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TMI Blog2020 (3) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose of agricultural purposes. A.O. had to examine the details of each loan disbursement and determine the purpose for which the loans were disbursed, i.e., whether it is for agricultural purpose or non-agricultural purpose. In these cases, such a detailed examination has not been conducted by the A.O. A.O. has not examined to what extent loans, if any, has been disbursed to non-members. There is a passing statement of the assessment order that there has been disbursement of non-agricultural loans to non-members as well. There has been no detailed examination of these aspects by the A.O. At the time of assessment, the judgment of Chirakkal Service Cooperative Bank Ltd. [ 2016 (4) TMI 826 - KERALA HIGH COURT] was ruling the roost and the certificate issued by the Registrar of Co-operative Society terming the assessee as a primary agricultural credit society would be sufficient for grant of deduction u/s 80P. Therefore, in view of the dictum laid down in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT (supra), we are of the view that there should be fresh examination by the Assessing Officer as regards the nature of each loan disbursement and purpose fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The relevant finding of the Assessing Officer for assessment year 2010-2011 reads as follow:- 27. Summing up the above discussions above, following facts emerge:- (1) The assessee has claimed deduction u/s.80P of the Income Tax Act, 1961, as the assessee has been Registered and Classified as Primary Agricultural Credit Society by the Jt. Registrar of Societies. (2) As per Explanation given under Section 80P(4) of the Income Tax Act, 1961, deduction u/s 80P(2)(a)(i), can be allowed only on compliance of Banking Regulation Act, 1949, because the definition of Banking as per Section 80P should be in accordance and compliance with Banking Regulation Act, 1949. (3) In the case of The Chirakkal Service Cooperative Bank Ltd. Vs. The CIT (ITA No.212 of2013, the Hon. Kerala High Court has held that since the assessee has been registered as Primary Agricultural Credit Society (PACS) and classified as such by the competent authority, the assessee is entitled to deduction u/s.80P of the Income Tax Act, 1961. While delivering the said judicial pronunciation, whether assessee cooperative society being a PACS, could do Banking Activities have not come for consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntain any prohibitory clause for admission of other cooperative societies and the by-laws itself allows admission of Self Helf Groups, Kudumbasree etc., which can also be registered as Cooperative Societies, the assessee cannot be treated as eligible for deduction u/s.80P. (10) In view of above facts, it is very much clear that the assessee is not eligible for claiming deduction u/s.80P(2)(a)(i) of the Income Tax Act, 1961, for the income earned from such Banking Activities. 5. Aggrieved by the orders passed by the Assessing Officer disallowing major portion of the claim of deduction u/s 80P(2) of the I.T.Act, the assessee preferred appeals before the first appellate authority for assessment years 2010-2011 and 2014-2015. The CIT(A) placing reliance on the judgment of the Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT [(2019) 414 ITR 67 (Ker.) (FB) (HC)] held that the Assessing Officer had made elaborate findings and has come to a factual finding that agricultural credit provided by the assessee is only minuscule. Accordingly disallowance of part of claim of deduction u/s 80P of the I.T.Act made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. ITA No. 06/PNJ/2014 on 04-07-2014 (g) ITAT, Poona - Jankalyan Nagri Sahakari Pat Sanstha Ltd. reported in 24 Taxmann.com (Pune Tribunal) 127 (h) ITAT, Ahamadabad - Jafari Momin Vikas Co- Op. Credit society on 31 October, 2012 (i) ITAT, Indore - Bhee Thrift Credit Co- operative society on 6 August, 2012 (j) ITAT, Bangalore - Yeshwantpur Credit cooperative Society on 11 April, 2012 (k) ITAT, Ahmedabad-Sarvoday Credit cum Consumers Co-operative Society on 3 May, 2013 (l) ITAT, Pune - Jain Nagri Sahkari Pat Sanstha Department Of Income Tax on 14 September, 2012 (m) ITAT, Pune - Dharasur Mardini Nagar Sahakari on 20 November, 2012 (n) ITAT, Pune - Vardhman Nagari Sahakari Path Sansta on 22 November, 2012 (o) ITAT, Mumbai - The Income Tax officer, Ward- 20(2)(1), Mumbai -ITA No.1820/MUM/2017 dated 02- 08-2018 C. When almost all decisions of various High Courts and ITATs in India had made detailed discussions and arrived into a conclusion on the subject matter of eligibility for deduction u/s 80P in favour of credit co-operative societies which are not licensed by R.B.I., and such co-operative societies all over India whose activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant receives deposits from the members only the primary object or principal business of the appellant cannot be treated as Banking. Further, the byelaws of the appellant permit admission of other co-operative societies as members. Therefore, appellant is not a Primary Co-operative Bank by definition provided in Part V of the Banking Regulation Act 1949. F. Assessment Order is bad in law in as much as the reason recorded for the issuance of notice u/s 148 was that the appellant did not file the return of income. It is a settled position in law that non-filing of return of income cannot be a reason to believe that the income has escaped assessment [Hon ble High Court of Bombay in W.P. No.1155 of 2016 dated 20/07/2016] G. The Appellant prays that the general outlook in the decisions of various High courts and ITATs across the country on the disallowance of claim for deduction u/s 80(P), adopted on the basis of CBDT clarification No. 133/06/2006-07 dated 19-05-2007 shall be taken into consideration while disposing this appeal petition. 6.1 The learned AR relied on the grounds raised, however, did not raise any argument with regard to the reopening of assessment as val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a conclusion whether benefits can be extended or not in the light of the provisions under sub-section (4) of Section 80P. 33. In Chirakkal [384 ITR 490] the Division Bench held that the appellant societies having been classified as Primary Agricultural Credit Societies by the competent authority under the KCS Act, it has necessarily to be held that the principal object of such societies is to undertake agricultural credit activities and to provide loans and advances for agricultural purposes, the rate of interest on such loans and advances to be at the rate to be fixed by the Registrar of Co-operative Societies under the KCS Act and having its area of operation confined to a Village, Panchayat or a Municipality and as such, they are entitled for the benefit of sub-section (4) of Section 80P of the IT Act to ease themselves out from the coverage of Section 80P and that, the authorities under the IT Act cannot probe into any issues or such matters relating to such societies and that, Primary Agricultural Credit Societies registered as such under the KCS Act and classified so, under the Act, including the appellants are entitled to such exemption. 34. In Chirakkal [384 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purpose for which the loans were disbursed, i.e., whether it is for agricultural purpose or non-agricultural purpose. In these cases, such a detailed examination has not been conducted by the A.O. Further, the A.O. has not examined to what extent loans, if any, has been disbursed to non-members. There is a passing statement at para 15 of the assessment order that there has been disbursement of non-agricultural loans to non-members as well. There has been no detailed examination of these aspects by the A.O. At the time of assessment, the judgment of the Hon ble jurisdictional High Court in the case of Chirakkal Service Cooperative Bank Ltd. (supra) was ruling the roost and the certificate issued by the Registrar of Co-operative Society terming the assessee as a primary agricultural credit society would be sufficient for grant of deduction u/s 80P of the I.T.Act. Therefore, in view of the dictum laid down by the Full Bench of the Hon ble Kerala High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT (supra), we are of the view that there should be fresh examination by the Assessing Officer as regards the nature of each loan disbursement and purpose for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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