TMI Blog2020 (9) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... sed, i.e., whether it for agricultural purpose or not. A.O. shall list out the instances where loans have disbursed for non-agricultural purposes etc. and accordingly conclude that the assessee s activities are not in compliance with the activities of primary agricultural credit society functioning under the Kerala Co-operative Societies Act, 1969, before denying the claim of deduction u/s 80P(2) of the I.T.Act. For the above said purpose, the issue raised in these appeals is restored to the files of the Assessing Officer. Appeal filed by the assessee is allowed for statistical purposes. - ITA No. 172/Coch/2020 - - - Dated:- 14-9-2020 - Shri Chandra Poojari , AM And Shri George Mathan , JM Appellant by : Sri. Hamid Hussain K.P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 finding that agricultural credit provided by the assessee is only minuscule and assessee cannot be termed as primary agricultural credit society. Accordingly disallowance of claim of deduction u/s 80P of the I.T.Act made by the Assessing Officer was upheld by the CIT(A). In the result the appeal filed by the assessee was rejected by the CIT(A) for assessment year 2014-2015. 5. Aggrieved by the order passed by the CIT(A), the assessee has preferred this appeal before the Tribunal, raising following grounds:- 1. The Order of the learned Commissioner of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gricultural area and the members of our society are mainly agriculturists. The bylaw of assessee Co-op society has clearly mentioned that, assessee is a primary agricultural credit society and the main object is to provide financial accommodation to assessee members for agricultural purposes or purposes connected with the agricultural activities. So there is no need for independent evaluation of the objectives or even otherwise the objects are of agricultural nature and not otherwise. A major portion of loans included in medium terms, ordinary loans, others (long term), gold loan are also agricultural in nature. 5. The learned Commissioner of Income Tax Appeals further failed to see that, assessee is a co-operative society registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be granted to the assessee. However, the Full Bench of the Hon ble Kerala High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT (supra) had reversed the above findings of the Hon ble Kerala High Court in the case of Chirakkal Service Co-operative Cooperative 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 issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies 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 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 Chirakk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the reason that assessee was essentially doing the business of banking and disbursement of agricultural loans by the assessee was only minuscule. Therefore, the Assessing Officer concluded that the assessee cannot be treated as co-operative society. The Assessing Officer after perusing the narration of the loan extracts in the statutory audit report for assessment year 2014-2015, came to the conclusion that out of the total loan disbursement, only a minuscule portion has been advanced for agricultural purposes. We are of the view that the narration in loan extracts in the audit reports by itself may not conclusive to prove whether loan is a agricultural loan or a non-agricultural loan. The gold loans may or may not be disbursed for th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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