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2019 (8) TMI 510

..... uo;ble jurisdictional High Court in the case of The Mavilayi Service Cooperative Bank Ltd. [2019 (3) TMI 1580 - KERALA HIGH COURT] held that the AO 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. 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 accordingly- Appeal filed by the Revenue is allowed for statistical purposes. - ITA No.447/Coch/2019 - 7-8-2019 - Shri Ch .....

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..... &Ors dated 19.03.2019 has held that the proposition laid in Chirakkal is bad in law? 4. Is the above decision of the CIT(A) relying on the decision of the Hon'ble ITAT in the case of M/s Maruthonkara Service Co-Operative Bank Ltd stating that the decision of Apex court in the case of M/s Citizens Co-Operative Society is not applicable to the facts of the instant case just in law, when the full bench of the High Court has relied on the aforesaid decision while arriving at the conclusion that the AO need not extend the benefits available, merely looking at the class of the society as per 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 S .....

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..... e 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? 9. It is statutory that 20% of deposits collected is to be mainta .....

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..... 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 Section 80P of the IT Act, after the introduction of sub-section (4) thereof, the Assessing Officer has to extend the benefits available, merely looking at the class of the society as per the certificate of registration issued unde .....

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