TMI Blog2020 (10) TMI 1120X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and purpose for which it has been disbursed, i.e., whether it for agricultural purpose or not. A.O. shall list out the instances where loans have been disbursed for non-agricultural purposes etc. and accordingly conclude that the assessees 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). The issue raised in these appeals is restored to the files of the AO. AO shall examine the activities of the assessee-societies - Appeals filed by the assessee are allowed for statistical purposes. - ITA Nos.287 & 288/Coch/2020, ITA Nos.289 & 290/Coch/2020, ITA Nos.294 & 295/Coch/2020, ITA No.29 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction u/s 80P of the I.T.Act. 5. Aggrieved by the orders passed by the Assessing Officer disallowing the claim of deduction u/s 80P(2) of the I.T.Act, the assessees preferred appeals before the first appellate authority for assessment years 2009-10 and 2014-2015. 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 assessees is only minuscule and assessees cannot be termed as primary agricultural credit society. Accordingly disallowance of claim of dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the claim of exemption made by the Appellant is not under Sec. 80P(4) of the Act which applies to Primary Co-operative Bank coming under the purview of the Banking Regulation Act. It is respectfully submitted that the appellant does not come under the control of RBI and is not involved in banking activities. It is therefore respectfully submitted that the activities undertaken by the appellant will have to be examined prior to rejecting the claim of exemption. It is respectfully prayed that by following the ratio of the Judgment of the Full Bench of High Court reported in [2019] 414 ITR 67 (Ker) [FB] this Hon'ble Tribunal be pleased to direct the Officer to relook the claim of exemption including the issue of classification as to whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rily 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 into any issues or such matters relating to such societies and that, Primary Agricultural Credit Societies registered as such under the KCS Act and clas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.1 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 assessees were essentially doing the business of banking and disbursement of agricultural loans by the assessees was only minuscule. Therefore, the Assessing Officer concluded that the assessees 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 years 2009-10 and 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 conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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