INCOME TAX ACT, 1961

Section 80P

Deduction under section 80P - Allowability - Activities of assessee whether incompliance of Kerala Co-operative Societies Act, 1969 -

Assessees in these cases were registered as cooperative societies under Kerala State Co-operative Societies Act, 1969. Assessments were completed in assessees' cases by denying deduction claimed under section 80P. AO denied deduction claim by treating assessees as a co-operative bank, and not a co-operative society. Further, interest received from investments were denied deduction under section 80P by treating the same as income from 'Other sources'. Held: Larger Bench of jurisdictional High Court in Mavilayi Service Co-operative Bank Ltd. [2019 TaxPub(DT) 4909 (Ker-HC)] held that AO has to conduct an inquiry into factual situation as to activities of assessee society to determine eligibility of deduction under section 80P. AO is not bound by registration certificate issued by Registrar of Kerala Co-operative Societies classifying assessee-society as a cooperative society. Each assessment year is separate and eligibility shall be verified by AO for each of assessment years. Thus, issue of deduction under section 80P(2)(a)(i) was restored to AO to examine activities of respective assessee and determine whether their activities were in compliance with activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and grant deduction under section 80P(2) in accordance with law.

REFERRED : Deputy Commissioner of Income-Tax v. M/s. Ace Multi Axes Systems Ltd. (2018) 400 ITR 0141 (SC) : 2017 TaxPub(DT) 5071 (SC) The Citizen Co-Operative Society Ltd. v. Asstt. CIT (2017) 397 ITR 1 (SC) : 2017 TaxPub(DT) 2053 (SC) M/s. The Totgars' Cooperative Sale Society Ltd. v. ITO (2010) 322 ITR 283 (SC) : 2010 TaxPub(DT) 1466 (SC) Sabarkantha Zilla Kharid Vechan Sangh Ltd. v. CIT (1993) 203 ITR 1027 (SC) : 1993 TaxPub(DT) 1481 (SC) Mavilayi Service Co-operative Bank Ltd. v. CIT [ITA No. 97/2016 Order, dated 19th March, 2019] : 2019 TaxPub(DT) 4909 (Ker-HC) The 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] CIT v. Kerala State Co-operative Marketing Federation Ltd. (1998) 234 ITR 201 (Kerala) : 1998 TaxPub(DT) 0460 (Ker-HC) The Kizhathadiyoor Service Co-op. Bank Ltd. v. ITO ITA No. 525/Coch/2014 (Order, dated 20-7-2016)

FAVOUR : Matter remanded

A.Y. :

SUBSCRIBE FOR FULL CONTENT