TaxTMI 
TaxTMI 
2016 (11) TMI 1614
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....d, is opposed to law on the facts and in the circumstances of the case. 2. The Ld. Commissioner of Income Tax (Appeals) has erred in deleting the disallowance of deduction claimed by the assessee under section 80P(2)(a)(i) of the Act. 3. While placing reliance on the decision of the Kerala High Court in the case of The Chirakkal Service Co-operative Bank Ltd in ITA No.212 of 2013, the Ld. (IT (A) ought to have considered whether the assessee-society claiming the status of "Primary Agricultural Credit Society" has actually fulfilled the primary object or principal business of providing agricultural loans to agriculturists. 4. The Ld. CIT (A) ought to have also considered an earlier decision of the jurisdictional Hi....
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....nting to Rs. 79,57,892/- u/s 80P of the I T Act. The assessment was completed u/s 144 of the I T Act vide order dated 13.3.2015. The Assessing Officer completed the assessment by making certain additions and rejecting the claim of benefit of deduction u/s 80P(2)(a)(i) of the Act. 5 Aggrieved by the disallowance u/s 80P(2)(a)(i), the assessee preferred appeal to the first appellate authority. Before the CIT(A), it was contended that for the AYs 2010-11, 2011-12 and 2013-14, the Division Bench of the Hon'ble jurisdictional High Court in the case of the Chirakkal Service Cooperative Bank Ltd & others in ITA No.212 of 2013 ( Judgment dated 15th February 2016) in which the assessee was also a party, had decided the matter in favour of the ass....
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.... 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? 7.1 In considering the above question of law, the Hon'ble High Court rendered the following findings: "15. Appellants in these different appeals are indisputably societies registered under the Kerala cooperative societies Act, 1969, for sort, K....
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.... 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 accordance with the proviso to sub-clause 2 of section 5(cciv) of the BR Act. The different orders of the Tribun....
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....ed by the Registrar of Cooperative Societies stating that the assessee is a primary agricultural credit society, we hold that the assessee is entitled to the benefit of deduction u/s 80P(2)(a) of the I T Act. Accordingly, the ground nos 2 to 5 are dismissed. It is ordered accordingly. 8 As regards ground no 6, the brief facts are as follows: The Assessing Officer had made a ad-hoc disallowance of 5% out of the total interest paid by the assessee on the deposits received from its members. The amount of such disallowance was Rs. 44,97,108/-. The Assessing Officer had added the same under the head 'business income'. On further appeal by the assessee, the disallowance made by the Assessing Officer was confirmed by the CIT(A) for the....
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....missions and perused the material on record. The Assessing Officer while making the ad-hoc disallowance of interest paid had brought the same to tax under the head "income from business". Once the same is brought to tax as 'income from business', the said income is entitled to the benefit of deduction u/s 80P(2)(i)(a) of the Act. In taking the above view, we placed reliance on the following orders of the Tribunal: i) Buldana Urban Coop Credit Society Ltd vs ACIT - IT appeal nos 151 to 153 and 179 to 181(ITAT Nagpur) 0f 2012 ii) Karad Merchant Sah. Credit Sanstha vs ITO - ITA No. 159/PN/09 (AY2005-06) of ITAT Pune. 10.1 The CBDT, in the recent circular no.37/2016 dated 2nd Nov 2016 has considered higher deduction u/s 80P....