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2019 (6) TMI 613 - HC - Income TaxDeduction u/s 80P(2)(a)(i) - income derived by the assessee by way of interest from loans and advances made by it as not eligible for deduction - as per AO assessee is not a society as envisaged u/s 80P(4) - HELD THAT:- In Chirakkal Service Co-operative Bank v. Commissioner of Income Tax [2016 (4) TMI 826 - KERALA HIGH COURT] held that societies having been classified as Primary Agricultural Credit Societies by the competent authority under the Kerala Co-operative Societies 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 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 Act to ease themselves out from the coverage of Section 80P and that the authorities under the Act cannot probe into any issues or such matters relating to such societies and that the Primary Agricultural Credit Societies registered as such under the Kerala Cooperative Societies Act and classified so under that statute, are entitled to such exemption. Chirakkal (supra) now stands overruled by the decision of the Full Bench of this Court in Mavilayi Service Cooperative Bank Limited v. Commissioner of Income Tax [2019 (3) TMI 1580 - KERALA HIGH COURT] 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 Thus matter has to be remitted to the Income Tax Appellate Tribunal for fresh consideration by it in the light of the aforesaid decision. Substantial question of law is answered in favour of the revenue.
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