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TMI Blog2020 (7) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... non-agricultural purpose. In these cases, such a detailed examination has not been conducted by the A.O s. In the light of the dictum laid down 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 AO 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. A.O. shall list out the instances where loans have disbursed for non-agricultural purposes and accordingly conclude that the assessee s activities are not in compliance with the activities of primary agricultural credit society functioning under the Kerala Co-operative Societies Act, 1969, before denying the claim of deduction u/s 80P(2) - Decided in favour of assessee for statistical purposes. - ITA No.194/Coch/2020, ITA No.195/Coch/2020 And SA No.104/Coch/2020, SA No.105/Coch/2020, ITA No.196/Coch/2020 And SA No.106/Coch/2020 - - - Dated:- 8-7-2020 - Shri Chandra Poojari, AM And Shri George George K, JM For the Appellants : Sri.Arun Raj For the Respondent : Sri.Mritunjaya Sharma, Sr.DR ORDER PER GEO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. The order dated 10-12-2019 passed by the Commissioner of Income Tax (Appeals)-II Kochi confirming the order dated 19-12-2016 of the Assessing officer disallowing the deduction claimed under section 80 P of the Act for the AY 2011-12 by the appellant who is a Primary Agricultural Credit Society is illegal, arbitrary and unjustified. 2. The CIT (Appeals) ought not to have confirmed the disallowance of deduction under section 80 P of the Act made by the assessing officer. 3. The ,CIT (Appeals) ought to have remanded the matter back to the assessing officer for fresh consideration in view of the judgment dated 19-3-2019 of the Full Bench of the Honourable High Court in the case of Mavilayi Service Cooperative Bank Ltd V s CIT. 4. The CIT (Appeals) failed to consider that the Full Bench of the Kerala High Court in the case of Mavilayi Service Cooperative Bank Ltd V s CIT has held that the assessing officer has to look into the transaction and the assessee can produce documents before the assessing officer to support / substantiate the claim of 80P deduction. 5. The CIT (Appeals) failed to note that the assessing officer should consider the matter afresh and de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 Cooperative 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-operative Society [397 ITR 1] it cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. 7.1 In the instant cases, the Assessing Officer had denied the claim of deduction u/s 80P of the I.T.Act for the reason that assessees were essentially doing the business of banking and disbursement of agricultural loans by the assessees was only minuscule. Therefore, the Assessing Officer s concluded that the assessees are not entitled to deduction u/s 80P(2) of the I.T.Act. The Assessing Officer afte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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