TaxTMI 
TaxTMI 
2020 (3) TMI 1135
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....rala Co-operative Societies Act, 1969. For the assessment year 2014-15, the return of income was filed after claiming deduction u/s 80P of the I.T.Act. The Assessing Officer passed an order, 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 01.04.2007, the assessee will not be entitled to the deduction u/s 80P(2) of the I.T.Act. The Assessing Officer The Assessing Officer also disallowed the claim of deduction with regard to interest income received by the assessee on investments made with Dis....
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....onfirming the order 27-12- 2016 passed by the Income Tax Officer, Ward- 2 (3), Trivandrum for the AY 2014-15 is highly illegal, arbitrary, unjustified and contrary to the law and facts of the case. 2. The CIT (Appeals) erred in invoking section 154 of the Act and passing order dated 3-9-2019 modifying the order dated 5-3-2019. 3. The CIT (Appeals) thoroughly erred in modifying the order dated 5- 3-2019 and dismissing the appeal filed by the appellant holding that the order dated 27-12-2016 passed by the assessing officer is in accordance with the judgment dated 19-3-2019 passed by the Full Bench of the Honourable High Court of Kerala in Mavilayi Service Co-operative Bank Ltd Vs CIT and connected cases (ITA No. 97 of 2016 and connected c....
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.... the Act. 6. The learned AR relied on the grounds raised. 6.1 The learned Departmental Representative, on the other hand, strongly supported the orders of the Income-tax authorities. 7. We have heard the rival submissions and perused the material on record. The Hon'ble Kerala High Court in the case of Kil Kotagiri Tea & Coffee Estates Co. Ltd. v. ITAT reported in 174 ITR 579 had held that when an authority has decided on the basis of a decision of the High Court which is subsequently reversed, there would be a rectifiable mistake coming within the section 154 of the Income-tax Act. The Larger Bench of the Hon'ble Kerala High Court has reversed the dictum laid down by the judgment of the Hon'ble Kerala High Court in the case of Chirakkal ....
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....t. It was held by the Hon'ble High Court that 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. The Hon'ble High Court held that each assessment year is separate and eligibility shall be verified by the Assessing Officer for each of the assessment years. The finding of the Larger Bench of the Hon'ble High Court reads as follows:- "33. In view of the law laid down by the Apex Court in Citizen Co-operative Society [397 ITR 1] it cannot be contended that, while considering the claim made by an assessee society for deduction under Section 80P of the IT Act, after the introduction of sub-section (4) thereof, the A....
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....t and classified so, under the Act, including the appellants are entitled to such exemption. 34. In Chirakkal [384 ITR 490] the Division Bench expressed a divergent opinion, without noticing the law laid down in Antony Pattukulangara [2012 (3) KHC 726] and Perinthalmanna [363 ITR 268]. Moreover, the law laid down by the Division Bench in Chirakkal [384 ITR 490] is not good law, since, in view of the law laid down by the Apex Court in Citizen Co-operative Society [397 ITR 1], on a claim for deduction under Section 80P of the Income Tax Act, by reason of sub-section (4) thereof, the Assessing Officer has to conduct an enquiry into the factual situation as to the activities of the assessee society and arrive at a conclusion whether benefits ....
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....ituation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P of the I.T.Act. In view of the dictum laid down by the Full Bench of the Hon'ble jurisdictional High Court (supra), we restore the issue of deduction u/s 80P(2) to the files of the Assessing Officer. The Assessing Officer shall examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) of the I.T.Act. 7.3 As regards the interest on the investments with Co-operative Banks and other Banks, the co-ordinate Bench order of the Tribunal in the case of Kizhathad....