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TMI Blog2020 (6) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. In the light 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 [ 2019 (3) TMI 1580 - KERALA HIGH COURT] 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 which it has been disbursed, i.e., whether it for agricultural purpose or not - issue raised in this appeal is restored to the files of the Assessing Officer - Decided in favour of assessee for statistical purposes. - ITA No.176/Coch/2020 - - - Dated:- 8-6-2020 - Shri George George K, Judicial Member For the Appellant : Sri.Sivadas Chettoor, CA For the Respondent : Sri.B.Sajjive, Sr.AR ORDER This appeal at the instance of the assessee is directed against the order of the CIT(A), dated 17.02.2020. The relevant assessment year is 2014-2015. 2. The solitary issue that is raised is whether the CIT(A) is justified in confirming the Assessing Officer s order in denying the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Officer (AO) took the view that the appellant is not eligible for deduction U/s 80P as the appellant lend only-a small portion for agricultural' purposes and therefore cannot be claimed as a primary Agricultural society for Financial Year 2013-14. After elaborate discussion AO came to conclusion that the appellant is not eligible for deduction u/s 80P. The Income Tax Officer also mentioned about the admission of SLP by Honorable Supreme Court on 25/11/2016 against the Kerala High Court judgment in ITA 156/2014 dated 15/02/2016 in the case of Madai service cooperative bank Ltd v/s ITO. Thus the AO passed the final order on 19/12/2016 refixing the total income at ₹ 5,23,997/-. As per the audit report issued by the Registrar of Cooperative Societies under the Kerala Cooperative Societies Act 1969 net profit was shown at ₹ 42,172/- to which he added 29,61,431/- being inadmissible claims of expenses and reserves etc. He also deducted ₹ 24,79,606/- being income which is not liable to be included in the total income. He also initiated penalty proceedings U/S 271(1) (c ), 271 B 271 F of the Income Tax Act 1961 for concealment of income, delay in filing audi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) of the I.T.Act has to be granted to the assessee. However, the Full Bench of the Hon ble Kerala High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT (supra) had reversed the above findings of the Hon ble Kerala High Court in the case of Chirakkal Service Co-operative Co-operative Bank Ltd. v. CIT (supra) . The Larger Bench of the Hon ble Kerala High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT (supra) 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 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-operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the assessee society and arrive at a conclusion whether benefits can be extended or not in the light of the provisions under sub-section (4) of Section 80P of the IT Act. In view of the law laid down by the Apex Court in Citizen Cooperative Society [397 ITR 1] the law laid down by the Division Bench Perinthalmanna [363 ITR 268] has to be affirmed and we do so. 35. In view of the law laid down by the Apex Court in Ace Multi Axes Systems case (supra), since each assessment year is a separate unit, the intention of the legislature is in no manner defeated by not allowing deduction under Section 80P of the IT Act, by reason of sub-section (4) thereof, if the assessee society ceases to be the specified class of societies for which the deduction is provided, even if it was eligible in the initial years. 6.1 In the instant case, the Assessing Officer had denied the claim of deduction u/s 80P of the I.T.Act for the reason that assessee was essentially doing the business of banking and disbursement of agricultural loans by the assessee was only minuscule. Therefore, the Assessing Officer concluded that the assessee cannot be treated as co-operative society. The Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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