TMI Blog2019 (8) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. It is ordered accordingly- Appeal filed by the Revenue is allowed for statistical purposes. - ITA No.447/Coch/2019 - - - Dated:- 7-8-2019 - Shri Chandra Poojari, AM And Shri George George K, JM For the Appellant : Smt.A.S.Bindhu, Sr.DR For the Respondent : Sri.Hamid Hussain ORDER PER GEORGE GEORGE K, JM : This appeal at the instance of the Revenue is directed against the order of the CIT(A) dated 15.03.2019. The relevant assessment year is 2015-2016. 2. The solitary issue raised in this appeal is whether the assessee is entitled to deduction u/s 80P of the I.T.Act? 3. Brief facts of the case are as follows: The assessee in this case is registered as co-operative society under the Kerala State Co-operative Societies Act, 1969. The assessment was completed in assessee s case by denying deduction claimed u/s 80P of the I.T.Act. The Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the certificate issued by the registrar? 5. From the table given below, listing the similarities between M/s Citizen Service Co- Operative Society and the assessee, hasn't the CIT(A) erred in relying on the decision ITAT Cochin Bench in the case of M/s Maruthonkara Service Co-Operative Bank Ltd where it has been held that the decision of M/s Citizen Service Co-Operative Society is not applicable to the instant case of the assessee? M/s.Citizen Co-operative Society M/s.Kodur Service Co-operative Bank Ltd. Governed by Multi-State Co-operative Societies Act. Governed by Kerala Co-operative Societies Area of operation restricted to the states of Maharashtra, Karnataka and Andhra Pradesh. Area of Operation restricted to the respective panchayath / municipality of Kerala State. Activities are confined only to Members Ordinary and Nominal. Activities are confined to Class A, Class B, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative Society Limited? 8. In the case of the assessee, Class C and D members are just nominal members who can take loans against security and do not have any other rights. Majority of income is received by the society from nominal members through non agricultural gold loan interest and majority of such income is used to give agricultural loans to ordinary members. In short, major part of the income are collected from nominal members who doesn't have any say in the running of the society and is perused majorly for giving loans to Class A members. Hence, there is no mutuality between the members of the assessee society where the Class - A members are making profit at the behest of nominal members i.e. the Class B,C and 0 members. Therefore, the identity of the contributors to the fund is different from that of the participators of the surpluses. Therefore we have a scenario which is the same as in the case of M/s Citizens Co-Operative Society Limited. In this context, hasn't the CIT(A) erred in holding that the decision of the Apex Court in the case of M/s Citizen Service Co-Operative Society is not applicable to the instant case of the assessee? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h, 2019] . The learned Counsel for the assessee, on the other hand, supported the order of the CIT(A). 7. We have heard the rival submissions and perused the material on record. The Larger Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Cooperative Bank Ltd. (supra) held that the Assessing Officer has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction 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 finding of the Larger Bench of the Hon ble High Court reads as follows:- 33. In view of the law laid down by the Apex Court in Citizen Co-operative Society [397 ITR 1] it cannot be contended that, while considering the claim made by an assessee society for deduction under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions under subsection (4) of Section 80P of the IT Act. In view of the law laid down by the Apex Court in Citizen Co-operative Society [397 ITR 1] the law laid down by the Division Bench Perinthalmanna [363 ITR 268] has to be affirmed and we do so. 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 the 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. It is ordered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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