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TMI Blog2020 (6) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) of the I.T.Act. For the above said purpose, the issue raised in this appeal is restored to the files of the Assessing Officer. The Assessing Officer shall examine the activities of the assessee-society by following the dictum laid down by the Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT (supra) and shall take a decision in accordance with law. - Appeal filed by the assessee is allowed for statistical purposes - ITA No.213/Coch/2020 And SA No.119/Coch/2020 - - - Dated:- 26-6-2020 - Shri Chandra Poojari, AM And Shri George George K, JM For the Appellant : Sri.Sivadas Chettoor, CA For the Respondent : Sri.Mritunjaya Sharma, Sr.DR ORDER PER BENCH : This appeal at the instance of the assessee is directed against the order of the CIT(A) dated 03.03.2020. The assessee has also preferred a stay application seeking to stay the recovery of outstanding tax arrears. The relevant assessment year is 2017-2018. 2. The solitary issue that is raised is whether the CIT(A) is justified in confirming the Assessing Officer s order in denying the claim of deduction u/s 80P(2)(a)(i) of the I.T.Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the deduction. A detailed note in support of this ground shall be filed on or before the hearing of this appeal. 3. It is submitted that the denial of deduction u/s 80P( 4) of the Act by the lower authorities is illegal and unsustainable in law on a harmonious and combined reading of all the applicable provisions of law in this connection. A detailed note in support of this ground shall be filed on or before the hearing of this appeal. 4. The learned CIT(A) had passed the order based on the decisions of Chirakkal and Perinthalmanna case alone and failed to consider the other important grounds raised by the appellant. The CIT(A) is duty bound to decide all the issues/grounds raised in the appeal, Therefore the said order violates the natural justice principles besides being illegal. 5. In the facts and circumstances of the case, the appellant is clearly eligible for deduction of the whole profit attributable to the activities of giving credit facilities to its members under section 80P. The denial of the said deduction by the CIT(A) is illegal, unwarranted and unreasonable. 6. The order suffers from serious legal infirmities in so far as the learned officer f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank Ltd. v. CIT [(2016) 384 ITR 490 (Ker.)] had held that when a certificate has been issued to an assessee by the Registrar of Co-operative Societies characterizing it as primary agricultural credit society, necessarily, the deduction u/s 80P(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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 situation as to the activities 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 Co-operative 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. 7.1 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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