M/s.Mugu Service Co-op Bank Ltd, Kasargode V. The iTO, Kasargode

ITA 355/COCH/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4666 (ITAT-COCHIN)
• Duration Of Justice: 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-10-2020
• Assessment Year: 2017-2018
• Appeal Filed On: 28-09-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAJJIV
• Assessee Lawyers: T M SREEDHARAN
• Keywords: Application of stay; Competent authority; Set aside
• Section: 80P; 201; 13; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI CHANDRA POOJARI, AM & SHRI GEORGE MATHAN, JM ITA NO. 355 / COCH / 2020 (ASSESSMENT YEAR: 201 7 - 1 8 ) SA NO. 194 / COCH / 2020 (ASSESSMENT YEAR: 201 7 - 1 8 ) M/S. MUGU SERVICE CO - OPERATIVE BANK LTD. MUGU P.O., PUTHIGE KASARAGOD 671321 VS. INCOME TAX OFFICER, WARD - 1 & TPS KASARAGOD PAN AACAM7915R APPELLANT RESPONDENT APPELLANT BY: SHRI T.M. SREEDHARAN RESPONDENT BY: SHRI B. SAJJIV, SR. DR DATE OF HEARING: 2 1 . 10 .2020 DATE OF PRONOUNCEMENT: 2 1 . 10 .2020 O R D E R PER BENCH : THESE APPEAL AT THE INSTANCE OF THE ASSESSEE IS DIRECTED AGAINST THE ORDERS OF THE CIT(A), DATED 08 .0 9 .2020. THE ASSESSEE HAS ALSO PREFERR ED STAY APPLICATION SEEKING TO STAY THE RECOVERY OF OUTSTANDING TAX ARREAR S. THE RELEVANT ASSESSMENT YEAR IS 201 7 - 1 8 . 2. THE SOLITARY ISSUE RAISED IS WHETHER THE CIT(A) IS JUSTIFIED IN CONFIRMING THE ASSESSING OFFICERS ORDER IN DENYING THE CLAIM OF DEDUCTION U/S 80P(2) OF THE I.T. ACT. 3. THE BRIEF FACTS OF THE CASE ARE AS FOLLOW: THE ASSESSEE IS A CO - OPERATIVE SOCIETY R EGISTERED UNDER THE KERALA CO - OPERATIVE SOCIETIES ACT, 1969. FOR THE ASSESSMENT YEAR 201 7 - 1 8 , RETURN WAS FILED AFTER CLAIMING DEDUCTION U/S 80P OF THE I.T. ACT. THE ASSESSMENT ITA NO. 355 / COCH / 2020 SA NO. 194 / COCH / 2020 M/S. MUGU SERVICE CO - OPERATIVE BANK LTD. 2 ORDER WAS PASSED FOR THE RELEVANT ASSESSMENT YEARS, WHEREIN THE ASSESSING OFFICE R DISALLOWED THE CLAIM OF DE DUCTION U/S 80P OF THE I.T. ACT BY PASSING ORDER U/S 154 OF THE 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 ASSESSEE WAS ESSENTIALLY DOING THE BUSI NESS 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. 4. AGGRIEVED BY THE ORDER PASSED BY THE ASSESSING OFFICER DISALLOWI NG THE CLAIM OF DEDUCTION U/S 80P(2) OF THE I.T. ACT, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE CIT(A) PLACING RELIANCE ON THE JUDGMENT OF THE FULL BENCH OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THE MAVILAYI SER VICE CO - OPERATIVE BANK LTD. V. CIT [(2019) 414 ITR 67 (KER.) (FB) (HC)] HELD THAT THE ASSESSING OFFICER HAD MADE ELABORATE FINDINGS AND HAS COME TO A FACTUAL FINDING THAT AGRICULTURAL CREDIT PROVIDED BY THE ASSESSEE IS ONLY MINUSCULE AND ASSESSEE CANNOT B E TERMED AS PRIMARY AGRICULTURAL CREDIT SOCIETY. ACCORDINGLY DISALLOWANCE OF CLAIM OF DEDUCTION U/S 80P OF THE I.T. ACT MADE BY THE ASSESSING OFFICER WAS UPHELD BY THE CIT(A). IN THE RESULT THE APPEAL FILED BY THE ASSESSEE WAS REJECTED BY THE CIT(A) FOR AS SESSMENT YEARS 2014 - 2015 AND 2015 - 2016. 5. AGGRIEVED BY THE ORDER PASSED BY THE CIT(A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL, RAISING FOLLOWING GROUNDS : - 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX ( A PP E A L S ) , KOZH I KODE , I N I . T . A . NO . 