INCOME TAX ACT, 1961

Section 80P

Deduction under section 80P - Cooperative society - AO failed to examine activities of assessee before denying claim of deduction under section 80P - Remand

AO completed assessment in assessee's case by denying deduction claimed under section 80P, treating the assessee as co-operative bank and not co-operative society. However, CIT (A) allowed the claim of deduction under section 80P. Aggrieved, Revenue was in appeal. Held: The High Court in the case of The Mavilayi Service Cooperative Bank Ltd. ((ITA No.97/2016 order dt. 19-3-2019): 2019 TaxPub(DT) 4909 (Ker-HC)), held that the AO has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction under section 80P. Further, it was also held that AO is not bound by the registration certificate issued by the Registrar of Kerala Co-operative Society classifying the assessee-society as a cooperative society and each assessment year is separate and eligibility shall be verified by the AO for each of the assessment years. Therefore, in the instant case, the issue of deduction under section 80P(2) was restored to AO to determine whether the activities of assessee were in compliance with the activities of a cooperative society functioning under the Kerala Co-operative Societies Act, 1969 and grant deduction under section 80P(2) in accordance with law.