TaxTMI 
TaxTMI 
2019 (7) TMI 1731
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....ssessing officer as well as the appellate authority to the extent of objections made herein after, are against the facts and circumstances of the case under consideration and hence opposed to the provisions of law. B. The issue regarding the entitlement of deduction under Section 80P with respect to a co-operative society which is classified as Primary Agricultural Credit Society is covered by M/s Chirakkal Service Co-operative Bank Ltd reported in 384 ITR 490 (Kerala High Court). Hence the decision is binding on the assessing authority as well as the first appellate authority. C. The issue with respect to the tax on interest earned from the deposit maintained with District Co-operative Banks and Government Treasuries are covered by the decision of this Hon'ble Tribunal in the case of M/s Puthupally Village Service Co-operative Bank as per the order dated 31-102016 in ITA No 279/Coch/2016. Hence the said decision is binding on the assessing authority as well as the appellate authority. Hence the estimation of income for Rs. 23, 83, 514 is liable to be deleted. D. It is settled law that eligibility for deduction/exemption cannot be overlooked on technical grounds, if the a....
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.... assessee i.e carrying on business of providing credit facilities to its members. The Assessing Officer relied on the judgment of the Supreme Court in the case of Totgar's Co-operative Sales Society Ltd vs ITO (322 ITR 283) wherein it was held that "the assessee being Co-operative Society is engaged in providing credit facilities to its members or marketing agricultural produce of 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 Act and it cannot be said to be attributable to the activities of the Society and therefore, the interest did not qualify for deduction under u/s.80P(2)(a)(i) of the IT Act". The Assessing Officer is of the further view that the benefit of section, 80P(2)(d) of the Act is allowable only in respect of any income by way of interest derived by the cooperative society from its investments with another cooperative society but not to the interest income earned from the district co-operative bank as in the case of the assessee. The Assessing Officer further relied on the decision of this Tribunal in ITA No11/Coch/2014/ dt.24.09.2014 in the case of Muth....
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.... regular business income. The CIT(A) referred to the judgment of the Supreme Court in the case of Totgar's Co-operative Sales Society Ltd. vs. ITO (322 ITR 283) wherein it was held that "The words " the whole of the amount of profits and gains of business" in section 80P(2) of the Income Tax Act, 1961 emphasise that the income in respect of which deduction is sought by a cooperative society must constitute the operational income and not the other income which accrues to the society". According to the CIT(A), in this case, the assessee sought exemption/deduction not from the operational income which they earned from loan and advances given to the members of the society but from the income which accrued from the surplus amount deposited with the district cooperative bank. Since regular business income alone is to be exempted from tax u/s 80P(2)(a)(i) of the Act, the interest received from the deposit the assessee had with the district co-operative bank shall necessarily be treated as income from other sources only and accordingly be brought to tax. The CIT(A) referred to para 10 of the judgment of the Supreme Court cited supra wherein it was stated that "...... The headnote to sectio....
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....rom amounts retained by it, in view of the Supreme Court decision, cannot be said to be attributable to the activity mentioned in section 80P(2)(a)(i) of the Act. Hence, the CIT(A) was of the view that the judgment of the Supreme Court cited supra squarely apply to the case of the assessee and accordingly, the interest earned from the investment made in the district co-operative bank is to be brought to tax under the head income from other sources. Hence, no exemption/deduction under the above mentioned section can be allowed. 5.2 The CIT(A) rejected the argument of the assessee that the interest earned from the investment with the district co-operative bank otherwise is to be exempted u/s 80P(2)(d) since interest was earned from district cooperative bank and not from another co-operative society as stipulated in the Act. According to the CIT(A), under the extant provision of the Act, exemption can be claimed only when deposit is made with another cooperative society which in turn is registered under the Kerala Cooperative Societies Act and not with the district co-operative bank as done by the assessee. The CIT(A) relied on the decision of this Tribunal in the case of Mutholy Ser....
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.... of the CIT(A). 8. We have heard the rival submissions and perused the record. With regard to the interest income earned by the assessee from other Banks and Treasury on which deduction u/s. 80P(2)(i)(a) of the Act is to be granted, there is no dispute that the assessee has made investments in the course of banking activities and such interest income was received on investments made with cooperative banks and other scheduled banks. The co-ordinate bench of the Tribunal in the case of Kizhathadiyoor Co-operative Bank Limited vs. ITO for AY 2009-10 in ITA No.525/Coch/2014 vide order dated 20/07/2016 had held that such interest income received by the assessee should be assessed as "income from business" instead of "income from other sources". In view of the order of the co-ordinate bench, we hold that the CIT(A) is not justified in holding that interest income received by the assessee should be assessed as "income from other sources". In our opinion, it should be assessed as "income from business" only. 8.1 As regards grant of deduction u/s. 80P(2)(i)(a) of the Act, the Assessing Officer shall follow the law laid down by the Larger Bench of the Jurisdictional High Court in the case ....
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....mounts so credited or where the explanation offered by the assessee is not satisfactory in relation to it then such credits may be charged to tax as income of the assessee. The CIT(A) observed that the burden lies on the assessee to prove the genuineness of credits and the conditions that are required to be established by the assessee thereby, are the identity of the creditors, genuineness of the transactions and the credit worthiness of the creditors and once these three essential requirements are prima facie proved by the assessee, the onus would shift to the Department. Here is the case, according to the CIT(A) opportunities were given to the assessee to establish the identity of the creditors, genuineness of the transactions and the credit worthiness of the creditors on 17.10.2016, 28.10.2016, and 15.12.2016. Instead of establishing the above mentioned conditions, the assessee failed to furnish further details. The CIT(A) observed that the assessee had not discharged the responsibility of explaining the source for the cash deposits made during the year under consideration under the extant provisions of the Income Tax Act. Without establishing the identity of the creditors, genu....
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....identity of the depositors to the satisfaction of the Assessing Officer. It is seen that the assessee has not furnished the details of names and addresses and PAN Nos. of the concerned depositors. In our opinion, the assessee has to fulfil the above requirements. However, we make it clear that the assessee, being a Co-operative Society, need not prove the creditworthiness and genuineness of the deposits, but it has to prove the identity of the depositors by furnishing proof of address and PAN details of the depositors to the satisfaction of the Assessing Officer as held by the Hyderabad Bench of the Tribunal in the case of ACIT vs. Citizen Co-operative Society Ltd. (54 SOT 196) (URO)(Hyd.). Accordingly, we remit this issue to the file of the Assessing Officer with a direction to the assessee to furnish the identity of the depositors with PAN details before the AO and decide the issue in accordance with law. 14.1 Further, we make it clear that since the assessee's business is to accept deposits and lend advance inter alia with other activities, we are inclined to hold that income resulting on account of addition made u/s. 68 cannot be considered as income derived from business thou....