TaxTMI 
TaxTMI 
TaxTMI 
2020 (7) TMI 219
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....rent assessees are directed against the various orders of the CIT(A). The assessees have also preferred stay applications seeking to stay the recovery of outstanding tax arrears. 2. Since common issues are raised in these appeals, they were heard together and are being disposed of by this consolidated order. 3. The solitary issue that is raised in these appeals is whether the CIT(A) is 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. 4. The brief facts of the case are as follow: The assessees are co-operative societies registered under the Kerala Co-operative Societies Act, 1969. For the assessment years under consideration, returns were filed after claiming deduction u/s 80P of the I.T.Act. The assessment orders were passed for the relevant assessment years, wherein the Assessing Officer disallowed 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)(a)(i) of the I.T.Act was that the assessees were 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.....
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....e all the issues/grounds raised in the appeal, Therefore the said order violates the natural justice principles besides being illegal. 5. In the facts and circumstances of the case, the appellant is clearly eligible for deduction of the whole profit attributable to the activities of giving credit facilities to its members under section 80P. The denial of the said deduction by the CIT(A) is illegal, unwarranted and unreasonable. 6. The order suffers from serious legal infirmities in so far as the learned officer failed to deal with many important objections raised against the denial of deduction u/s 80P( 4) of the Act. The predisposition and the lack of application of mind are plain and glaring. There is a clear violation of natural justice in this case. 7. The learned Commissioner of Income Tax(Appeals) acted illegally while ignoring the submission of the appellant that the society falls under the definition of Co-operative credit society u/s 5 (ccii) of the Banking Regulation Act 1949. 8. It is submitted that if the department is treating the appellant as a Cooperative Bank then all the other deductions and reliefs provided to the said bank should also be made available to....
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....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 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 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 ....
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....ear is a separate unit, the intention of the legislature is in no manner defeated by not allowing deduction under Section 80P of the IT Act, by reason of sub-section (4) thereof, if the assessee society ceases to be the specified class of societies for which the deduction is provided, even if it was eligible in the initial years." 7.1 In the instant cases, the Assessing Officer had denied the claim of deduction u/s 80P of the I.T.Act for the reason that assessees were essentially doing the business of banking and disbursement of agricultural loans by the assessees was only minuscule. Therefore, the Assessing Officer's concluded that the assessees are 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 periods under consideration, 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.....