TMI Blog2019 (12) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... vestments 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 . However, 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. V. CIT (supra) and examine the activities of the assessee-society before granting deduction u/s 80P of the I.T.Act on such interest income. - ITA No.572/Coch/2019 - - - Dated:- 2-12-2019 - Shri Chandra Poojari, AM And Shri George George K, JM For the Assessee : Sri.Santhosh P.Abraham, Advocate For the Revenue : Smt.A.S.Bindhu, Sr.DR ORDER PER GEORGE GEORGE K, JM : This appeal at the instance of the assessee is directed against the order of the CIT(A) dated 03.09.2019. The assessee has also preferred a stay application seeking to stay the recovery of outstanding tax arrears. The relevant assessment year is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing officer as well as the appellate authority passed u/s 154 of the Act to the extent of objections made herein after, are against the facts and circumstances of the case and is opposed to the provisions of law. B. The authority below went wrong in initiating proceedings u/s 154 on the basis of the subsequent decision of the jurisdiction of the High Court. The appellate authority had invoked the jurisdiction u/s 154 disregarding the fact that the department have the right of appeal against the order passed u/s 250, and without verifying whether the department had filed an appeal against the order. C. The appellate authority did not properly considered the issue raised before him regarding the disallowance of the exemption claimed u/s 80P, while passing the order u/s 154. D. The authorities below went wrong in disallowing the certificate issued by the statutory authority under the Kerala Co-operative Societies Act. E. The appellate authority ought to have considered the claim of the appellant u/s 80P and the reasoning given by them, misinterpreting the provisions of Sec. 80P(4) and its explanation is oppos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rged at the time of final hearing, it is just and necessary to set aside the Annexure A1 Assessment Order as well as Annexure A4 Order in Appeal passed u/s 154 to the extent of objections made herein above. 6. The learned AR relied on the grounds raised. The learned Departmental Representative, on the other hand, strongly supported the orders of the Income-tax authorities. 7. We have heard the rival submissions and perused the material on record. The Hon ble jurisdictional High Court in the case of Chirakkal Service Co-operative Co-operative Bank Ltd. v. CIT [(2016) 384 ITR 490 (Ker.)] had held that when a certificate has been issued to an assessee by the Registrar of Co-operative Societies characterizing it as primary agricultural credit society, necessarily, the deduction u/s 80P(2) of the I.T.Act has to be granted to the assessee. However, the Full Bench of the Hon ble Kerala High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT (supra) had reversed the above findings of the Hon ble Kerala High Court in the case of Chirakkal Service Co-operative Co-operative Bank Ltd. v. CIT (supra) . The Larger Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 80P and that, the authorities under the IT Act cannot probe into any issues or such matters relating to such societies and that, Primary Agricultural Credit Societies registered as such under the KCS Act and classified so, under the Act, including the appellants are entitled to such exemption. 34. In Chirakkal [384 ITR 490] the Division Bench expressed a divergent opinion, without noticing the law laid down in Antony Pattukulangara [2012 (3) KHC 726] and Perinthalmanna [363 ITR 268]. Moreover, the law laid down by the Division Bench in Chirakkal [384 ITR 490] is not good law, since, in view of the law laid down by the Apex Court in Citizen Co-operative Society [397 ITR 1], on a claim for deduction under Section 80P of the Income Tax Act, by reason of sub-section (4) thereof, the Assessing Officer has to conduct an enquiry into the factual situation as to the activities of the assessee society and arrive at a conclusion whether benefits can be extended or not in the light of the provisions under sub-section (4) of Section 80P of the IT Act. In view of the law laid down by the Apex Court in Citizen Cooperative Society [397 ITR 1] the law laid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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