INCOME TAX ACT, 1961

Section 80P(2)

Deduction under section 80P(2) - Allowability - -

Assessee, a co-operative society, registered under Kerala Co-operative Societies Act, 1969. claimed deduction under section 80P. AO after perusing narration of loan extracts denied deduction for the reason that assessee was essentially doing business of banking and disbursement of agricultural loans by assessee was only minuscule. Held: Narration in loan extracts/audit reports by itself might not be conclusive to prove whether loan was a 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 the purpose for which loans were disbursed, i.e., whether it was for agricultural purpose or non-agricultural purpose. 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. There was a passing statement in the assessment order that there had been disbursement of loans to non-members as well. Accordingly, matter was remanded to AO for necessary examination.

Supported by:Mavilayi Service Co-Operative Bank Ltd., Kodiyeri Service Co-Operative Bank Ltd., M/s. Vazhappally Service Co-Operative Bank Ltd., M/s. 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. : 2017-18

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