TaxTMI 
TaxTMI 
2019 (12) TMI 502
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..... The relevant assessment year is 2011-2012. 2. The brief facts of the case are as follow: The assessee is a co-operative society registered under the Kerala Co-operative Societies Act, 1969. For the assessment year 2011-2012, the return of income was filed on 11.01.2012 declaring income of Rs.Nil, after claiming deduction u/s 80P of the I.T.Act. The Assessing Officer passed an order u/s 143(3) of the I.T.Act vide order dated 29.11.2017 disallowing the claim of deduction u/s 80P of the I.T.Act. The reasoning of the Assessing Officer to disallow the claim of deduction u/s 80P(2) of the I.T.Act was that the assessee was doing the business of banking, and therefore, in view of insertion of section 80P(4) of the I.T.Act with effect from 0....
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....efore the Tribunal raising the following grounds:- "A. The Orders of the assessing officer as well as the appellate authority passed u/s 154 of the Act to the extent of objections made herein after, are against the facts and circumstances of the case and is opposed to the provisions of law. B. The authority below went wrong in initiating proceedings u/s 154 on the basis of the subsequent decision of the jurisdiction of the High Court. The appellate authority had invoked the jurisdiction u/s 154 disregarding the fact that the department have the right of appeal against the order passed u/s 250, and without verifying whether the department had filed an appeal against the order. The assessing authority had filed appeal agains....
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....pellant is a members co-operative society and are only doing the trading activities with its members and the learned assessing officer has not made any contention that the society is doing trading activities with non members. Since the trading activities are with members alone any income derived from the activities are exempt under mutuality concept and the deduction u/s 80P is not required for such income. The learned assessing officer has not considered the same while making the additions. H. The assessing authority as well as the appellate authority went wrong in finding that deduction claimed u/s 80 P{2} of the IT Act, for which a party does not take in interest earned on deposits made with district co-operative bank. ....
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....terizing it as primary agricultural credit society, necessarily, the deduction u/s 80P(2) of the I.T.Act has to be granted to the assessee. However, the Full Bench of the Hon'ble Kerala High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT (supra) had reversed the above findings of the Hon'ble Kerala High Court in the case of Chirakkal Service Co-operative Co-operative Bank Ltd. v. CIT (supra). The Larger Bench of the Hon'ble Kerala High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT (supra) held 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. It was....
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....CS Act, it has necessarily to be held that the principal object of such societies is to undertake agricultural credit activities and to provide loans and advances for agricultural purposes, the rate of interest on such loans and advances to be at the rate to be 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 and as such, they are entitled for the benefit of sub-section (4) of Section 80P of the IT Act to ease themselves out from the coverage of Section 80P and that, the authorities under the IT Act cannot probe into any issues or such matters relating to such societies and that, Primary Agricultural Credit Societies registered as such unde....
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.... eligible in the initial years." 7.1 The CIT(A) had initially allowed the appeal of the assessee and granted deduction u/s 80P(2) of the I.T.Act. Subsequently, the CIT(A) passed order u/s 154 of the I.T.Act, wherein the claim of deduction u/s 80P of the I.T.Act was denied, by relying on the judgment of the Larger Bench of the Hon'ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT (supra). The CIT(A) ought not to have rejected the claim of deduction u/s 80P(2) of the I.T.Act without examining the activities of the assesseesociety. The Full Bench of the Hon'ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) had held that the A.O. has to ....