TaxTMI 
TaxTMI 
2014 (4) TMI 1172
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....aham K Thomas, the ld.representtive for the assessee submitted that the assessee is a co-operative agricultural and rural development bank. The assessee returned income under the head "Income from business or profession" and "Income from house property". In respect of income from business, the assessing officer has allowed the claim of the assessee for exemption u/s 80P(1)(a)(i) and 80P(d) of the Act. However, in respect of claim of exemption u/s 80P(2)(c) to the extent of Rs. 50,000 from the income from house property, the assessing officer disallowed the claim of the assessee. Referring to provisions of section 80P(2)(c) of the Act, the ld.representative for the assessee submitted that when the co-operative society engaged in an activity ....
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....the extent of Rs. 50,000 as provided in section 80P(2)(c) of the Act. The question arises for consideration is whether the activities referred to in section 80P(2)(c) of the Act includes letting out of property and rental income received as income from house property? 6. We find that there are conflicting judicial opinions on this issue. The Gauhati High Court in CIT vs The Industrial Co-operative Bank Ltd vs CIT (1992) 196 ITR 174 (Gauh) had an occasion to examine the provisions of section 80P(2)(c) of the Act. The assessee before the Gauhati High Court is a co-operative society engaged itself in the business of banking. In addition to income from banking, the assessee also had income from letting out of house property. The assessee cla....
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....erefore, it is obvious that the Apex Court has not gone to the merit of the matter and expressly observed that the principles raised in the appeal may be taken out in another appropriate case. But so far, the Apex Court did not have any occasion to consider this issue in any other matter. Both, the ld.representative for the assessee and the ld.DR could not bring to our notice any judgment of the Apex Court in this respect. 7. We also find that the Kerala High Court had an occasion to examine this issue in Kottayam Co-operative land Mortgage Bank Ltd vs CIT (1988) 172 ITR 443 (Ker). The Kerala High Court found that the term "activities" referred to in section 80P(2)(c) of the Act intended to cover receipts from sources other than actual c....
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.... not such an activity falling under clause (c). The rent thus received by the assessee is not eligible for the exemption provided thereunder. In this view, the Appellate Tribunal was justified in rejecting the assessee's claim." 8. This judgment of the Kerala High Court in Kottayam Co-operative land Mortgage Bank Ltd (supra) was followed by another division Bench of the Kerala High Court in Kottayam District Co-operative Bank Ltd vs CIT (1991) 188 ITR 568 (Ker). 9. The Madhya Pradesh High Court, by following the judgment of the Kerala High Court, in Sindhi Sahiti Multipurpose And Transport Cooperative Society Ltd vs CIT (1995) 214 ITR 232 (MP) found that letting out of the property and receipt of rental income is not an activity refer....