INCOME TAX ACT, 1961

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

Deduction under section 80P(2)(a)(i) - Co-operative society - AO as per narration in loan extracts treated assessee as co-operative bank -

Assessee, a co-operative societies registered under Kerala Co-operative Societies Act, 1969, claimed deduction under section 80P(2)(a)(i). AO disallowed deduction on the ground that assessee was essentially doing the business of banking and disbursement of agricultural loans by assessee was only minuscule.Held: AO after perusing narration of loan extracts in the statutory audit report for assessment years under consideration, concluded that out of total loan disbursement, only a minuscule portion had been advanced for agricultural purposes. However, narration in loan extracts by itself might not conclusive to prove whether loan was agricultural loan or a non-agricultural loan. Accordingly, matter was remanded for verification afresh. AO would list out the instances where loans were disbursed for non-agricultural purposes, etc., and accordingly concluded where loans were disbursed for non-agricultural purposes, etc., and accordingly conclude that assesses activities were not in compliance with activities of primary agricultural credit society functioning under the Kerala Co-operative Societies Act, 1969, before denying the claim of deduction under section 80P(2).

Followed: Mavilayi Service Co-operative Bank Ltd., M/s. Kodiyeri Service Co-operative Bank Ltd., M/s. Vazhappally Service Co-operative Bank Ltd., M/s. Poonjar Service Co-operative Bank Ltd. v. CIT (2019) 414 ITR 67 (Ker.) (FB) (HC) : 2019 TaxPub(DT) 4909 (Ker-HC).

REFERRED :

FAVOUR : Matter remanded.

A.Y. :

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