Interest on investments with treasuries & Banks- Eligibility of Section 80P deduction- HC remands matter to AO

Enadimangalam Service Co-operative Bank Ltd. Vs ITO (ITAT Cochin)

As regards the interest on the investments with Co­operative Banks and other Banks, the co-ordinate Bench order of the Tribunal in the case of Kizhathadiyoor Service Co‑operative Bank Limited in ITA No.525/ Coch/ 2014 (order dated 20.07.2016), had held that interest income earned from investments with treasuries and banks is part of banking activity of the assessee, and therefore, the said interest income was eligible to be assessed as ‘income from business‘ instead of ‘income from other sources‘. However, as regards the grant of deduction u/s 80P of the I.T.Act on such interest income, the Assessing Officer shall follow the law laid down by the Larger Bench of the Hon’ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) and examine the activities of the assessee-society before granting deduction u/s 80P of the I.T.Act on such interest income. The Assessing Officer shall also examine whether the assessee is entitled to deduction u/s 80P(2)(d) of the I.T.Act, provided, facts are already available on record for such deduction. It is ordered accordingly.

FULL TEXT OF THE ITAT JUDGEMENT

This appeal at the instance of the assessee is directed against the order of the CIT(A), dated 15.10.2019 passed u/s. 154 r.w.s. 250 of the I.T.Act. The relevant assessment year is 2011-2012.

2. There is a delay of 60 days in filing this appeal before the tribunal. The assessee has filed a petition for condonation of delay and also an Affidavit of the Secretary of the assessee­ bank stating therein the reasons for belated filing of the appeal. I have perused the reasons stated in the affidavit for not filing the appeal on time. I find that there is sufficient cause for the delayed filing of this appeal and no latches can be attributed to the assessee. Hence, I condone the delay and proceed to dispose of the same on merits.

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