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TMI Blog2019 (12) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the case are as follow: The assessee is a co-operative society registered under the Kerala Co-operative Societies Act, 1969. For the assessment year 2015-2016, the return of income was filed on 19.12.2015 declaring income of Rs.Nil, after claiming deduction u/s 80P of the I.T.Act. The Assessing Officer passed an order u/s 143(3) of the I.T.Act vide order dated 21.12.2017 disallowing the claim of deduction u/s 80P of the I.T.Act. The reasoning of the Assessing Officer to disallow the claim of deduction u/s 80P(2) of the I.T.Act was that the assessee was doing the business of banking, and therefore, in view of insertion of section 80P(4) of the I.T.Act with effect from 01.04.2007, the assessee will not be entitled to the deduction u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessing officer as well as the appellate authority passed u/s 154 of the Act to the extent of objections made herein after, are against the facts and circumstances of the case and is opposed to the provisions of law. B. The authority below went wrong in initiating proceedings u/s 154 on the basis of the subsequent decision of the jurisdiction of the High Court. The appellate authority had invoked the jurisdiction u/s 154 disregarding the fact that the department have the right of appeal against the order passed u/s 250, and without verifying whether the department had filed an appeal against the order. C. The appellate authority did not properly considered the issue raised before him regarding the disallowance of the exemption cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mutuality concept and the deduction u/s 80P is not required for such income. The learned assessing officer has not considered the same while making the additions. H. The assessing authority as well as the appellate authority went wrong in finding that deduction claimed u/s 80 P{2} of the IT Act, for which a party does not take in interest earned on deposits made with district co-operative bank. As per section 80P(2) deduction is available in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative bank being a Central Society as defined u/s 2(d) of the KCS Act, the authorities below committed a gross mistake in holding that District Co-operative Bank is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chirakkal Service Co-operative Co-operative Bank Ltd. v. CIT (supra). The Larger Bench of the Hon'ble Kerala High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT (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 co-operative society. The Hon'ble High Court held that each assessment year is separate and eligibility shall be verified by the Assessing Officer for each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Village, Panchayat or a Municipality and as such, they are entitled for the benefit of sub-section (4) of Section 80P of the IT Act to ease themselves out from the coverage of Section 80P and that, the authorities under the IT Act cannot probe into any issues or such matters relating to such societies and that, Primary Agricultural Credit Societies registered as such under the KCS Act and classified so, under the Act, including the appellants are entitled to such exemption. 34. In Chirakkal [384 ITR 490] the Division Bench expressed a divergent opinion, without noticing the law laid down in Antony Pattukulangara [2012 (3) KHC 726] and Perinthalmanna [363 ITR 268]. Moreover, the law laid down by the Division Bench in Chirakkal [384 ITR 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice Co-operative Bank Ltd. v. CIT (supra). The CIT(A) ought not to have rejected the claim of deduction u/s 80P(2) of the I.T.Act without examining the activities of the assesseesociety. The Full Bench of the Hon'ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) had held that the A.O. 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. In view of the dictum laid down by the Full Bench of the Hon'ble jurisdictional High Court (supra), we restore the issue of deduction u/s 80P(2) to the files of the Assessing Officer. The Assessing Officer shall examine the activities of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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