2016 (11) TMI 669

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....0, the return of income was filed on 30.3.2011 declaring 'nil' income. The assessment was completed u/s 143(3) of the Act vide order dated 23.12.2011. While completing the assessment, the Assessing Officer disallowed the claim of deduction u/s 80P(2) of the Act. The deduction u/s 80P(2) was denied by the Assessing Officer for the reason that the assessee had not fulfilled its main object of providing financial accommodation to its members for agricultural purpose and therefore, was not entitled to the benefit of deduction u/s 80P(2) of the Act. The Assessing Officer had also, by invoking the provisions of section 40(a)(ia) of the Act, disallowed the interest payment for the reason that tax was not deducted at source. According to the Assess....

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....bunal. It is in this context, the case was heard on 14th Oct 2016. 7 I have heard the rival parties and perused the material on record. The Hon'ble High Court, in the case of Chirakkal Service Co-op Bank Ltd., reported in 384 ITR 490 had held that a primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969, is entitled to the benefit of deduction u/s 80P(2) and the embargo placed u/s 80P(4) of the Act will not have application to such societies. The Hon'ble High Court was considering the following substantial question of law: a) Whether on the facts and in the circumstances of the case under consideration, the Tribunal is correct in law in deciding against the assessee, the issue regarding entitleme....

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....redit activities and to provide loans and advances for agricultural purposes, the rate 'of interest on such loans and advances to be at the rate fixed by the Registrar of co-operative societies under the KCS Act and having its area of operation confined to a village, panchayat or a municipality. This is the consequence of the definition clause in section 2(oaa) of the KCS Act. The authorities under the IT Act cannot probe into any issue or such matter relating to such applicants. 16. The position of 1aw being as above with reference to the statutory provisions, the appellants had shown to the authorities and the Tribunal that they are primary agricultural credit societies in terms of clause (cciv) of section 5 of the BR Act, having r....

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.... Societies to the above said effect and the same is on record. The Hon'ble High Court, in assessee's own case and other batch of cases, had held that primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969, is entitled to the benefit of deduction u/s 80P(2). Since there is a certificate issued by the Registrar of Cooperative Societies, stating that the assessee is a primary agricultural credit society, I hold that the assessee is entitled to the benefit of deduction u/s 80P(2) of the Act.   8 In the result, the appeal filed by the assessee is allowed. ITA No. 402/Coch/2013 (By the Revenue) 9 The Assessing Officer by invoking the provisions of section 40 (a)(ia) had disallowed the interest pay....