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2016 (11) TMI 1615 - AT - Income TaxBenefit of deduction u/s 80P(2) - assessee is a primary agricultural credit society - HELD THAT:- In the instant case, the assessee is a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969. The certificate, which has been issued by the Registrar of Cooperative Societies, to the above effect, is placed on record. CHIRAKKAL SERVICE CO-OPERATIVE BANK LTD. VERSUS THE COMMISSIONER OF INCOME TAX [2016 (4) TMI 826 - KERALA HIGH COURT] held that primary agricultural credit societies registered under the Kerala Cooperative Societies Act, 1969 are entitled to the benefit of deduction u/s 80P(2)(i)(a) of the Act. Since there is a certificate issued by the Registrar of Cooperative Societies stating that the assessee is a primary agricultural credit society, we hold that the assessee is entitled to the benefit of deduction u/s 80P(2)(a). Granting deduction u/s 80P(2) for the addition made u/s 68 - HELD THAT:- We notice that the Assessing Officer while making the addition u/s 68 of the Act had brought the same to tax under the head ‘income from business’. Once the same is brought to tax as ‘income from business’, the said income is entitled to the benefit of deduction u/s 80P(2)(i)(a) of the Act . See THE KARAD MERCHANT SAH. CREDIT [2011 (2) TMI 1543 - ITAT PUNE] and BULDANA URBAN CO-OPERATIVE CREDIT SOCIETY LTD. [2013 (12) TMI 237 - ITAT NAGPUR] The CBDT, in the recent circular no.37/2016 dated 2nd Nov 2016 has considered higher deduction u/s 80P on the enhanced profit as a result of disallowance of expenditure. The CBDT had clarified that, as a result of expenditure disallowance, there is a enhanced profit and the same is brought to tax as business income, deduction under Chapter VI-A need to be allowed on the enhanced profit. Thus we hold that the CIT(A) is justified in granting benefit of deduction u/s 80P(2)(i)(a) of the Act, as regard to addition u/s 68
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