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TMI Blog2020 (8) TMI 501X X X X Extracts X X X X X X X X Extracts X X X X ..... lity of deduction u/s 80P Thus restore the issue of deduction u/s 80P(2) to the files of the Assessing Officer. In this case, the A.O. had concluded that out of the total loan disbursed by the assessee only 12.54% are for agricultural purpose / allied activities. I am of the view that the above finding of the A.O. is not conclusive unless each loan applications / loan ledger are verified and the A.O. AO shall examine the activities of the assessee afresh 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) - Appeal filed by the assessee allowed for statistical purposes. - ITA No.89/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the I.T.Act. In allowing the appeal of the assessee, the CIT(A) followed the judgment of the Hon ble jurisdictional High Court in the case of Chirakkal Service Cooperative Co-operative Bank Ltd. v. CIT [(2016) 384 ITR 490 (Ker.). 4. Subsequently, the CIT(A) issued notice u/s 154 of the I.T.Act proposing to rectify his order passed, in view of the subsequent 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 [ITA No.97/2016 order dated 19th March, 2019]. The assessee objected to the issuance of notice. However, the CIT(A) rejected the objections raised by the assessee and passed order u/s 154 of the I.T.Act, disallowing the claim of the assessee u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not in consonance with the Hon ble Supreme Court decision in the case of T S Balaram ITO v. Volkat Brothers (1971) 82 ITR 50 (SC) and Mepco Industries Ltd. v. CIT and another (2009) 319 ITR 208 SC. 6) The decision of the Hon ble High Court of Kerala in the case of Kilkothagiri Tea Coffee Estate Co. Ltd., relied upon by the Hon ble CIT (Appeals) is not applicable to your appellant s case. 7) For the above and other grounds that may be submitted at the time of hearing it is prayed to the Honorable Tribunal to cancel the order u/s 154 r.w.s. 250. 6. The learned AR mailed a request for adjourning this case, however, we proceed to dispose of this appeal after hearing the learned Departmental Representative, since similar cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltural 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 Cooperative 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 Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d initially allowed the appeals of the assessee and granted deduction u/s 80P(2) of the I.T.Act. Subsequently, the CIT(A) passed orders u/s 154 of the I.T.Act, wherein the claim of deduction u/s 80P of the I.T.Act was denied, by relying on the judgment of the Larger Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT (supra). The CIT(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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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