Case Law Details
Peruvemba Service Cooperative Bank Limited Vs ITO (ITAT Cochin)
The issue under consideration is whether the AO need to conduct an Inquiry into Factual Situation as to activities of assessee society to determine eligibility of deduction u/s 80P?
ITAT states that, the Assessing Officer has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P of the I.T.Act. The Assessing Officer is not bound by the registration certificate issued by the Registrar of Kerala Co-operative Society classifying the assessee-society as a co-operative society. Each assessment year is separate and eligibility shall be verified by the Assessing Officer for each of the assessment years. In the instant case, the Assessing Officer had denied the claim of deduction u/s 80P of the I.T.Act for the reason that assessee was essentially doing the business of banking and disbursement of agricultural loans by the assessee was only minuscule. Therefore, the Assessing Officer concluded that the assessee is not entitled to deduction u/s 80P(2) of the I.T.Act. Necessarily, the A.O. 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. In this case, such a detailed examination has not been conducted by the A.O. Further, the A.O. has not examined to what extent loans, if any, has been disbursed to non-members.
The A.O. shall list out the instances where loans have disbursed to non-members of assessee-society, 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 u/s 80P(2) of the I.T.Act. For the above said purpose, the issue raised in this appeal is restored to the files of the Assessing Officer. Assessing Officer shall examine the activities of the assessee-society and shall take a decision in accordance with law.
FULL TEXT OF THE ITAT JUDGEMENT
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