Tribunal directs inquiry into co-op society's activities for tax deduction eligibility

The Tribunal directed the Assessing Officer to conduct an inquiry into the activities of the co-operative society to determine eligibility for deduction u/s 80P of the Income Tax Act. The Tribunal emphasized compliance with the Kerala Co-operative Societies Act, 1969, and the need to follow the Full Bench judgment of the Hon'ble jurisdictional High Court regarding interest income from investments with Cooperative Banks and other Banks. The appeal was allowed for statistical purposes, and the Stay Application was dismissed as infructuous. The order was pronounced in December 2019, highlighting the importance of a detailed examination of the assessee society's activities for deduction u/s 80P.

---

---

Issues:
1. Disallowance of deduction u/s 80P of the Income Tax Act by Assessing Officer.
2. Appeal to CIT(A) and subsequent issuance of notice u/s 154 proposing rectification.
3. Rejection of deduction u/s 80P by CIT(A) and subsequent appeal to the Tribunal.
4. Interpretation of judgments by Hon'ble jurisdictional High Court regarding eligibility for deduction u/s 80P.
5. Examination of activities of the assessee society to determine eligibility for deduction u/s 80P.

Analysis:
1. The Assessing Officer disallowed the claim of deduction u/s 80P of the Income Tax Act for the assessment year 2011-2012, stating that the assessee, a co-operative society, was engaged in banking activities. This disallowance included interest income received from investments made with District Co-operative Banks.

2. The assessee appealed to the CIT(A), who initially allowed the deduction u/s 80P based on the judgment of the Hon'ble jurisdictional High Court in a similar case. However, the CIT(A) later issued a notice u/s 154 proposing rectification based on a subsequent judgment by the Full Bench of the Hon'ble jurisdictional High Court.

3. The CIT(A, despite objections from the assessee, passed an order disallowing the deduction u/s 80P. Subsequently, the assessee filed an appeal before the Tribunal challenging this decision, raising various grounds including procedural irregularities and misinterpretation of the law by the authorities.

4. The Tribunal considered the conflicting judgments of the Hon'ble jurisdictional High Court regarding the eligibility for deduction u/s 80P. While the initial judgment favored the assessee, the subsequent Full Bench judgment required an inquiry into the activities of the assessee society to determine eligibility for the deduction.

5. In light of the conflicting judgments and the requirement to examine the activities of the assessee society, the Tribunal directed the Assessing Officer to conduct an inquiry and determine the eligibility of the deduction u/s 80P based on compliance with the activities of a co-operative society under the Kerala Co-operative Societies Act, 1969.

6. Regarding interest income from investments with Cooperative Banks and other Banks, the Tribunal directed the Assessing Officer to follow the law laid down by the Full Bench of the Hon'ble jurisdictional High Court and examine the activities of the assessee-society before granting deduction u/s 80P on such income.

7. The Tribunal allowed the appeal for statistical purposes, dismissed the Stay Application as infructuous, and pronounced the order in December 2019, emphasizing the need for a detailed examination of the activities of the assessee society to determine eligibility for deduction u/s 80P of the Income Tax Act.

---