TaxTMI 
TaxTMI 
2020 (6) TMI 614
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....ssing Officer to disallow the claim of deduction u/s 80P(2)(a)(i) of the I.T.Act was that the assessee was essentially 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 deduction u/s 80P of the I.T.Act. The relevant finding of the Assessing Officer reads as follow:- "27. Summing up the above discussions above, following facts emerge:- (1) The assessee has claimed deduction u/s.80P of the Income Tax Act, 1961, as the assessee has been Registered and Classified as Primary Agricultural Credit Society by the Jt. Registrar of Societies. (2) As per Explanation given under Section 80P(4) of the Income Tax Act, 1961, deduction u/s 80P(2)(a)(i), can be allowed only on compliance of Banking Regulation Act, 1949, because the definition of Banking as per Section 80P should be in accordance and compliance with Banking Regulation Act, 1949. (3) In the case of The Chirakkal Service Cooperative Bank Ltd. Vs. The CIT (ITA No.212 of2013, the Hon. Kerala High Court has held that since the assessee has been registered as Primary Agricultural Credit Soc....
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.... Section 37 (1) of the Income Tax Act, 1961, no any expenditure is allowable in the case of assessee. (9) In view of decision of the Hon. Kerala High Court in the case of The Chirakkal Service Cooperative Bank Ltd. Vs. The CIT (ITA No.212 of 2013, since the by laws of the assessee cooperative society does not contain any prohibitory clause for admission of other cooperative societies and the by-laws itself allows admission of Self Helf Groups, Kudumbasree etc., which can also be registered as Cooperative Societies, the assessee cannot be treated as eligible for deduction u/s.80P. (10) In view of above facts, it is very much clear that the assessee is not eligible for claiming deduction u/s.80P(2)(a)(i) of the Income Tax Act, 1961, for the income earned from such Banking Activities. 4. Aggrieved by the order passed by the Assessing Officer disallowing the claim of deduction u/s 80P(2) of the I.T.Act, the assessee preferred appeal before the first appellate authority for assessment year 2009-2010. The CIT(A) placing reliance on the judgment of the Full Bench of the Hon'ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT....
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....) ITAT, Indore - Bhee Thrift & Credit Co- operative society on 6 August, 2012 (j) ITAT, Bangalore - Yeshwantpur Credit co-operative Society on 11 April, 2012 (k) ITAT, Ahmedabad-Sarvoday Credit cum Consumers Cooperative Society on 3 May, 2013 (l) ITAT, Pune - Jain Nagri Sahkari Pat Sanstha Department Of Income Tax on 14 September, 2012 (m) ITAT, Pune - Dharasur Mardini Nagar Sahakari on 20 November, 2012 (n) ITAT, Pune - Vardhman Nagari Sahakari Path Sansta on 22 November, 2012 (o) ITAT, Delhi - Palhawas Primary Agriculture Co-op. Society Ltd. Palhawas Distt., ITA No.2368/Del/2011. (p) ITAT Delhi - Dharuhera Primary Agriculture Co-op society ITA No.2371/Del/2011. (q) ITAT, Mumbai - The Income Tax officer, Ward- 20(2)(1), Mumbai -ITA No.1820/MUM/2017 dated 02-08-2018 C. When there is plenty of decisions of various High Courts and ITATs in India had made detailed discussions and arrived into a conclusion on the subject matter of eligibility for deduction u/s 80P, disallowance of claim under the said Section made by the Assessing Officer and the CIT(Appeals) relying on related decisions is denial of natur....
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....that deduction u/s 80P is available only to Primary agricultural credit societies and not to Cooperative Banks [as prohibited u/s 80P(4) of the Act]. A primary agricultural credit Society is defined at Section 56{c) inserting a new clause at section 5 as (cciv), in the Banking Regulation Act, 1949 (Refer Para 3.6 to 3.8 of the AO's order at Page 4-5). Para 3.18 of the AO's order (at Page 10) may also be referred for understanding the nature of Cooperative Societies as per the BR Act, 1949. The primary difference between a- cooperative bank and a primary credit society is only in the case of paid up share capital and reserve (For primary Cooperative Bank - same shall not be less than Rs. 1 Lakh and for primary Credit Society - it shall be less than Rs. 1 Lakh). The primary agricultural credit society is permitted to provide financial accommodation only to its members and that too for agricultural purposes and connected activities. (Refer Para 3.11 of the AO's order - at Page 7) Para 7 to 9 of the AO's order (Pages 24-25) clearly brought out that section 80P refers only to BR Act, 1949 for definitions of cooperative bank ad primary agricultu....
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....ithout giving effect to the provisions of clause (38) of section 10 or section 1OA or section 1OB or section 10BA or Chapter V/-A exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed."p The filing of ITR in case of assessee's case is mandatory. Any deduction under Chapter VI-A is not automatic and it is subject to fulfilling of specific conditions and also subject to verification by the AO. Therefore, the assessee failed to file the ITR and can't automatically claim the operation of the provisions of the section 80P of the Act which it is not found entitled to, by the AO. Accordingly, it is humbly submitted that the action of the AO in reopening of the assessment is justified. [For further/additional details, please refer to Para 12 of Ld. CIT(A) order (pages 8-9) 3. It is further prayed to the Hon'ble Tribunal that if such cases are set aside assessee's may be asked to co....
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.... 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 Assessing Officer has to extend the benefits available, merely looking at the class of the society as per the certificate of registration issued under the Central or State Co-operative Societies Act and the Rules made thereunder. On such a claim for deduction under Section 80P of the IT Act, 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 can be extended or not in the light of the provisions under sub-section (4) of Section 80P. 33. In Chirakkal [384 ITR 490] the Division Bench held that the appellant societies having been classified as Primary Agricultural Credit Societies by the competent authority under the KCS 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 agricultu....
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....ncluded that the assessee is not entitled to deduction u/s 80P(2) of the I.T.Act. The Assessing Officer after perusing the narration of the loan extracts for the financial period 2008-2009, came to the conclusion that out of the total loan disbursement, only a minuscule portion has been advanced for agricultural purposes. The narration in loan extracts / audit reports by itself may not conclusive to prove whether loan is a agricultural loan or a non-agricultural loan. The gold loans may or may not be disbursed for the purpose of agricultural purposes. Necessarily, the A.O. had to examine the details of each loan disbursement and determine the purpose for which the loans were disbursed, i.e., whether it is for agricultural purpose or non-agricultural purpose. In this case, such a detailed examination has not been conducted by the A.O. Further, the A.O. has not examined to what extent loans, if any, has been disbursed to non-members. There is a passing statement in the assessment order that there have been disbursement of loans to non-members as well. At the time of assessment, the judgment of the Hon'ble jurisdictional High Court in the case of Chirakkal Service Cooperative Bank ....