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of <h1>Tribunal allows appeal, dismisses Stay Petition, emphasizes detailed examination for deductions under I.T. Act</h1> <h3>M/s. Aryanad Service Cooperative Bank Limited Versus The Income Tax Officer Ward -2 (3), Trivandrum</h3> M/s. Aryanad Service Cooperative Bank Limited Versus The Income Tax Officer Ward -2 (3), Trivandrum - TMI Issues:1. Disallowance of deduction u/s 80P of the I.T. Act by the Assessing Officer.2. Appeal to the CIT(A) and subsequent rectification order u/s 154 of the I.T. Act.3. Interpretation of the judgment of the Hon'ble jurisdictional High Court regarding deduction u/s 80P of the I.T. Act.4. Treatment of interest income received from investments with Co-operative Banks and other Banks.5. Grant of deduction u/s 80P of the I.T. Act on interest income.Analysis:1. The Assessing Officer disallowed the claim of deduction u/s 80P of the I.T. Act for the co-operative society, stating that it was engaged in banking activities, making it ineligible for the deduction. This decision was based on the insertion of section 80P(4) of the I.T. Act. The Assessing Officer also disallowed the deduction on interest income from investments made with District Co-operative Banks and other Banks.2. The CIT(A) allowed the appeal by granting the deduction u/s 80P of the I.T. Act, including interest income received from other banks and treasury. The CIT(A) relied on a judgment of the Hon'ble jurisdictional High Court to support this decision.3. Subsequently, the CIT(A) issued a notice u/s 154 of the I.T. Act to rectify the order based on a different judgment of the Full Bench of the Hon'ble jurisdictional High Court. The CIT(A) then passed an order disallowing the deduction u/s 80P of the I.T. Act, which led to the appeal before the Tribunal.4. The Tribunal considered the conflicting judgments of the Hon'ble High Court regarding the eligibility of the co-operative society for deduction u/s 80P of the I.T. Act. The Tribunal held that the Assessing Officer should examine the activities of the society to determine eligibility for the deduction.5. Regarding interest income from investments with Co-operative Banks and other Banks, the Tribunal directed the Assessing Officer to assess the activities of the society before granting deduction u/s 80P of the I.T. Act on such interest income.In conclusion, the Tribunal allowed the appeal for statistical purposes and dismissed the Stay Petition. The decision emphasized the need for a detailed examination of the activities of the co-operative society to determine its eligibility for deductions under the I.T. Act, in line with the judgments of the Hon'ble High Court.
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