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AO is not obliged to grant deduction u/s 80P by merely looking at the certificate of registration
The Mavilayi Service Co-operative Bank Ltd vs. CIT (Kerala High Court) (Full Bench)
AO is not obliged to grant deduction by merely looking at the certificate of registration issued by the competent authority under the Co-op Societies Act. Instead, he has to conduct an enquiry into the factual situation as to the activities of the assessee and arrive at a conclusion whether benefits can be extended or not. Chirakkal 384 ITR 490 (Ker) overruled. Antony Pattukulangara 2012 (3) KHC 726 & Perinthalmanna 363 ITR 268 (Ker) approved. Citizen Co-operative Society 397 ITR 1 (SC) followed)
This batch of Income Tax Appeals are listed before the Full Bench, after obtaining orders from the Hon’ble Acting Chief ,Justice, based on a reference order dated 09.07.2018 of the Division Bench. One of the substantial questions of law raised in these appeals Is as to whether the respective assessees are eligible for exemption under Section 80P of the Income Tax Act, 1961, after the introduction of sub-section (4) thereof.
2. Before the Division Bench, the assessees contended that the issue is covered by the decision of a Division Bench of this Court in Chirakkal Service Co-operative Bank ltd. v. Commissioner of Income Tax [(2016) 384 ITR 490 (Ker)]. On the other, hand, the Revenue contended that the aforesaid decision was rendered without noticing the decision of yet another Division Bench in Perinthalmanna Service Co-operative Bank Ltd. v. Income Tax Officer and another [(2014) 363 ITR 268 (Ker)].
A reading of the order of reference would show that the learned Senior Counsel/learned counsel for the assessees raised certain grounds to dissuade the Division Bench from referring the issue to a Larger Bench. After considering those contentions the decisions in Perinthalmanlla Service Cooperative Bank [363 ITR 268] and Chirakkal Service Cooperative Bank [384 ITR 490], the Division Bench referred the matter to be placed before the Larger Bench, relying on the judgment of the Apex Court in Assistant Commissioner of Income Tax v. Victory Aqua Farm Ltd [(2015) 280 CTR 32 (SC)].
The Division Bench noticed that there is divergence of opinion expressed by the two Division Benches in Perinthalmanna [363 ITR 268] and Chirakkal [384 ITR 490]. In Perinthalmanna the action of the Assessing Officer in having extended the benefit of deduction under Section 80P of the Income Tax Act, by reasons of sub-section (4) thereof, by merely looking at the registration certificate under the Kerala Co-operative Societies Act, 1969 and the nomenclature given by the Department of Co-operative Societies was the subject of suo motu revision and the revisional order was approved by the Division Bench and it was also held that the Assessing Officer has to complete assessment taking due from the observations made by the Revislonal Authority, which will provide an Insight to the nature of enquiry and ascertainment of the factual situation.
In Chirakkal, the Divjsion Bench did not notice the earlier judgment in Perinthalmanna. After referring to the provisions under the Kerala Co-operative Societies Act and the Banking Regulation Actl 1949 the Division Bench held that the certificate of registration issued by the Department categorizing the assessee as Primary Agricultural Credit Society could be reIied on solely to grant deduction under Section 80P of the Income Tax Act.