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2019 (5) TMI 1387 - ITAT COCHINBenefits of section 80P - HELD THAT:- The issue was considered by the Jurisdictional High Court in the case of Mavilayi Service Co-operative Bank Ltd. vs. CIT [2019 (3) TMI 1580 - KERALA HIGH COURT] wherein it was held that the AO is not obliged to grant deduction by merely looking at the certificate of registration issued by the competent authority under the Co-operative Societies Act. Instead, he has to conduct an enquiry into the factual situation as to the activities of the assessee and arrive at a conclusion whether the benefits of section 80P can be extended or not. Thus, the Full Bench overruled the earlier judgment of the Jurisdictional High Court in the case of Chirakkal Service Co-operative Bank Ltd. vs. CIT [2016 (4) TMI 826 - KERALA HIGH COURT] . The Full Bench had followed the judgment of the Supreme Court in the case of Citizen Co-operative Society Ltd. vs. ACIT [2017 (8) TMI 536 - SUPREME COURT] . In view of the latest judgment of the Jurisdictional High Court cited supra, this issue is remitted to the file of the Assessing Officer with the direction to examine the actual activities carried on by the assessee so as to grant deduction u/s. 80P of the Act. Accordingly, the issue in dispute is remitted to the file of the AO for fresh consideration in accordance with the above direction. This ground of appeals of the Revenue is partly allowed for statistical purposes. Deduction u/s. 80P(2)(a)(i) - HELD THAT:- With regard to the interest income earned by the assessee from other Banks and Treasury on which deduction u/s. 80P(2)(i)(a) is to be granted, there is no dispute that the assessee has made investments in the course of banking activities and such interest income was received on investments made with cooperative banks and other scheduled banks. The co-ordinate bench of the Tribunal in the case of Kizhathadiyoor Co-operative Bank Limited [2016 (7) TMI 1405 - ITAT COCHIN] had held that such interest income received by the assessee should be assessed as “income from business” instead of “income from other sources”. In view of the order of the co-ordinate bench, we hold that the CIT(A) is justified in holding that interest income received by the assessee should be assessed as “income from business”. Unexplained cash credits u/s. 68 - HELD THAT:- CIT(A) has taken a different view for this assessment year 2014-15 which is not proper. Judicial discipline requires consistency in its proceedings. Being so, we are inclined to remit this issue to the file of the AO for this assessment year in conformity with the order of the CIT(A) with a direction to the assessee to provide details of the depositors along with the proof of identity to the Assessing Officer. The Assessing Officer is directed to verify the identity of the depositors and if the assessee proves the identity of the parties, then the addition is to be deleted in view of the order of the Tribunal in the case of This ground of appeal of the assessee is partly allowed for statistical purposes. Non granting of deduction u/s. 80P(2) - treating the unexplained credits as ‘income from other sources’ - HELD THAT:- This issue was considered by the Jurisdictional High Court in the case of Kerala Sponge Iron Ltd. [2015 (9) TMI 233 - KERALA HIGH COURT] wherein “the income had been treated as unexplained cash credit u/s 68. Once it was so done for the purpose of set off or any other purpose, the unexplained income could not be treated as business income under any one of the heads provided under section 14 in which case the question of set off did not arise. Therefore, the order of the Tribunal to the extent it had set aside the order of the Commissioner (Appeals) directing the Assessing Officer to allow the set off of the current year’s business loss as well as brought forward business loss and unabsorbed depreciation against income assessed u/s 68 was to be set aside.” In view of this, we are of the opinion that deduction u/s 80P(2) cannot be allowed for the unexplained income assessed as u/s 68 of the Act and the said income cannot be treated as business income. With this observation, we remit this issue to the file of the Assessing Officer with reference to the addition made u/s. 68 - Ground of appeal of the assessee is partly allowed for statistical purposes.
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