TaxTMI 
TaxTMI 
TaxTMI 
2016 (10) TMI 1154
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....are as follows: i) Whether the CIT(A) is justified in confirming the disallowance made by the Assessing Officer with regard to the claim of deduction u/s. 80P(2) of the Act? ii) Whether the interest received from the Government Treasury is to be included under the head "income from other sources" or "income from business? 3. We shall take up for adjudication issueswise as under:- i) Whether the CIT(A) is justified in confirming the disallowance made by the Assessing Officer with regard to the claim of deduction u/s. 80P(2) of the Act. Briefly stated the facts of the issue are as follows: 4. The assessee is a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969. For the assessment year 2012-....
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....le High Court of Kerala in the case of Chirakkla Service Coop Bank Ltd. (supra) had held that a primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969 is entitled to the benefit of deduction u/s. 80P(2). The Hon'ble High Court was considering the following substantial question of law: a) Whether on the facts and in the circumstances of the case under consideration, the Tribunal is correct in law in deciding against the assessee, the issue regarding entitlement for exemption under section 80P,ignoring the fact that the assessee is a primary agricultural credit society? 4.5 In considering the above question of law, the Hon'ble High Court rendered the following findings: "15. Appellants in these di....
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....to a village, panchayat or a municipality. This is the consequence of the definition clause in section 2(oaa) of the KCS Act. The authorities under the IT Act cannot probe into any issue or such matter relating to such applicants. 16. The position of 1aw being as above with reference to the statutory provisions, the appellants had shown to the authorities and the Tribunal that they are primary agricultural credit societies in terms of clause (cciv) of section 5 of the BR Act, having regard to the primary object or principal business of each of the appellants. It is also clear from the materials on record that the bye-laws of each of the appellants do . not permit admission of any other co-operative society as member, except may be, in acc....
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....ification of assessment order shows that assessee received interest income of Rs. 43,00,963/-/- out of the deposits made in Treasury and Federal Bank. The issue is similar to the case of Totgar's Co-operative Sale Society Ltd. vs. ITO (2010) (322 ITR 283), in which the Hon. Supreme Court held that the assessee being co-operative society is engaged in providing credit facilities to its members (or) marketing agricultural produce to its members, interest earned by it by investing surplus funds in short term deposits would fall under the head "income from other sources" taxable u/s. 56 of the Income Tax Act and it cannot be said to be attributable to the activities of society and therefore, the interest did not qualify for deduction u/s. 80P(2....
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....e Apex court found that the deposit of surplus funds by the co-operative society is not eligible for deduction u/s 80P(2). In the case before the Apex Court in Totgar's Co-operative Sale Society Ltd vs ITO (supra), the assessee co-operative society was to provide credit facility to its members and market the agricultural produce. The assessee is not in the business of banking. Therefore, this Tribunal is of the opinion that the judgment of the Apex court in Totgar's Co-operative Sale Society Ltd (supra) is not applicable in respect of the co-operative society whose business is banking. Admittedly, the assessee has invested funds in state promoted treasury small savings fixed deposit scheme. Since Government of India has withdrawn India Vika....