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TMI Blog2020 (3) TMI 1136X X X X Extracts X X X X X X X X Extracts X X X X ..... . For the assessment year 2011-12, the return of income was filed after claiming deduction u/s 80P of the I.T.Act. The Assessing Officer passed an order, disallowing the claim of deduction u/s 80P of the I.T.Act. The reasoning of the Assessing Officer to disallow the claim of deduction u/s 80P(2) of the I.T.Act was that the assessee was doing the business of banking, and therefore, in view of insertion of section 80P(4) of the I.T.Act with effect from 01.04.2007, the assessee will not be entitled to the deduction u/s 80P(2) of the I.T.Act. The Assessing Officer The Assessing Officer also disallowed the claim of deduction with regard to interest income received by the assessee on investments made with District Co-operative Banks and other Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nally decided the appeal in favour of the appellant based on the decision of the Kerala High court in Chirakkal Service Cooperative Bank Ltd Vs CIT, Calicut (414 ITR 67) (Ker) which was binding on him. The Commissioner! Appeals) has erred in rectifying his order by invoking section 154 relying on the subsequent full bench decision of the Kerala High court in Mavilayil Service Co-operative Bank Ltd Vs CIT , Calicut ( 414 ITR 67)(Ker). The Learned Commissioner(Appeals)should have appreciated that the full bench of the Kerala High Court has only held that to ascertain the actual nature of the Cooperative Society as to whether it is a Primary Agricultural Cooperative Society (PACS) it is not enough if only the certificate issued by the Register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Estates Co. Ltd. v. ITAT reported in 174 ITR 579 had held that when an authority has decided on the basis of a decision of the High Court which is subsequently reversed, there would be a rectifiable mistake coming within the section 154 of the Income-tax Act. The Larger Bench of the Hon'ble Kerala High Court has reversed the dictum laid down by the judgment of the Hon'ble Kerala High Court in the case of Chirakkal Service Co-operative Bank Ltd. (supra) by holding that the activities of the assessee has to be examined to determine whether the assessee is Co-operative society or cooperative bank. In the light of the Larger Bench judgment of the Hon'ble Kerala High Court, the earlier CIT(A) order's granting deduction u/s. 80P(2) of the I.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer for each of the assessment years. The finding of the Larger Bench of the Hon'ble High Court reads as follows:- "33. In view of the law laid down by the Apex Court in Citizen Co-operative Society [397 ITR 1] it cannot be contended that, while considering the claim made by an assessee society for deduction under Section 80P of the IT Act, after the introduction of sub-section (4) thereof, the Assessing Officer has to extend the benefits available, merely looking at the class of the society as per the certificate of registration issued under the Central or State Co-operative Societies Act and the Rules made thereunder. On such a claim for deduction under Section 80P of the IT Act, the Assessing Officer has to conduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 down by the Division Bench Perinthalmanna [363 ITR 268] has to be affirmed and we do so. 35. In view of the law laid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) of the I.T.Act. 7.3 As regards the interest on the investments with Cooperative Banks and other Banks, the co-ordinate Bench order of the Tribunal in the case of Kizhathadiyoor Service Cooperative Bank Limited in ITA No.525/Coch/2014 (order dated 20.07.2016), 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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