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TMI Blog2020 (10) TMI 409X X X X Extracts X X X X X X X X Extracts X X X X ..... ncil and with the tracing of the Council and the preparation of the appeal, delay had occurred. The Revenue has seriously objected to the delay. On perusal of the Affidavit filed by the Secretary of the assessee-cooperative bank shows that the assessee has gone on the advise of the Chartered Accountant. The facts mentioned in the Affidavit have not been shown to be false or wrong. This being so, we feel that the assessee has shown bonafides and has given reasonable explanation for the delay in filing of the appeal. Consequently, the delay in filing of the appeal is condoned and the appeal disposed of on merits. 4. The solitary issue that is raised is whether the CIT(A) is justified in confirming the Assessing Officer's order in denying the claim of deduction u/s 80P(2)(a)(i) of the I.T.Act. 5. The brief 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 under consideration, return of income was filed after claiming deduction u/s 80P of the I.T.Act. The assessment order was passed for assessment year under consideration, wherein the Assessing Officer disallowed the claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t discharged the onus to prove that activities of the appellant is that of Primary Agricultural Credit Co-operative society and held that appellant is not eligible for deduction under Section 80P(2)(a)(i).The said finding is not legal. Infact, the application of the revenue under Section 154 itself is not maintainable and this fact was not considered by the appellate authority. C. The appellant society is registered under Kerala Cooperative Societies Act. As per Section 2(1) of the Kerala Cooperative Societies Act, member of a society includes nominal member as well as associates member. The society is accepting deposits from the members and provides credit facilities to the members only and thereby the petitioner society is entitled to get the benefit of Sec. 80P(2)(a)(i) of the Act. This aspect was not considered by the authorities below in the proper perspective. D. As per the dictum laid down by the Hon'ble Supreme Court in COMMISSIONER OF INCOME TAX vs. NAWANSHAHAR CENTRAL COOPERATIVE BANK LTD. (2007) 289 ITR 6 (SC) held that investments made by a banking concern are part of the business of banking. The income arising from such investments would, therefore, be attrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en Co-operative Society case the Hon'ble Supreme Court was not considered about the eligibility of a Primary Agricultural Credit Society for deduction under section 80P of the Act. What was considered on the basis of the specific facts of the case held that the said society is not entitled for deduction under section 80P of the Act, since its functioning itself is contrary to the ct and Rules. Thus, even after the amendment made to the provisions of sEc.80P of the Act by insertion of section 80P(4) of the Act, the Primary Agricultural Credit Society is eligible for deduction under section 80P of the Act. H. As per the Kerala Co-operative Societies Act, 'member' is defined in Section 2(1) of the Act which includes a nominal member also. Sec. 2 (1) of the said Act read that "Member" means a person joining in the application for the registration of a co-operative society or a person admitted to membership after such registration in accordance with this Act, the Rules and the Bye law and includes a nominal or associate member" The "normal member' is defined under 2(M) of the KCS Act, which reads that a "nominal or associate member' means a member who possesses on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon'ble court and registered as SLP (C) No. 22491 of 2020 and the said appeal is pending. Thus, whether it is eligible for deduction under Section 80P of the Income Tax Act 1961 or will it be hit by Section 80P(4) is a matter to be decided by the Hon'ble Supreme Court in the above said appeals. Hence, in the above circumstance, it is highly improper to decide the matter and deny the benefit of Section 80P of the Income Tax Act 1961 to the appellant. And such act amounts to judicial indiscipline also. L. The Commissioner (Appeals) as well as the assessing Officer ought to have appreciated that even if the appellant is not a Primary Agricultural Credit Co-operative Society the appellant is not a Co-operative Bank and hence eligible for deduction u/s 80P of the Income Tax Act 1961 in the light of the clarification No.133/06/2006-07 dated 19-05-2007 issued by CBDT, New Delhi, which is binding on the Assessing Officer. M. When there is large number of decisions of various High Courts and ITATs in India in which detailed discussions were made and conclusion arrived on the subject matter of eligibility for deduction u/s. 80P, disallowance of claim under the said Section ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 under the Central 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 tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 under consideration, 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 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 these cases, such a detailed examination has not been conducted by the A.O. 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 iss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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