TMI Blog2016 (10) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that:- In the instant case, the assessee is a cooperative Bank. The investment in treasury/banks and earning interest on the same 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) of the Act. Therefore, the Income Tax Authorities were not justified in treating interest income received by the assessee as ‘income from other source’ and denying the benefit of section 80P(2) of the Act. Thus this ground of the assessee is allowed. - I.TA No.279/Coch/2016, S.P. No. 40/Coch/2016 - - - Dated:- 31-10-2016 - SHRI B. P. JAIN, AM GEORGE GEORGE K., JM For The Assessee : Shri T.T. Biju, Adv. For The Revenue : Shri A. Dhanaraj, Sr. DR ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act, the assessee-Society is not entitled to the benefit of deduction u/s. 80P of the Act. 4.1 Aggrieved by the denial of the benefit of deduction u/s. 80P(2) of the Act, the assessee preferred appeal to the first appellate authority. The first appellate authority confirmed the view taken by the Assessing Officer. 4.2 Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us. The Ld. Counsel for the assessee submitted that the issue in question whether the assessee is entitled to the benefit of deduction u/s. 80P(2) of the Act is squarely covered in favour of the assessee by the judgment of the Hon ble High Court of Kerala in the case of Chirakkal Service Co-op Bank Ltd. reported in 384 ITR 490. 4.3 The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng defined the term 'cooperative society' for the purposes of the BR Act with reference to, among other things, the registration of a society under any State law relating to co-operative societies for the time being; it cannot but be taken that the purpose of the societies so registered under the State Law and its objects have to be understood as those which have been approved by the competent authority under such State law. This, we visualise as due reciprocative legislative exercise by the Parliament recognising the predominance of decisions rendered under the relevant State Law. In this view of the matter, all the appellants having sbeen classified as primary agricultural credit societies by the competent authority under the KCS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eason, it cannot but be held that the appellants are entitled to exemption from the provisions of section 80P of the IT Act by virtue of sub- section 4 of that sect; on. In this view of the matter, the appeals succeed. 17. In the light of the aforesaid, we answer substantia1 question 'A' in favour of the appellants and hold that the Tribunal erred in law in deciding the issue regarding the entitlement of exemption under section 80P against the appellants. We hold that the primary agricultural credit societies, registered as such under the KCS Act; and classified so, under that Act, including the appellants are entitled to such exemption. 4.6 In view of the judgment of the Hon ble Jurisdictional High Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgments, it is seen that the facts of the instant case are similar to the facts involved in the above referred three cases. Because of the above said reasons the action of the Assessing Officer is hereby upheld. 5.1 We have heard both sides and perused the material on record. As regards the interest from treasury and banks, we find on identical facts, the Cochin Bench of the Tribunal in the case of the Muttom Service Cooperative Bank Ltd in ITA No. 372/Coch/2010 had decided the matter in favour of the assessee. The Cochin Bench of the Tribunal in the case of Muttom Service Cooperative Bank Ltd (supra) has distinguished the judgment of the Hon ble Apex Court in the case of Totgar s Cooperative Sale Society Ltd (supra). The relevant findi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nking activity, therefore, the interest accrued on such investment has to be treated as business income in the course of its banking activity. Once it is a business income, the assessee is entitled for deduction u/s 80P(2)((a)(i). therefore, this Tribunal is of the opinion that the judgment of the Larger Bench of the apex Court in Karnataka State Cooperative Apex Bank (supra) is applicable to the facts of this case. By respectfully following the judgment of the Apex court in Karnataka State Cooperative Bank (supra), the order of the Commissioner of Income-tax(A) is upheld. 5.2 In the instant case, the assessee is a cooperative Bank. The investment in treasury/banks and earning interest on the same is part of the banking activity of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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