TMI Blog2020 (4) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... m laid we restore the issue of deduction u/s 80P(2) to the files of the AO to 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. Interest on the investments with Co-operative Banks and other Banks - 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 . 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. Appeals filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals before the Tribunal raising the following common grounds except for variation in figures. We will consider the grounds as raised in ITA No. 16/Coch/2020:- 1. The order of the Commissioner of lncome Tax (Appeals). Thrissur u/s 154 r.w.s 250 of the 1T Act, 1961 is opposed to law and contrary to the facts of the case and against equity and principles of natural justice. 2. a. The Commissioner of income fax (Appeals), based on the Three judge bench decision of the Hon ble High Court in the case of Mavilayi Service Cooperative Bank Ltd vs. Commissioner of Income Tax. ITA No. 97 of 2016 and in 17 other cases on 19.03.2019, has proposed to rectify the appellate order passed by him dated 24.01.2019. b. The Commissioner of lncome Tax(Appeals) has concluded that the appellant is a Primary Agricultural Credit Society and that the appellant is entitled to deduction u/s 80P(2)(a)((i) as mentioned in his order dated 24.01.2019. c. The Commissioner of Income Tax (Appeals) has failed to appreciate that the Supreme Court has taken on record an SLP filed before it against the decision of Kerala High Court in the larger Bench dated 19.03.2019. d. The first Appellate Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inion, this argument of the Ld. AR is misconceived and the subsequent judgment of the Jurisdictional High Court could be the reason to rectify the orders of the CIT(A) as held by the Hon ble Kerala High Court in the case of Kil Kotagiri Tea Coffee Estates Co. Ltd. v. ITAT reported in 174 ITR 579. In this case, the Jurisdictional High Court 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 Cooperative 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. Act have been rightly recalled by the CIT(A). Therefore the grounds raised by the assessees that the CIT(A) has erred in passing orders u/s. 154 of the I. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant societies 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 to be 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 and as such, they are entitled for the benefit of sub-section (4) of Section 80P of the IT Act to ease themselves out from the coverage of Section 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cooperative society functioning under the Kerala Co-operative Societies Act, 1969, subject to jurisdiction granted to the assessees as per the certificates of registration issued by the Registrar of Co-operative Societies, and accordingly, consider the allowability of deduction u/s 80P 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim which had not been preferred in assessment proceeding and that said section operated only on the facts which were already on record and could not be resorted to for introducing new facts. This decision was affirmed by the Supreme Court in appeal in Anchor Pressings (P) Ltd. vs. CIT (1986) 58 CTR (SC) 126 : (1986) 161 ITR 159 (SC). 7.7 The above decision of Allahabad High Court as well as another decision of that High Court in Sharda Prasad vs. CIT (1975) 100 ITR 373 (All.) in which also rectification proceeding was held to be not maintainable for obtaining relief under Section 84 of the Act were dissented from by Gujarat High Court in Choksi Metal Refinery vs. CIT (1977) 107 ITR 63 (Guj) in which facts were identical. The Gujarat High Court mainly relied on circular of the [Board No. 14 (XL-35) of 1955 dt. 11th April, 1955 in which the Board had declared that the officers of the Department should not take advantage of ignorance of an assessee as to his rights and it was one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the officers should take the initiative in guiding a taxpayer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the CIT(A). Being so, such claim cannot be entertained by the CIT(A) while he is deciding the issue under section 154 r.w.s. 250 of the I.T. Act. Hence, I do not find any infirmity in the order of the CIT(A) on this issue in rejecting the claim of the assessee u/s. 80P(2)(d) of the I.T. Act. 7.9.1 Further, the reliance placed by the Ld. AR on the judgments of the Supreme Court in the case of National Thermal Power Corporation Ltd. vs. CIT (229 ITR 383) and Goetze (India) Ltd. vs. CIT (157 Taxman 1) have no application to the facts of the present case since they were delivered on different set of facts. Further, the Ld. AR placed reliance on the earlier order of the co-ordinate Bench in the case of M/s. Pazhuvil Service Co-operative Bank Limited vs. ITO in ITA No.15/Coch/2020 vide order dated 06/02/2020 stating that the issue was covered in favour of the assessee. However, I find that the Tribunal decided the issue without noticing the judgment of the Supreme Court in the case of Anchor Pressings (P) Ltd. vs. CIT 161 ITR 159. Being so, I do not find any merit in the claim of the assessee u/s. 80P(2)(d) of the I.T. Act made during the proceedings u/s. 154 of the I.T. Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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