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2020 (12) TMI 843 - AT - Income TaxDeduction u/s. 80P(2) - CIT(A) passed order u/s. 154 wherein the claim of deduction u/s. 80P was denied, by relying on the judgment of the Larger Bench of the Hon'ble Jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. [2019 (3) TMI 1580 - KERALA HIGH COURT]. - HELD THAT:- Full Bench of the Hon'ble Jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. vs. CIT (supra) had held that the A.O. has to conduct an inquiry into the factual situation as to the activities of the assessee 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 assessee and determine whether the activities are in compliance with the 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. 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.
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