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TMI Blog2020 (9) TMI 727X X X X Extracts X X X X X X X X Extracts X X X X ..... loans were disbursed, i.e., whether it is for agricultural purpose or non-agricultural purpose. In these cases, such a detailed examination has not been conducted by the A.O. At the time of assessment, the judgment of Chirakkal Service Cooperative Bank Ltd. [ 2016 (4) TMI 826 - KERALA HIGH COURT ] was ruling the roost and the certificate issued by the Registrar of Co-operative Society terming the assessee as a primary agricultural credit society would be sufficient for grant of deduction u/s 80P. 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. The A.O. shall list out the instances where loans have disbursed for non-agricultural purposes etc. 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). - Appeals file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the result the appeals filed by the assessee were rejected by the CIT(A) for assessment years under consideration. 6. Aggrieved by the orders passed by the CIT(A), the assessee has preferred these appeals before the Tribunal. Identical grounds have been raised and they read as follow:- A: The orders of the authorities below in so far as they are against the appellant are opposed to law, facts and circumstances of the case. B: The appellant is eligible for deduction under Section 80P(2)(a)(i) of the Income Tax Act and the finding to the contrary by the lower authorities is without any justification and arbitrary. C: The finding of the assessing authority that appellant falls within the definition of Co-operative Bank which is not eligible for deduction u/s.80P is illegal and without any justification. The lower authorities ought to have interpreted Section 80P(4) correctly so as to find that appellant is a primary agricultural credit society (PACS) engaged in providing credit facilities to its members. For this reason itself, the entire demand is liable to be cancelled. D: The finding of the lower authorities that the agricultural credit provided by the appellant is negligible if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in Chirakkal's case is reversed. But in the said judgment the matter is remitted for further enquiry by the statutory authorities. So much so, the assessing authority ought to conduct enquiries in accordance with the law. H: The finding of the lower authorities that details and evidences as required by the assessing authority are not furnished is incorrect and without any justification. The assessing authority ought to have considered the documents submitted so as to find that the appellant is a PACS engaged in providing credit facilities to its members. I: No other co-operative societies are admitted to the appellant Society as members. J: The levy of interest under Sections 234A and 234B is illegal and liable to be cancelled. K: Demand of tax u/ s. 156 is also not correct or legal, therefore, liable to be cancelled. L: Other grounds will be raised at the time of hearing. 6.1 The learned AR relied on the grounds raised. The learned Departmental Representative, on the other hand, strongly supported the orders passed by the Income Tax Authorities. 7. We have heard the rival submissions and perused the material on record. The Hon ble jurisdictional High Court in the case of Chi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority under the KCS Act, it has necessarily to be held that 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra) was ruling the roost and the certificate issued by the Registrar of 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 (supra), 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. The A.O. shall list out the instances where loans have disbursed for non-agricultural purposes etc. 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) of the I.T.Act. For the above said purpose, the issue raised in these appeals 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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