TMI Blog2020 (10) TMI 409X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 149/Coch/2020 - - - Dated:- 7-10-2020 - Shri Chandra Poojari, AM And Shri George Mathan, JM Appellant by : Sri.O.D.Sivadas, Advocate Respondent by : Sri.B.Sajjive, Sr.DR ORDER Per Bench This is an appeal filed by the assessee against the order of the learned CIT(Appeals), Trivandrum dated 03.09.2019. The relevant assessment year is 2015-2016. 2. Sri. O.D.Sivadas, Advocate represented on behalf of the assessee and Sri.B.Sajjive, Senior Departmental Representative represented on behalf of the Revenue. 3. This appeal filed by the assessee is delayed by 93 days, for which the assessee has filed condonation petition, wherein it is mentioned that the assessee was unaware of what has to be done after receipt of the order of the CIT(A) and had approached the assessee s Chartered Accountant in the first week of December. It is mentioned that later on inquiry with the Chartered Accountant, the assessee was informed that it would be better to entrust the filing of appeal to another Council and with the tracing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was rejected by the CIT(A) for assessment year under consideration. 7. Aggrieved by the order passed by the CIT(A), the assessee has preferred this appeal before the Tribunal, raising following grounds:- A. Against the assessment order, the appellant filed statutory appeal before the Commissioner (Appeals), Thiruvanthapuram and the appeal was allowed as per order dated 25.05.2018. The said order has become final and no further action was taken by the Revenue against the order issued by the appellate authority. So, the rectification order issued by the Appellate Authority is not legal, as there is no apparent error on the face of record of the order issued by the appellate authority. B. The contention of the revenue is the rectification application that is that in view of the reference order of the full bench of Hon 'ble High Court of Kerala in Mavilayi Service Cooperative Bank Ltd., 414 ITR 67, the appellant is not entitled to get deduction under Section 80P of the Act. The above view has bee accepted by the Commissioner of Income Tax (Appeals), and held that there is mistake apparent from records in the appellate order as the appellant has not discharg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Vs. ACIT reported in 397 ITR 1), the appellate authority declined the claim under Section 80P of the Act. The reasoning in the said judgment is that principle of mutuality which is the basis criterion for the society to claim deduction under 80(P) of the Act and if there is no identity between contributors and participators, mutuality failed and if there is no mutuality among the members of the petitioner society the benefit of Section 80(P) was denied to the petitioner. Actually the above judgment is not applicable and further, the said society was not registered as Primary Agriculture Credit Society and the said society was functioning contrary to the approved bye-law as well as the Act and Rules. G. The Citizens Co-operative Society was established as per the Mutually Aided Cooperative Societies Act, 1995 as per the approved bylaw of the said society, it cannot admit 'nominal members'. But, most of the deposits were taken from the such category of persons, who cannot be members of the society and the on the basis of the above, it was find that the activities of the said society is clearly in violation to the Act and Rules and also the approved byelaw. Thus, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hands of the assessing authority is necessary so as to consider whether the petitioner society is entitled to get deduction or not and then only proceeding can be initiated for realization of the alleged tax and hence, there is no justification in dismissing the appeal on the ground that the Full Bench in Mavilayi's case. J. The appellant society is not liable to pay any amount as Income Tax and the appellant is entitled to obtain deduction under section 80(P)(2) of the Income Tax Act, since, the same is society is Primary Agricultural Credit Society. There is no dispute with respect to the entitlement of the Primary Agricultural Credit Societies get deduction under 80(P)(4) of the Act. In Mavilayi case, the Hon'ble High Court has not considered the merit of the each case and thereby there is no justification for denying the benefit under Section 80P(4) of the Act and hence, there orders passed by the assessing authority and the appellate authority are liable to be setaside. K. Against the reference order in Mavilayi's cas, the said co-operative bank has filed appeal [SLP (Civil) Diary No. 27628/2019] before the Hon'ble Supreme Court. The appeal has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -operative Bank Ltd. v. CIT [(2016) 384 ITR 490 (Ker.)] had held that when a certificate has been issued to an assessee by the Registrar of Co-operative Societies characterizing it as primary agricultural credit society, necessarily, the deduction u/s 80P(2) of the I.T.Act 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Citizen Co-operative Society [397 ITR 1], on a claim for deduction under Section 80P of the Income Tax Act, by reason of sub-section (4) thereof, 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 of the IT Act. In view of the law laid down by the Apex Court in Citizen Cooperative Society [397 ITR 1] the law laid down by the Division Bench Perinthalmanna [363 ITR 268] has to be affirmed and we do so. 35. In view of the law laid down by the Apex Court in Ace Multi Axes Systems case (supra), since each assessment year is a separate unit, the intention of the legislature is in no manner defeated by not allowing deduction under Section 80P of the IT Act, by reason of sub-section (4) thereof, if the assessee society ceases to be the specified class of societies for which the deduction is provided, even if it was eligible in the initial years. 8.1 In the instant cases, the Assessing Officer had denied the claim of deduction u/s 80P of the I.T.Act for the reason that asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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