co-operative Society on 31 October, 2012 (j) ITAT, Bangalore - Yeshwantpur Credit Co-operative Society on 11 April, 2012. (k) ITAT, Ahmedabad - Sarvodaya Credit Cum Consumers Cooperative Society on 3 May, 2013. (l) ITAT, Pune - Jain Nagri Sahakari Pat Sanstha Department of Income Tax on 14 September, 2012. (m) ITAT, Pune - Dharasur Mardini Nagar Sahakari on 20 November, 2012. (n) ITAT, Pune - Vardhman Nagari Sahakari Path Sanstha on 22 November, 2012. (o) ITAT, Delhi - Palhawas Primary Agriculture Co-o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and treasury also was allowed as deduction u/s. 80P(2)(a)(i) of the I.T. Act. In allowing the appeal of the assessee, the CIT(A) followed the judgment of the Hon'ble jurisdictional High Court in the case of Chirakkal Service Cooperative Co-operative Bank Ltd. v. CIT [ (2016) 384 ITR 490 (Ker.). 6. Subsequently, the CIT(A) issued notice u/s. 154 of the I.T. Act proposing to rectify his order passed, in view of the subsequent 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 notice. However, the CIT(A) rejected the objections raised by the assessee and passed order u/s. 154 of the I.T. Act, disallowing the claim of the assessee u/s. 80P(2) of the I.T. Act. 7. Aggrieved by the order passed by the CIT(A), the assessee has preferred this appeal before the Tribunal. 8. The learned AR relied on the grounds raised. The learned Departmental Representative, on the other hand, strongly supported the orders passed by the Income Tax Authorities. 9. We have heard the rival submissions and perused the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant 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 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 dow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activities of a cooperative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s. 80P(2) of the I.T. Act. 10. Regarding Ground No. 2 relating to disallowance of claim for deduction u/s. 80P made in respect of income from banking and credit business with members, we find that a similar issue came up for consideration before the co-ordinate Bench of the Tribunal As regards the interest on 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 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 L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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