TaxTMI 
TaxTMI 
2016 (10) TMI 1195
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....e 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? iii) Whether the CIT(A) is justified in confirming the disallowance of interest paid on deposit amounting to Rs. 17,17,183/-.? 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 soc....
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....icate issued by the Registrar of Cooperative Societies to the above said effect is placed on record. The Hon'ble 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 th....
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....fixed by the Registrar of co-operative societies under the KCS Act and having its area of operation confined 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....
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....ncome from business 5. The CIT(A) decided the issue against the assessee by observing as under:- "4.2 Verification of assessment order shows that assessee received interest income of Rs. 1,53,311/- out of the deposits made in Treasury. 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 act....
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....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 Vikas Patra, as a small savings instrument, funds invested at the discretion of the bank is one of the activities of the banking as per the Banking Regulation Act. Since the assessee co-operative society is in the 4 ITA No.372/Coch/2010 business of banking the investment in the state promoted treasury small savings fixed depo....
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....g the assessee to furnish the details of interest paid. Since the assessee did not furnish the requisite details, the Assessing Officer had disallowed 5% of the interest paid on deposit. 6.1 Aggrieved the assessee preferred appeal to the first appellate authority. Before the CIT(A), the assessee had furnished the details of the interest expenditure. However, the CIT(A) rejected the plea of the assessee for want of time. The relevant finding of the CIT(A) is reproduced as under:- "7. It is seen that the assessee did not give any details before the Assessing Officer. However during the course of appellate proceedings, assessee produced many details, which had not been given to the Assessing Officer. However, there is no time available for c....