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2020 (12) TMI 590 - AT - Income TaxDeduction u/s. 80P(2) - AO denied the claim of deduction for the reason that assessee was essentially doing the business of banking and disbursement of agricultural loans by the assessee was only minuscule - HELD THAT:- AO after perusing the narration of the loan extracts for the financial periods under consideration, came to the conclusion that out of the total loan disbursement, only a minuscule portion has been advanced for agricultural purposes. The narration in loan extracts/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 this case, such a detailed examination has not been conducted by the A.O's. In the light of the dictum laid down in the case of The Mavilayi Service Co-operative Bank Ltd. [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. A.O. shall list out the instances where loans have disbursed for non-agricultural purposes 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).
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