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TMI Blog2020 (6) TMI 614X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 80P(2)(a)(i) of the I.T.Act was that the assessee was essentially 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 deduction u/s 80P of the I.T.Act. The relevant finding of the Assessing Officer reads as follow:- "27. Summing up the above discussions above, following facts emerge:- (1) The assessee has claimed deduction u/s.80P of the Income Tax Act, 1961, as the assessee has been Registered and Classified as Primary Agricultural Credit Society by the Jt. Registrar of Societies. (2) As per Explanation given under Section 80P(4) of the Income Tax Act, 1961, deduction u/s 80P(2)(a)(i), can be allowed only on compliance of Banking Regulation Act, 1949, because the definition of Banking as per Section 80P should be in accordance and compliance with Banking Regulation Act, 1949. (3) In the case of The Chirakkal Service Cooperative Bank Ltd. Vs. The CIT (ITA No.212 of2013, the Hon. Kerala High Court has held that since the assessee has been registered as Primary Agricultural Credit Society (PACS) and classified as such by the competent authority, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of decision of the Hon. Kerala High Court in the case of The Chirakkal Service Cooperative Bank Ltd. Vs. The CIT (ITA No.212 of 2013, since the by laws of the assessee cooperative society does not contain any prohibitory clause for admission of other cooperative societies and the by-laws itself allows admission of Self Helf Groups, Kudumbasree etc., which can also be registered as Cooperative Societies, the assessee cannot be treated as eligible for deduction u/s.80P. (10) In view of above facts, it is very much clear that the assessee is not eligible for claiming deduction u/s.80P(2)(a)(i) of the Income Tax Act, 1961, for the income earned from such Banking Activities. 4. Aggrieved by the order passed by the Assessing Officer disallowing the claim of deduction u/s 80P(2) of the I.T.Act, the assessee preferred appeal before the first appellate authority for assessment year 2009-2010. The CIT(A) placing reliance on the judgment of the Full Bench of the Hon'ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT [(2019) 414 ITR 67 (Ker.) (FB) (HC)] held that the Assessing Officer had made elaborate findings and has come to a factual fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um Consumers Cooperative Society on 3 May, 2013 (l) ITAT, Pune - Jain Nagri Sahkari Pat Sanstha Department Of Income Tax on 14 September, 2012 (m) ITAT, Pune - Dharasur Mardini Nagar Sahakari on 20 November, 2012 (n) ITAT, Pune - Vardhman Nagari Sahakari Path Sansta on 22 November, 2012 (o) ITAT, Delhi - Palhawas Primary Agriculture Co-op. Society Ltd. Palhawas Distt., ITA No.2368/Del/2011. (p) ITAT Delhi - Dharuhera Primary Agriculture Co-op society ITA No.2371/Del/2011. (q) ITAT, Mumbai - The Income Tax officer, Ward- 20(2)(1), Mumbai -ITA No.1820/MUM/2017 dated 02-08-2018 C. When there is plenty of decisions of various High Courts and ITATs in India had made detailed discussions and arrived into a conclusion on the subject matter of eligibility for deduction u/s 80P, disallowance of claim under the said Section made by the Assessing Officer and the CIT(Appeals) relying on related decisions is denial of natural justice to the appellant. D. The Appellant prays that the general outlook in the decisions of various High Courts and ITATs across the country on the disallowance of claim of deduction u/s 80P, adopted on the basis of CBDT clarification No.133/06/2006-07 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO's order at Page 4-5). Para 3.18 of the AO's order (at Page 10) may also be referred for understanding the nature of Cooperative Societies as per the BR Act, 1949. The primary difference between a- cooperative bank and a primary credit society is only in the case of paid up share capital and reserve (For primary Cooperative Bank - same shall not be less than Rs. 1 Lakh and for primary Credit Society - it shall be less than Rs. 1 Lakh). The primary agricultural credit society is permitted to provide financial accommodation only to its members and that too for agricultural purposes and connected activities. (Refer Para 3.11 of the AO's order - at Page 7) Para 7 to 9 of the AO's order (Pages 24-25) clearly brought out that section 80P refers only to BR Act, 1949 for definitions of cooperative bank ad primary agricultural credit society, wherein BR Act provides certain qualifications for a cooperative society to become primary agricultural credit society which includes transactions with members only for agricultural activities and non-admission of any other cooperative society as a member (Reference is also drawn to Hon'ble Kerala HC decision in case of Muha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd setting forth such other particulars as may be prescribed."p The filing of ITR in case of assessee's case is mandatory. Any deduction under Chapter VI-A is not automatic and it is subject to fulfilling of specific conditions and also subject to verification by the AO. Therefore, the assessee failed to file the ITR and can't automatically claim the operation of the provisions of the section 80P of the Act which it is not found entitled to, by the AO. Accordingly, it is humbly submitted that the action of the AO in reopening of the assessment is justified. [For further/additional details, please refer to Para 12 of Ld. CIT(A) order (pages 8-9) 3. It is further prayed to the Hon'ble Tribunal that if such cases are set aside assessee's may be asked to cooperate with the Department to furnish all the relevant records as directed by the Hon'ble Tribunal, as various instances have been cited by the field authorities on non-compliance by the assessee's in furnishing of records particulars even when Hon'ble Tribunal has given directions to examine every case. 4. In view of the above, the Hon'ble Tribunal is requested to uphold the order of the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or State Co-operative Societies Act and the Rules made thereunder. On such a claim for deduction under Section 80P of the IT Act, the Assessing Officer has to conduct an enquiry into the factual situation as to the activities of the assessee society and arrive at a conclusion whether benefits can be extended or not in the light of the provisions under sub-section (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 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 int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. The gold loans may or may not be disbursed for the purpose of agricultural purposes. Necessarily, the A.O. had to examine the details of each loan disbursement and determine the purpose for which the loans were disbursed, i.e., whether it is for agricultural purpose or non-agricultural purpose. In this case, such a detailed examination has not been conducted by the A.O. Further, the A.O. has not examined to what extent loans, if any, has been disbursed to non-members. There is a passing statement in the assessment order that there have been disbursement of loans to non-members as well. At the time of assessment, the judgment of the Hon'ble jurisdictional High Court in the case of Chirakkal Service Cooperative Bank Ltd. (supra) was ruling the roost and the certificate issued by the Registrar of Co-operative Society terming the assessee as a primary agricultural credit society would be sufficient for grant of deduction u/s 80P of the I.T.Act. Therefore, in view of the dictum laid down by the Full Bench of the Hon'ble Kerala High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT (supra), we are of the view that there should be fresh examination by the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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