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2019 (6) TMI 1057 - AT - Income TaxDeduction u/s 80P - assessee is registered as co-operative societies under the Kerala State Co-operative Societies Act 1969 - AO treated the assessee as co-operative bank and not co-operative society - HELD THAT - The Larger Bench in the case of The Mavilayi Service Co-operative Bank Ltd. 2019 (3) TMI 1580 - KERALA HIGH COURT held that the Assessing Officer has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P of the I.T.Act. It was held by the Hon ble High Court that the Assessing Officer is not bound by the registration certificate issued by the Registrar of Kerala Co-operative Society classifying the assessee-society as a cooperative society. The Hon ble High Court held that each assessment year is separate and eligibility shall be verified by the Assessing Officer for each of the assessment years. The issue of deduction u/s 80P(2)(a)(i) is restored to the Assessing Officer. The Assessing Officer shall examine the activities of the assessee and determine whether their activities are in compliance with the activities of a cooperative society functioning under the Kerala Co-operative Societies Act 1969 and grant deduction u/s 80P(2) in accordance with law. Appeals filed by the Revenue are allowed for statistical purposes.
Issues:
- Whether the assessee is entitled to deduction u/s 80P of the I.T.Act? Analysis: 1. Issue of Entitlement to Deduction u/s 80P: - The appeals by the Revenue were against the CIT(A)'s order allowing deduction u/s 80P for the assessee, a cooperative society under the Kerala State Co-operative Societies Act, 1969. - The Assessing Officer initially denied the deduction treating the assessee as a cooperative bank, not a cooperative society. - The CIT(A) allowed the deduction based on the judgment of the jurisdictional High Court in a similar case. - The Department contended that the CIT(A) erred in allowing the deduction solely based on the High Court's decision without detailed analysis. - The Departmental Representative relied on the latest judgment of the Larger Bench of the High Court, emphasizing that each assessment year requires a separate verification of eligibility for deduction u/s 80P. - The High Court held that the Assessing Officer must conduct an inquiry into the factual activities of the society to determine eligibility for the deduction, not solely rely on the registration certificate. - The Full Bench of the High Court ordered the issue of deduction u/s 80P(2)(a)(i) to be restored to the Assessing Officer for examination of the society's activities and compliance with the law under the Kerala Co-operative Societies Act, 1969. 2. Judicial Interpretations and Precedents: - The High Court emphasized that the Assessing Officer should verify the activities of the society for each assessment year to determine eligibility for deduction u/s 80P. - The judgment highlighted the need for a factual inquiry into the society's operations rather than a blanket acceptance based on registration status. - The High Court clarified that the Assessing Officer is not bound by the registration certificate and must assess the society's activities to decide on the deduction eligibility. - Reference was made to conflicting decisions and the necessity to follow the law laid down by the Apex Court in similar cases. 3. Conclusion: - The appeals by the Revenue were allowed for statistical purposes, and the issue of deduction u/s 80P(2)(a)(i) was remanded to the Assessing Officer for a detailed examination of the society's activities and compliance with the law. This detailed analysis of the judgment showcases the legal intricacies involved in determining the entitlement to deduction under section 80P of the Income Tax Act for cooperative societies.
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