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2019 (6) TMI 613

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 Secti .....

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n I.T.A.No.144/Coch/2018. 2. The respondent/assessee is a Primary Agricultural Credit Society registered under the Kerala Co-operative Societies Act, 1969. It is a society engaged in banking as well as providing credit facilities to its members. The issue in this appeal relates to assessment of income tax for the assessment year 2014-2015 in respect of the society. 3. The Assessing Officer treated the income derived by the assessee by way of interest from loans and advances made by it as not eligible for deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') on the ground that the assessee is not a society as envisaged under Section 80P(4) of the Act and passed assessment order accord .....

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as envisaged under Section 80P(4) of the Act. The Assessing Officer has found that enquiry can be conducted into the factual situation whether the assessee is conducting business as a Primary Agricultural Credit Co-operative Society and that the benefit under Section 80P(2) of the Act cannot be granted merely on the basis of the registration certificate issued to the assessee under the Kerala Co-operative Societies Act, 1969. The Appellate Authority relied upon the decision of this Court in Chirakkal Service Co-operative Bank Ltd v. Commissioner of Income Tax : 2016(2) KLT 535 and found that the assessee being a Primary Agricultural Credit Cooperative Society registered under the Kerala Co-operative Societies Act is entitled for deduction .....

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t 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 Socities Act and classified so under that statute, are entitled to such exemption. 9. Chirakkal (supra) now stands overruled by the decision of the Full Bench of this Court in Mavilayi Service Cooperative B .....

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ovisions under sub-section (4) of Section 80P of the IT Act . 10. In the light of the law laid down by the Full Bench of this Court in Mavilayi Service Co-operative Bank (supra), the matter has to be remitted to the Income Tax Appellate Tribunal for fresh consideration by it in the light of the aforesaid decision. The legal position with regard to the substantial question of law raised in this appeal is covered by the decision in Mavilayi Service Co-operative Bank (supra) and the substantial question of law is answered in favour of the revenue. 11. Consequently, the appeal is allowed and the order dated 23.07.2018 of the Income Tax Appellate Tribunal, Cochin Bench in I.T.A.No.144/Coch/2018 is set aside. The aforesaid appeal is remanded for .....

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