TMI Blog2019 (5) TMI 1190X X X X Extracts X X X X X X X X Extracts X X X X ..... tion u/s 80P of the I.T.Act. It was held by the Hon ble High Court that the Assessing Officer is not bound by the registration certificate issued by the Registrar of Kerala Co-operative Society classifying the assessee-society as a cooperative society. The Hon ble High Court held that each assessment year is separate and eligibility shall be verified by the Assessing Officer for each of the assessment years. The issue of deduction u/s 80P(2)(a)(i) is restored to the AO. AO shall examine the activities of the assessee and determine whether its activities are in compliance with the activities of a cooperative society functioning under the Kerala Co-operative Societies Act, 1969 and grant deduction u/s 80P(2) in accordance with law. Inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction u/s 80P of the I.T.Act. 3. Brief facts of the case are as follows: The assessee in this case is a registered as co-operative societies under the Kerala State Co-operative Societies Act, 1969. The assessment was completed in the assessee s case by denying deduction claimed u/s 80P of the I.T.Act. The Assessing Officer for denying the claim of deduction u/s 80P of the I.T.Act, treated the assessee as a co-operative bank and not a co-operative society. Further the interest received from the investments were denied deduction u/s 80P of the I.T.Act by treating the same as income from `other sources . 4. Aggrieved by the orders of the assessment, the assessee filed appeal before the first appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction u/s 80 P to the respondent assessee while computing the total income was irregular in nature and also against law. (ii) The case of M j s Chirakkal Service Co-operative Bank Ltd on which the Ld. CIT(A) relied upon is contested by the Department and the issue has been referred to a full bench by the Hon'ble High Court of Kerala, the decision of which is still awaited. (iii) Ld. CIT(A) ought to have considered the judgement of Hon'ble Supreme Court in the case of Citizen Co-operative society Ltd Vs ACIT, Circle-9(1), Hyderabad dated 08.08.2017 reported in 397 ITR l(SC), wherein it has been held that if a cooperative society is violating the principle of mutuality in the grab of persons who act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rative Sales Society. 4. For these and other grounds that may be advanced at the time of hearing the order of the learned Commissioner of Income tax (Appeals), Thiruvananthapuram on the above points may be set aside and that of the Assessing Officer restored. 6. The learned Departmental Representative relied on the grounds raised in the appeal. Further, the learned DR placed reliance on the latest judgment of the Larger Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT [ITA No.97/2016 order dated 19th March, 2019] . None was present on behalf of the assessee, however, we proceed to dispose off the appeal on merits. 7. We have hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 subsection (4) of Section 80P. 33. In Chirakkal [384 ITR 490] the Division Bench held that the appellant societies having been classified as Primary Agricultural Credit Societies by the competent authority 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35. In view of the law laid down by the Apex Court in Ace Multi Axes Systems case (supra), 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 of the IT Act, 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. 7.1 In view of the dictum laid down by the Full Bench of the Hon ble High Court, the issue of deduction u/s 80P(2)(a)(i) is restored to the Assessing Officer. The Assessing Officer shall examine the activities of the assessee and determine whether their activities are in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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