2019 (3) TMI 1580 - KERALA HIGH COURT

Deduction u/s 80P (2) - scope of introduction of sub-section (4) - provisions of this Section shall not apply in relation to any Co-operative Bank other than a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank - Primary Agricultural Credit Society or a Co-operative Bank - if the assessee is having a valid registration u/s 8 of the KCS Act, the authorities under the IT Act have to extend the benefit of deduction provided u/s 80P , by reason of sub-section (4) thereof, to such societies - HELD THAT :- In view of the law laid down by the Apex Court in Citizen Co-operative Society [2017 (8) TMI 536 - SUPREME COURT] it cannot be contended that, while considering the claim made by an assessee society for deduction u/s 80P , after the introduction of sub-section (4) thereof, the Assessing Officer has to extend the benefits available, merely looking at the class of the society as per the certificate of registration issued under the Central or State Co-operative Societies Act and the Rules made thereunder. On such a claim for deduction u/s 80P, 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.

Moreover, the law laid down by the Division Bench in Chirakkal [2016 (4) TMI 826 - KERALA HIGH COURT] is not good law, since, in view of the law laid down by the Apex Court in Citizen Co-operative Society (supra) on a claim for deduction u/s 80P, 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. In view of the law laid down by the Apex Court in Citizen Cooperative Society (supra) the law laid down by the Division Bench Perinthalmanna [2014 (6) TMI 184 - KERALA HIGH COURT] has to be affirmed and we do so.

In view of the law laid down by the Apex Court in Ace Multi Axes Systems' case [2017 (12) TMI 372 - SUPREME COURT] , 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, 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.

The question referred to the Full Bench is answered as above. Registry shall list the appeals before appropriate Bench as per roster.