INCOME TAX ACT, 1961

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

Deduction under section 80P - Allowability - Assessee allegedly engaged essentially in banking business having miniscule disbursement of agricultural loans -

Solitary issue raised was whether CIT(A) was justified in confirming AO's order in denying claim of deduction under section 80P(2)(a)(i) on allegation that assessee was essentially doing business of banking and disbursement of agricultural loans by assessee was only minuscule. Held: The narration in loan extracts/audit reports by itself may not be conclusive to prove whether loan is a agricultural loan or a non-agricultural loan. The gold loans may or may not be disbursed for 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. In instant case, such a detailed examination was not conducted by AO. There needed to be fresh examination by AO as regards nature of each loan disbursement and purpose for which it was disbursed, i.e., whether it was for agricultural purpose or not.

Followed:Mavilayi Service Co-Operative Bank Ltd. v. CIT (2019) 414 ITR 67 (Ker.) (FB) : 2019 TaxPub(DT) 4909 (Ker-HC)

REFERRED : Citizen Co-Operative Society Ltd. v. Asstt. CIT (2017) 397 ITR 1 (SC) : 2017 TaxPub(DT) 2053 (SC) Chirakkal Service Co-Operative Bank Ltd. v. CIT (2016) 384 ITR 490 (Ker.) : 2016 TaxPub(DT) 1770 (Ker-HC) Perinthalmanna Service Co-Operative Bank Ltd. v. ITO (2014) 363 ITR 268 (Ker) : 2014 TaxPub(DT) 1572 (Ker-HC) Antony Pattukulangara v. E.N. Appukuttan Nair & Ors. 2012 (3) KHC 726 (Ker)

FAVOUR : Matter remanded

A.Y. : 2013-14

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