ITA Cochin partially allows Revenue's appeal, remits issues for fresh assessment.

The ITAT Cochin partially allowed the Revenue's appeal, remitting both issues back to the Assessing Officer for fresh consideration in accordance with the directions provided in the judgment. The primary issue was regarding the eligibility of the assessee for deduction under section 80P(2)(a)(i) of the Act, while the second issue focused on the eligibility of interest income earned by the appellant from other Banks and Treasury for deduction under the same section. The ITAT directed the Assessing Officer to reevaluate the grant of deduction under section 80P(2)(a)(i) for both assessment years.

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Issues:
1. Eligibility for deduction under section 80P(2)(a)(i) of the Act.
2. Eligibility of interest income earned by the Appellant from other Banks and Treasury.

Issue 1: The primary issue in this case pertains to the eligibility of the assessee for deduction under section 80P(2)(a)(i) of the Act. The Revenue contended that the appellant, a Co-operative Society engaged in banking business, was not eligible for the deduction as it was not a primary agricultural credit society. The CIT(A), however, relying on judgments, including one from the High Court of Kerala, held in favor of the assessee. The ITAT noted the conflicting judgments and remitted the issue to the Assessing Officer to conduct an inquiry into the actual activities of the assessee to determine eligibility for the deduction under section 80P.

Issue 2: The second issue revolved around the eligibility of interest income earned by the appellant from other Banks and Treasury for deduction under section 80P(2)(a)(i) of the Act. The CIT(A) allowed the deduction based on a Tribunal order, stating that such income was part of the banking activity. The ITAT upheld the CIT(A)'s decision, emphasizing that the interest income should be assessed as "income from business" rather than "income from other sources." The ITAT directed the Assessing Officer to follow the law laid down by the Jurisdictional High Court and reevaluate the grant of deduction under section 80P(2)(a)(i) for both assessment years.

In conclusion, the ITAT partially allowed the appeal filed by the Revenue for statistical purposes, remitting both issues back to the Assessing Officer for fresh consideration in accordance with the directions provided in the judgment. The decision was pronounced on June 18, 2019, by the ITAT Cochin.

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