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TMI Blog2020 (10) TMI 987X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of deduction u/s 80P of the I.T. Act by passing order u/s 154 of the Act. The reasoning of the Assessing Officer to disallow the claim of deduction 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. 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. 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eople of Mugu Village are basically agriculturists and are members of the Society. The people of the village are agriculturists. The principal object is to lend money for agriculture and rural development activity in the area. The assessee is lending money for the agriculture and rural development activities of the area. Granting of loans to its members is for agricultural purposes, as also sometimes, on the strength of personal security, jewel loan etc. Loans are given for rural development and such other permissible activities at concessional rate of interest to its members. Rural development also includes education, medical facility, employment, housing and upliftment of population of the area and other developmental activities of the locality to be performed by the members of the society. 8. It is also respectfully submitted that Section BOP of the Act provides for deduction from gross total income, income referred to in sub section (2) of Section BOP, in accordance with and subject to the provisions of Section in computing the total income of the assessee. 9. Clause A(1) and sub section (2) provides for deduction of the income from carrying on business of banking or provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer dated 13.12.2019, allow the appeal and render justice." 5.1 The learned AR relied on the grounds raised. The learned Departmental Representative, on the other hand, strongly supported the orders passed by the Income Tax Authorities. 6. We have heard the rival submissions and perused the material on record. The Hon'ble jurisdictional High Court in the case of Chirakkal Service Co-operative Co-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 situatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uding 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 490] is not good law, since, in view of the law laid down by the Apex Court 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 Co-operative Society [397 ITR 1] the law laid down by the Division Bench erinthalmanna [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 de ..... 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