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| The Tax Publishers2020 TaxPub(DT) 3765 (Coch-Trib) INCOME TAX ACT, 1961
Section 80P(2)
Where the AO denied deduction under section 80P on the ground that the assessee was engaged in business of banking then in the light of dictum laid down by High Court in the case of Mavilayi Service Co-operative Bank Ltd. v. CIT 2019 TaxPub(DT) 4909 (Ker-HC) : (2019) 414 ITR 67 (Ker) (FB) (HC) AO was directed to look into nature of each loan disbursement and purpose for which it has been disbursed, afresh i.e., whether it was for agricultural purpose or not and AO shall list out the instances where loans have been disbursed for non-agricultural purposes then to decide the assessee's activities are not in compliance with the activities of primary agricultural credit society functioning under the Kerala Cooperative Societies Act, 1969, before denying the claim of deduction under section 80P(2) of the I.T. Act.
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Deduction under section 80P(2) - Assessee being primary agricultural credit society - AO alleged that assessee engaged in business of banking -
Assessee, a co-operative bank, had claimed deduction under section 80P. AO denied the deduction claimed alleging that assessee was primarily engaged in business of banking and disbursement of agricultural loans by the assessee was only minuscule and therefore, in view of provisions of section 80P(4) assessee was not entitled to deduction under section 80P. Held: The narration in loan extracts in the audit reports by itself may not conclusive to prove whether loan is a agricultural loan or a non-agricultural loan. The gold loans may or may not be disbursed for the purpose of agricultural purposes. Necessarily, the AO had to examine the details of each loan disbursement and determine the purpose for which the loans were disbursed, i.e., whether it is for agricultural purpose or non-agricultural purpose. There should be fresh examination by the 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. The AO shall list out the instances where loans have disbursed for non-agricultural purposes etc. and accordingly conclude that the assessee's activities are not in compliance with the 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) of the I.T. Act.
Followed:The Citizen Co-operative Society Ltd. v. ACIT (2017) 397 ITR 1 (SC) : 2017 TaxPub(DT) 2053 (SC) Mavilayi Service Co-operative Bank Ltd. v. CIT [(2019) 414 ITR 67 (Ker.) (FB) (HC)] : 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]
REFERRED :
FAVOUR : Matter remanded.
A.Y. : 2009-10 & 2014-15
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