For Full Access To All Latest Judgments on Income Tax
Click Here To Subscribe Now
Take a tour of our Income-Tax Library

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 Assessing Officer after perusing the narration of the loan extracts in the statutory audit report for assessment years 2013-2014 to 2015-2016, came to the conclusion that out of the total loan disbursement, only a minuscule portion has been advanced for agricultural purposes. We are of the view that the narration in loan extracts in the audit reports by itself may not conclusive to prove whether loan is a agricultural loan or a non-agricultural loan. The gold loans may or may not be disbursed for the purpose of agricultural purposes. Necessarily, the A.O. had to examine the details of each loan disbursement and determine the purpose for which the 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 the Hon’ble jurisdictional High Court in thecaseofChirakkal Service Cooperative Bank Ltd. (supra)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 thecaseofThe 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 by the Full Bench of the Hon’ble jurisdictional High Court in thecaseofThe Mavilayi Service Co-operative Bank Ltd. v. CIT (supra)and shall take a decision in accordance with law. It is ordered accordingl

Shanti Prime Publication Pvt. Ltd.

Sec. 80P(2)(a)(i) of Income Tax Act, 1961— Deduction — The assessee is a co-operative society registered under the Kerala Co-operative Societies Act, 1969. For the assessment years 2013-2014 to 2015-2016, 'Nil’ returns were filed after claiming deduction u/s 80P of the I.T.Act. The assessment orders were passed for assessment years 2013- 2014 to 2015-2016, wherein the Assessing Officer disallowed the claim of deduction u/s 80P of the I.T.Act. The reasoning of the Assessing Officer to disallow the claim of deduction u/s 80P(2)(a)(i) of the I.T.Act was that the assessee was essentially doing the business of banking, and therefore, in view of insertion of section 80P(4) of the I.T.Act with effect from 01.04.2007, the assessee will not be entitled to deduction u/s 80P of the I.T.Act. The appeals filed by the assessee were rejected by the CIT(A) for assessment years 2013-2014 to 2015-2016. The assessee has preferred these appeals before the Tribunal. Tribunal were 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. Tribunal have disposed of the appeals, the stay applications filed by the assessee are dismissed as infructuous and the appeals filed by the assessee were allowed for statistical purposes and the stay applications were dismissed. --- ALANALLUR SERVICE CO-OPERATIVE BANK LIMITED vs. ITO. [2020] 23 ITCD Online 49 (COCHIN)