Tribunal orders detailed examination for deduction eligibility under section 80P

The Tribunal directed the Assessing Officer to conduct a detailed examination to determine the eligibility of deduction u/s 80P of the I.T.Act for each assessment year, emphasizing the need to scrutinize the nature and purpose of loan disbursements, particularly agricultural and non-member loans. The Tribunal restored the issue for further investigation in accordance with the Full Bench judgment, instructing the assessee to cooperate. The appeal was allowed for statistical purposes, and the stay application was dismissed as infructuous.

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Issues Involved:
- Whether the CIT(A) was justified in confirming the Assessing Officer's order in denying the claim of deduction u/s 80P(2)(a)(i) of the I.T.Act for the assessment year 2017-2018.

Detailed Analysis:
1. Background: The assessee, a co-operative society registered under the Kerala Co-operative Societies Act, 1969, filed a return for the assessment year 2017-2018 claiming deduction u/s 80P of the I.T.Act. The Assessing Officer disallowed the claim based on the business nature of the society, primarily banking activities, and the introduction of section 80P(4) of the I.T.Act from 01.04.2007.

2. Appeals Process: The assessee appealed to the CIT(A), who upheld the disallowance citing the society's minimal agricultural credit activities, as per the judgment of the Full Bench of the Hon'ble jurisdictional High Court. The CIT(A) rejected the appeal for the assessment year 2017-2018.

3. Tribunal's Decision: The Tribunal considered the conflicting judgments of the Hon'ble Kerala High Court in the cases of Chirakkal Service Co-operative Bank Ltd. and The Mavilayi Service Co-operative Bank Ltd. The Tribunal emphasized that each assessment year requires a fresh examination by the Assessing Officer to determine the eligibility of deduction u/s 80P of the I.T.Act. The Assessing Officer was directed to conduct a detailed inquiry into the nature and purpose of each loan disbursement, especially regarding agricultural loans and loans to non-members.

4. Conclusion: The Tribunal restored the issue to the Assessing Officer for a thorough examination in line with the Full Bench judgment. The assessee was instructed to cooperate and provide necessary details. The Tribunal allowed the appeal for statistical purposes and dismissed the stay application as infructuous.

By following the Full Bench judgment, the Tribunal emphasized the need for a detailed assessment by the Assessing Officer to determine the eligibility of deduction u/s 80P of the I.T.Act for each assessment year, especially focusing on the nature and purpose of loan disbursements.

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