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TMI Blog2020 (4) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) ought not to have rejected the claim of deduction u/s 80P(2) of the I.T.Act without examining the activities of the assesseesociety. The Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) had held that the A.O. 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. In view of the dictum laid we restore the issue of deduction u/s 80P(2) to the files of the Assessing Officer to examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociety registered under the Kerala Co-operative Societies Act, 1969. For the assessment year 2011-2012, the return of income was filed on 18.03.2013 declaring income of Rs.Nil, after claiming deduction u/s 80P of the I.T.Act. The Assessing Officer passed order u/s 143(3) of the I.T.Act, disallowing the claim of deduction u/s 80P of the I.T.Act. The reasoning of the Assessing Officer to disallow the claim of deduction u/s 80P(2) of the I.T.Act was that the assessee was doing the business of banking, and therefore, in view of insertion of section 80P(4) of the I.T.Act with effect from 01.04.2007, the assessee will not be entitled to the deduction u/s 80P(2) of the I.T.Act. The Assessing Officer also disallowed the claim of deduction with rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llate authority went wrong in invoking powers under Sec.154 and upsetting its own order, when the assessing authority has accepted the order in appeal and did not file any appeal to the Tribunal against the said order. It is submitted that it is an abuse of Sec.154 of the Act. C. The Learned Commissioner (Appeals) is not appreciating the ratio of the Judgment of the Full Bench reported in 414 ITR 67. The jurisdictional High Court has only declared that registration per se would not be sufficient for want of deduction under Sec.80P. Therefore in the absence of enquiry as to the nature of the activity undertaken by the assessee, the denial of deduction under Sec.80P is bad in law. D. The Officer ought to have remanded the matter back for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivities 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 co-operative 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 finding of the Larger Bench of the Hon'ble High Court reads as follows:- "33. In view of the law laid down by the Apex Court in Citizen Co-operative Society [397 ITR 1] it cannot be contended that, while considering the claim made by an assessee society for ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 490] the Division Bench expressed a divergent opinion, without noticing the law laid down in Antony Pattukulangara [2012 (3) KHC 726] and Perinthalmanna [363 ITR 268]. Moreover, the law laid down by the Division Bench in Chirakkal [384 ITR 490] is not good law, since, in view of the law laid down by the Apex Court in Citizen Co-operative Society [397 ITR 1], on a claim for deduction under Section 80P of the Income Tax Act, by reason of sub-section (4) thereof, the Assessing Officer has to conduct an enquiry into the factual situa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank Ltd. V. CIT (supra) had held that the A.O. 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. In view of the dictum laid down by the Full Bench of the Hon'ble jurisdictional High Court (supra), we restore the issue of deduction u/s 80P(2) to the files of the Assessing Officer. The Assessing Officer shall examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) of the I.T.Act. 7.2 As regards the interest on the investments with Cooperative ..... X X X X Extracts X X X X X X X X Extracts X X X X
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