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TMI Blog2019 (6) TMI 1056X X X X Extracts X X X X X X X X Extracts X X X X ..... amid Hussain K.P. ORDER PER BENCH : These appeals at the instance of the Revenue are directed against different orders of the CIT(A). Since common issue is involved in these appeals, they were heard together and are being disposed off by this consolidated order. 2. The solitary issue raised in these appeals is whether the assessees are entitled to deduction u/s 80P of the I.T.Act? 3. Brief facts of the case are as follows: The assessees in these cases are registered as cooperative societies under the Kerala State Co-operative Societies Act, 1969. The assessment was completed in assessees 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of M/s Chirakkal Service Co-Operative Bank Ltd had ruled that the assessee was classified as Primary Agricultural Credit Society by the competent authority under the Kerala Co-operative Societies Act, it has necessarily to be held that the principal object of such society is to undertake agricultural credit activities and to provide loans and advances for agricultural purposes. The authorities under the Income Tax Act cannot probe into any issue or such matter relating to such assesses. However, when the case was again taken for hearing in the case of other assessees, the Hon'ble High Court of Kerala vide order in ITA No : 97 of 2016 dated 09.07.2018 cited has held that since two contrary decisions of benches o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. As against this, the Honourable Supreme Court has while deciding in the case of The Citizen Co-Operative Society Limited Vs Assistant Commissioner of Income Tax, Circle- 9(1), Hyderabad had taken into consideration the activities of the assessee society and not relied only on the certificate of registration issued by the Central Registrar of Co-operative societies. In view of this, is not the decision of the CIT(A) against the prevailing positions of law that differentiates between de jure and de facto positions and which permits the principle of penetration of the corporate veil to determine the true nature of the activities of the cooperative society? 5.The learned CIT(Appeals) ought to have seen that the above Apex Court's decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistration and classification. In view of this, is not the decision of the CIT(A) without merits? 8. For these and other grounds that may be urged at the time of hearing, it is requested that the order of the CIT(A) may be set aside and that of the Assessing Officer restored." 6. The learned Departmental Representative relied on the grounds raised in the appeals. 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]. The learned Counsel for the assessees, on the other hand, supported the orders of the CIT(A). 7. We have heard the rival submissions and perus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iety 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 and having its area of operation confined to a Village, Panchayat or a Municipality and as su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 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 assessees and determine whether their activities are in compliance with the activities of a cooperative society functioning under the Kerala Co-operative Societies Act, 1969 and grant deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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