INCOME TAX ACT, 1961

Section 80P(2)(a)(i)

Deduction under section 80P(2)(a)(i) - Co-operative society - Primary agriculture credit society - Determination

Assessee had been Registered and Classified as Primary Agricultural Credit Society. It claimed deduction under section 80P(2)(a)(i), AO after perusing narration of loan extracts denied assessee's claim on the ground that assessee was essentially doing the business of banking and disbursement of agricultural loans by assessee was only minuscule and also, there had been disbursement of loans to non-members as well. Held: Narration in loan extracts/audit reports by itself might not conclusive to prove whether loan was an agricultural loan or non-agricultural loan. The gold loans might or might not be disbursed for the purpose of agricultural purposes. Necessarily, AO had to examine details of each loan disbursement and determine purpose for which loans were disbursed, i.e., whether it was for agricultural purpose or non-agricultural purpose. However, such a detailed examination had not been conducted by AO. Further, AO had not examined to what extent loans, if any, had been disbursed to non-members. Accordingly, matter was remanded to AO for fresh examination as regards the nature of each loan disbursement and purpose for which it had been disbursed, i.e., whether it was for agricultural purpose or not.

Relied:Mavilayi Service Co-Operative Bank Ltd., Kodiyeri Service Co-Operative Bank Ltd., Vazhappally Service Co-Operative Bank Ltd., Poonjar Service Co-Operative Bank Ltd. v. CIT, Cochin (2019) 414 ITR 67 (Ker.) (FB) (HC) : 2019 TaxPub(DT) 4909 (Ker-HC).

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2009-10

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