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2020 (9) TMI 624 - AT - Income Tax


Issues:
Whether the CIT(A) was justified in confirming the Assessing Officer's order in denying the claim of deduction u/s 80P(2)(a)(i) of the I.T.Act.

Detailed Analysis:
The appeal before the Appellate Tribunal ITAT COCHIN involved the denial of a deduction claim u/s 80P(2)(a)(i) of the I.T.Act by the Assessing Officer for the assessment year 2014-2015. The Assessing Officer disallowed the deduction claim stating that the assessee, a co-operative society, was essentially engaged in banking activities and therefore, not entitled to the deduction under section 80P due to the insertion of section 80P(4) of the I.T.Act from 01.04.2007. The CIT(A) upheld the Assessing Officer's decision based on the factual finding that the agricultural credit provided by the assessee was minimal, and it could not be categorized as a primary agricultural credit society. The appeal was rejected by the CIT(A) relying on the judgment of the Full Bench of the Hon'ble jurisdictional High Court. The assessee then appealed to the Tribunal, challenging the CIT(A)'s decision.

The Tribunal considered the conflicting judgments of the Hon'ble Kerala High Court in the cases of Chirakkal Service Co-operative Co-operative Bank Ltd. v. CIT and The Mavilayi Service Co-operative Bank Ltd. v. CIT. The Full Bench of the Hon'ble Kerala High Court in The Mavilayi Service Co-operative Bank Ltd. case held that the Assessing Officer must conduct an inquiry into the factual situation of the activities of the assessee society to determine the eligibility for deduction u/s 80P of the I.T.Act. The Tribunal noted that the Assessing Officer had not conducted a detailed examination of each loan disbursement to ascertain whether they were for agricultural purposes or not. It was deemed necessary for the A.O. to list out instances where loans were disbursed for non-agricultural purposes before denying the deduction claim. Therefore, the Tribunal ordered a fresh examination by the Assessing Officer in accordance with the Full Bench judgment.

Ultimately, the Tribunal allowed the appeal filed by the assessee for statistical purposes, and the issue was restored to the files of the Assessing Officer for a thorough examination of the nature of loan disbursements to determine the eligibility for the deduction under section 80P(2) of the I.T.Act. The decision was pronounced on September 14, 2020.

 

 

 

 

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