INCOME TAX ACT, 1961

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

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

Assessee, a co-operative society, registered under Kerala Co-operative Societies Act, 1969 claimed deduction under section 80P(2)(a)(i). AO after perusing narration of loan extracts for the financial periods under consideration, concluded that out of total loan disbursement, only a minuscule portion had been advanced for agricultural purposes and assessee was essentially doing the business of banking, and therefore, in view of insertion of section 80P(4) with effect from 01-4-2007, assessee was not entitled to deduction under section 80P. Held: Narration in loan extracts / audit reports by itself might not be conclusive to prove whether loan was agricultural loan or a non-agricultural loan. Necessarily, AO had to examine details of each loan disbursement. Such a detailed examination had not been conducted by AO. Accordingly, 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 accordingly conclude that assessee's activities were not in compliance with activities of primary agricultural credit society functioning under the Kerala Co-operative Societies Act, 1969, before denying claim of deduction under section 80P(2).

Supported by:Mavilayi 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. : 2016-17

INCOME TAX ACT, 1961

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

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