TaxTMI 
TaxTMI 
TaxTMI 
2017 (3) TMI 1757
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....ion u/s 80P of the Act and hence, assessable u/s 56 of the I T Act. The relevant observations of the Assessing Office, read as follows: "The assessee's arguments as detailed above have been carefully considered. The assessee is a primary agricultural credit co-operative society (PACS) registered under the Co-operative Societies Act. Therefore, subject to satisfaction of provisions of section 80P(1), if the gross total income includes any income referred in sub-section (2) of section 80P, the assessee shall be eligible only for that income for deduction in computing the total income. As per details filed in respect of different type of loans, it is seen that the minimum rate of interest on loan was from 7% to 15.5%. Though the primary agricultural credit societies are formed for the purpose of providing finance to farmers, there are nonagricultural loans, like gold loans, housing loans and trade loans etc. Though the loans are paid to its members, the purpose of loan could not be proved to be fore agricultural purposes other than the loans such as Kissan Credits, Agricultural Short Term and Biogas loans. In the assessee's case. it is observed that majority of loans given we....
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....ieved, both the assessee and the revenue filed appeals to the Tribunal. The assessee has also filed cross objection against the revenue's appeal. The Tribunal, vide its order dated 3.11.2015, restored the assessment order and rejected the claim of the assessee for deduction u/s 80P(2) of the I T Act. 5 Aggrieved by the order of the Tribunal, the assessee preferred appeal before the Hon'ble High Court u/s 260A of the Act. The Hon'ble High Court, vide judgment dated 18.10.2016 restored the matter to the Tribunal. The Hon'ble High Court directed the Tribunal to decide the issue afresh in light of the judgment of the Hon'ble jurisdictional High Court in the case of Chirakkal Service Co-op Bank Ltd vs CIT reported in 384 ITR 490 and the Board Circular No. 18/2015 dated 2.11.2015. It is in this context, the cases were heard on 20th March, 2017. 6 The ld counsel for the assessee submitted that the circular no.18 of 2015 dated 2.11.2015 clearly states interest on deposits on non SLR securities is taxable under the head 'income from business" and are eligible for deduction u/s 80P(2)(a)(i) of the Act. It was submitted that in the instant case, the assessee is a cooperative Society provi....
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....perused the material available on record. We have also carefully gone through the order of the lower authority. No doubt, the latest judgment in Totgar's Co-operative Sale Society Ltd vs ITO (supra), the Apex court found that the deposit of surplus funds by the cooperative 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 cooperative 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 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 banki....
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....e appellants are entitled to such exemptions." 8.4 In the instant case, admittedly, the Joint Registrar (General) Kottayam, by certificate dated 23.12.2011 had certified that the assessee is a primary agricultural credit cooperative society. This fact also admitted by the Assessing Officer at page 2 of the assessment order. In view of the clear finding of the Hon'ble jurisdictional High Court, we are of the view that the assessee is entitled to the benefit of deduction u/s 80P(2) of the Act. 9 The details of interest income of Rs. 33,85,886/-, which was denied the benefit of deduction u/s 80P(2) are as follows: a) District Coop Bank, Pala Rs. 5,57,461/- b) District Coop Bank, Pala Rs. 417/- c) District Coop Bank, Erattupetta Rs. 20,08,270/- d) Meenachil taluk Coop Employees Soc. Rs. 3,19,738/- f) Meenachil Rubber Mktg Coop Soc. Rs. 5,00,000/ Total Rs. 33,85,886/- 9.1 As per section 80P(2)(d) of the I T Act, interest income received by the cooperative society from its investment from another cooperative society, is eligible for exemption from taxation. The whole of interest income was received from other cooperative society/banks and hence, as per provisions ....