The Tax Publishers2020 TaxPub(DT) 1617 (Coch-Trib) : (2020) 185 ITD 0474

INCOME TAX ACT, 1961

Section 80P(2)(a)(i), 80P(4)

Where AO, in view of section 80P(4), allowed deduction under section 80P only proportionately to the extent of agricultural loan disbursed by assesse without examining details of each loan disbursement and determining the purpose for which loans were disbursed, i.e., whether it was for agricultural purpose or non-agricultural purpose matter was remanded to AO to list out the instances where loans were disbursed to non-members of assessee-society, for non-agricultural purposes etc. and to decide the issue accordingly.

Deduction under section 80P(2)(a)(i) - Computation - AO invoked section 80P(4) and allowed deduction under section 80P only proportionately to the extent of agricultural loan disbursed by assessee, however without making detailed examination -

Assessee, a co-operative society registered under Kerala Co-operative Societies Act, 1969 claimed deduction under section 80P. AO allowed deduction under section 80P only proportionately to the extent of agricultural loan disbursed by assessee. The reasoning of AO to disallow a portion of claim of deduction under section 80P(2)(a)(i) was that assessee was essentially doing business of banking, and therefore, in view of insertion of section 80P(4) with effect from 1-4-2007, assessee was not entitled to deduction under section 80P in respect of disbursement of non-agricultural loan. Held: AO after perusing narration of the loan extracts came to the conclusion that out of total loan disbursement, only a minuscule portion had been advanced for agricultural purposes. The narration in loan extracts/audit reports by itself might not conclusive to prove whether loan is a agricultural loan or a non-agricultural loan. 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. Further, AO had not examined to what extent loans, if any, has been disbursed to non-members. There should be fresh examination by AO as regards the nature of each loan disbursement and purpose for which it had been disbursed. AO would list out the instances where loans have disbursed to non-members of assessee-society, for non-agricultural purposes etc. and accordingly conclude that assessee's activities were not in compliance with activities of primary agricultural credit society functioning under Kerala Co-operative Societies Act, 1969 before denying claim of deduction under section 80P(2). Matter remanded.

REFERRED :

FAVOUR : Against the assessee

A.Y. :



IN THE ITAT, COCHIN BENCH

SUBSCRIBE TaxPublishers.inSUBSCRIBE FOR FULL CONTENT