Tribunal upholds decision on deduction issue under section 80P, emphasizes activity assessment for tax deductions.

The Tribunal upheld the decision to restore the issue of deduction u/s 80P to the Assessing Officer for examination of the society's activities. It directed adherence to the law laid down by the Full Bench judgment regarding interest income earned from investments with Co-operative Banks and other Banks before granting deduction u/s 80P. The appeals were partly allowed for statistical purposes, emphasizing the need to assess the activities of the assessee society to determine eligibility for deductions under the I.T. Act.

---

---

Issues:
- Claim of deduction u/s 80P of the I.T. Act disallowed by Assessing Officer
- Appeals filed by assessee against CIT(A) orders
- CIT(A) issuing notices u/s 154 proposing to rectify orders
- Grounds raised by assessee challenging CIT(A) orders u/s 154
- Judgment of Hon’ble Kerala High Court regarding eligibility for deduction u/s 80P
- Activities of assessee society to determine eligibility for deduction u/s 80P
- Treatment of interest income earned from investments with Co-operative Banks and other Banks

Analysis:

1. The assessee, a co-operative society, filed returns of income for assessment years 2010-11 to 2012-13 and 2014-15, claiming deduction u/s 80P of the I.T. Act. The Assessing Officer disallowed the deduction, citing the business of banking and insertion of section 80P(4) from 01.04.2007. Additionally, interest income received on investments with District Co-operative Banks was also disallowed.

2. The CIT(A) allowed the appeals, granting deduction u/s 80P of the I.T. Act and allowing interest income under specific provisions. However, subsequent to a Full Bench judgment, the CIT(A) issued notices u/s 154 to rectify the orders, leading to disallowance of the deduction.

3. The assessee challenged the CIT(A) orders u/s 154, arguing that the subsequent judgment was not applicable at the time of the original order. The Tribunal referred to the Larger Bench judgment of the Hon’ble Kerala High Court, which emphasized the need for an inquiry into the activities of the assessee society to determine eligibility for deduction u/s 80P.

4. The Tribunal upheld the decision to restore the issue of deduction u/s 80P to the Assessing Officer for examination of the society's activities. It also directed the Assessing Officer to follow the law laid down by the Full Bench judgment regarding interest income earned from investments with Co-operative Banks and other Banks before granting deduction u/s 80P.

5. In conclusion, the appeals filed by the assessee were partly allowed for statistical purposes, emphasizing the importance of assessing the activities of the assessee society to determine eligibility for deductions under the relevant provisions of the I.T. Act.

---