INCOME TAX ACT, 1961

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

Deduction under section 80P(2)(a)(i) - Co-operative society - Whether assessee's activities not in compliance with the activities of primary agricultural credit society -

Assessee, a co-operative society, claimed deduction under section 80P(2)(a)(i). AO disallowed the claim of deduction on the ground that assessee was essentially doing the business of banking, and therefore, in view of insertion of section 80P(4) with effect from 1-4-2007, the assessee will not be entitled to deduction under section 80P. Held: In the case of the Mavilayi Service Co-operative Bank Ltd. ((2019) 414 ITR 67 (Ker) (FB) (HC) : 2019 TaxPub(DT) 4909 (Ker-HC), it was held that there should be fresh examination by AO as regards the nature of each loan disbursement and purpose for which it has been disbursed, i.e., whether it for agricultural purpose or not. Further, A.O. shall list out the instances where loans have been disbursed for non-agricultural purposes, etc., and accordingly conclude that the assessee's activities were not in compliance with the activities of primary agricultural credit society, before denying the claim of deduction under section 80P(2). Thus, in the interest of justice, the issue raised in these appeals was restored to the file of AO for examination of activities of the assessee-society.

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

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2009-10 & 2014-15

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