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2017 (3) TMI 1757 - AT - Income TaxDeduction u/s 80P - HELD THAT:- In the instant case, the assessee is a cooperative credit society providing credit facility to its members and the same is evident from the loans disbursement and it is part of the banking activity of the assessee’s cooperative bank. Therefore, the said income is eligible for deduction u/s 80P(2)(a)(i) . Moreover, the Board Circular no 18 of 2015 dated 2.11.2015 had clearly states that interest on deposits on non SLR securities is taxable under the head ‘income from business” and are eligible for deduction u/s 80P(2)(a)(i), in the case of Cooperative banks carry on the business of banking. As mentioned earlier, in this case, the assessee is a cooperative credit society providing credit facility to its members, which is akin to the banking activity. Therefore, we are of the view that the CIT(A) had correctly deleted the addition made by the Assessing Officer. Hon’ble Kerala High Court in the case of Chirakkal Service Co-op Bank Ltd [2016 (4) TMI 826 - KERALA HIGH COURT] had clearly held that primary agricultural societies registered under the Kerala Cooperative Society Act and classified so, under that Act, are entitled to the benefit of deduction u/s 80P(2) In the instant case, admittedly, the Joint Registrar (General) Kottayam, by certificate dated 23.12.2011 had certified that the assessee is a primary agricultural credit cooperative society. This fact also admitted by the Assessing Officer at page 2 of the assessment order. In view of the clear finding of the Hon’ble jurisdictional High Court, we are of the view that the assessee is entitled to the benefit of deduction u/s 80P(2) . As per section 80P(2)(d) interest income received by the cooperative society from its investment from another cooperative society, is eligible for exemption from taxation. The whole of interest income was received from other cooperative society/banks and hence, as per provisions of section 80P(2)(d) of the Act, the same is to be allowed as deduction. By virtue of section 80P(2)(a)(i) in the case of cooperative society carrying on the business of banking or providing credit facilities to its members, whole of the profits and gains attributable to such activities is eligible for deduction. If the income is derived by a cooperative society from the business of banking or providing credit facility to its members it will fall within the exemption. The Hon’be Supreme Court, in the case of CIT vs Karnataka State Cooperative [2001 (8) TMI 9 - SUPREME COURT] held that interest from surplus funds kept as deposits in banks, being ancillary and incidental to the carrying on of the business of providing credit facility by the assessee cooperative society to its members, is entitled to deduction u/s 80P(2)(a)(i). We hold that the Assessing Officer is not justified in denying the benefit of deduction u/s 80P - Decided in favour of assessee.
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