2019 (7) TMI 1207

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....raised by the revenue read as follows: 2. "The CIT(A) was not justified in law in allowing deduction u/s. 80P(2)(a)(i) of the Act to the co-operative society carrying on the business of baking, inspite of the fact that clause no.(4) of section 80P inserted with effect from 01.04.2007 clearly bars the co-operative society the above deduction, other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank". 3. "Whether on the facts and circumstances of the case, the CIT(A) is justified in law in placing reliance on the decision in the case of CIT vs. Biluru Gurubasava Pattina Sahakari Sangho Niyamitha in ITA No. 5006/2013, when the said appeal has been dismissed/withdrawn o....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....investments in co-operative and other banks. Both the aforesaid income was claimed to be eligible for deduction u/s.80P(2)(a)(i) of the Act. The AO took the view that the assessee was co-operative bank and therefore, as per provisions of section 80P(4) of the Act, the assessee was not entitled to deduction 80P(2)(a)(i) of the Act on the sum of Rs. 86,72,910/-. As far as deduction claimed on interest income earned on investments in co-operative and other banks, he held that the deduction calmed by the assessee cannot be allowed by the Revenue authorities for the reason that the income which was claimed as deduction was interest income which was earned by the assessee on deposits and in view of the decision of the Hon'ble Supreme Court in the....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....by a banking concern are part of the business of banking. Therefore the income arising from such investments is attributable to the business of banking falling under the head "profits and gains of business and profession". 7. Aggrieved by the order of the CIT(A) allowing the claim of the Assessee for deduction u/s.80P(2)(a)(i) of the Act, the revenue has raised the aforesaid grounds of appeal before the Tribunal. It is clear from the reading of Grds. 1 to 6 that the grievance of the revenue in the aforesaid grounds of appeal, is only with regard to the allowance by the CIT(A) of deduction u/s.80(P)(2)(a)(i) of the Act on income of Rs. 86,72,910/-. 8. As far as the aforesaid grievance of the revenue is concerned, the submission of the ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ned under the first part of Sec.80P(2)(a)(i) of the Act. Further the Hon'ble Supreme Court in the case of Citizens Co-operative Society Ltd. (supra) has also held it is also important to ascertain as to what is the nature of income which is claimed as exempt and as to how the principle of mutuality is not violated in respect of such income. An examination of (i)the memorandum of association, the articles of association, (ii) the byelaws and other documents explaining the rules and regulations of the society is necessary, so as to clearly understand the purpose and the nature of business done by it. An examination of the different categories of members of a society and what are the conditions attached to their being admitted as members and t....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... at source on expenditure debited in the Profit & Loss Account by invoking the provisions of section 40(a)(ia) of the Act. Before the CIT(Appeals), the assessee relying on CBDT circular No.37/2016 dated 2/11/2016 submitted that deduction u/s 80P(2)(a)(i) should be allowed on the enhanced income consequent to disallowance u/s 40(a)(ia) of the Act. This plea was accepted by the CIT(Appeals). The disallowance u/s 40(a)(ia) was made on account of non-deduction of tax at source on payment of pigmy commission and therefore, it had direct nexus with the business income of the assessee on which deduction u/s 80P(2)(a)(i) of the Act was claimed. Aggrieved by the order of the CIT(Appeals), the revenue has raised ground No.6. 6. In our view, the....