TMI Blog2016 (11) TMI 1615X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 SOCI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash credit assessed u/s 68 of the Act. 3. The Ld. CIT (A) ought to have appreciated the fact that deemed income u/s 68 of the Income Tax Act cannot be treated as income from providing credit facilities to the members of the Society, as envisaged in section 80P(2)(a)(i) of the Income Tax Act. 4. The Ld. CIT (A) ought to have further appreciated that the order of the Kerala High Court in the case of The Chirakkal Service Co-operative Bank Ltd in ITA No.212 of 2013 relied upon by him, is not applicable to the facts of this case. For these and other grounds that may be advanced at the time of hearing, the order of the learned Commissioner of Income tax (Appeals) on the above points may be set aside and that of the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n made u/s 68, held that deduction u/s 80P to the extent of enhanced income is eligible. 5 Aggrieved by the order of the CIT(A), the revenue is in appeal before us. The ld DR relied on the ground raised in the appeal memo. On the other hand, the ld counsel for the assessee reiterated the submissions made before the income tax authorities and supported the order of the CIT(A). 6 We have heard the rival submissions and perused the material on record.. The Hon ble jurisdictional High Court in the case of The Chirakkal Service Cooperative Bank Ltd others (supra) has held that the primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969 is entitled to the benefit of deduction u/s 80P(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt State Law. In this view of the matter, all the appellants having been classified as primary agricultural credit societies by the competent authority under the KCS Act, it has necessarily to be held that the principal object of such societies is to undertake agricultural credit activities and to provide loans and advances for agricultural purposes, the rate 'of interest on such loans and advances to be at the rate fixed by the Registrar of co-operative societies under the KCS Act and having its area of operation confined to a village, panchayat or a municipality. This is the consequence of the definition clause in section 2(oaa) of the KCS Act. The authorities under the IT Act cannot probe into any issue or such matter relating to suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sified so, under that Act, including the appellants are entitled to such exemption. 6.2 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. The Hon ble jurisdictional High Court had 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) Karad Merchant Sah. Credit Sanstha vs ITO ITA No. 159/PN/09 (AY2005-06) of ITAT Pune. 7.2 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. 7.3 In light of the above reasoning, 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 of the Act amounting to ₹ 2,96,19,669/-. CROSS OBJECTION ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