11113/2019 - 20 DATED 8.09.2020 FOR THE A S S E SSMENT YEAR 2017 - - 18 I S OPPOSED TO LAW , FACTS & CIRCUMSTANCES OF THE C A S E . 2. THE CIT(A) WENT WRONG IN SUSTAINING THE GROSS TOT A L I NCOME ASSESSED AS PER THE ASSESSMENT ORDER DATED 13 . 12 . 2019 . 3. THE CIT(A) WENT WRONG IN HIS FINDING THAT THE APP ELL A NT IS NOT E LI GIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE INCOME TAX ACT . IN THIS CONNECTION , IT IS RESPECTFULLY SUBMITTED THAT THE ASSESSING OFFICER AN D THE CIT(A) SHOULD HAVE HELD THAT THE APPELLANT IS A PRIMA R Y AGRICU LTURAL CREDIT SOCIETY(PACS) AND IS GOVERNED BY THE KERALA CO - OP ERATIVE SOCIETIES ACT , 1969. ITA NO. 355 / COCH / 2020 SA NO. 194 / COCH / 2020 M/S. MUGU SERVICE CO - OPERATIVE BANK LTD. 3 4. THE APPELLATE AUTHORITY SHOULD HAVE FOUND TH AT THE EXC L USION FROM EXEMPTION AS PER SUB SEC . (4) OF SEC.80P W OUL D NOT APP L Y TO THE APPELLANT , SINCE THE APPELLANT IS A PRIMARY AGRICULT U R AL CREDIT SOCIETY. 5. IN THIS CONNECTION , THE APPE L LANT RESPECTFULLY SUBM ITS T HAT THE APPE L LANT IS A CO - OPERATIVE SOCIETY REGISTERED UNDER T H E KERA L A CO - OPERAT I VE SOCIETIES ACT 1969 . THE A R EA OF OPERATION OF TH E S O C I ETY I S MUGU V I LLAGE F R OM THE TIME OF ITS INCEPTION . THE PRINCIPAL OB JEC T OF T HE SOC I ETY I S TO PROVIDE SHORT TERM AND MEDIUM TERM LOAN FOR VARI O US AGRICULTURA L PU R POSES TO I TS MEMBERS , SUCH AS PROCUREMENT OF SEEDS , M A NURE , PESTICIDES AND AGRICULTURAL IMPEDIMENTS ETC. THE DEALING S OF THE S O CIETY ARE WITH ITS OWN M E M BE R S . THE SOCIETY HAS BEEN ENJOYING THE EX E M P TIONS AND DEDUCTIONS AS P E R SECT I ON 80P OF THE ACT I N THE PAST . 6. FOR TH E ASSESSMENT YEAR 20 1 1 - 12 , THE DEDUCT I O N U / S 80P ( 2 ) WAS DEN I ED B Y T H E ASSESS I NG OFF I CER . HOWEVER , THE INCOME T A X APPE LL ATE TR I BUNA L , COCH I N BENCH AS PER ITA NO . 68/C/2015 DATED 1 7. 8 . 2016 ACCEPTED THE C L AIM FOR EXEMPT I ON/DEDUCT I ON AND ALSO THE CLA I M T H AT THE ASSESSEE IS A PRIMARY AGR I CULTURAL CREDIT SOCIETY. THE CERTIFIC A TE OF REG I STRATION ISSUED UNDER T HE KERALA CO - OPERAT I VE SOCIETIES ACT A ND BYE - LAWS WERE ALSO CONS I DERED TO COME TO THE CONCLUSION THAT TH E A S SESSEE IS A PRIMARY AGRICULTURAL CREDIT SOCIETY AND PROVIDING AGRICU L TU R AL CREDIT FACILITY TO ITS MEMBERS. 7. IN THIS CONNECTION , I T IS ALSO SUBMITTED THAT THE P E OPL E OF MUGU V I LLAGE ARE BASICALLY AGRICULTUR I STS AND ARE MEMBERS OF THE S O C IE TY . T HE PEOPLE OF THE V I L L AGE ARE AGRICULTURISTS. THE PRINCIPAL OBJEC T IS TO LEND MONEY FOR AGR I CULTURE AND RURAL DEVELOPMENT ACTIVITY IN THE AR EA . THE ASSESSEE IS LENDING MONEY FOR THE AGRICULTURE AND RURAL DEV E L O P MENT ACT I VIT I ES OF THE AREA. GRANTING OF LOANS TO ITS MEMBERS IS FOR AGR I CULTURA L PURPOSES , AS ALSO SOMETIMES, ON THE STRENGTH OF PERSONAL SEC URITY , JEWEL LOAN ETC. LOANS ARE GIVEN FOR RURAL DEVELOPMENT AN D SU CH OTHER PERMISSIBLE ACTIVITIES AT CONCESSIONAL RATE OF INTEREST T O ITS MEMBERS . RURAL DEVELOPMENT ALSO INCLUDES EDUCATION , MEDI C AL FACILITY , EMPLOYMENT , HOUSING AND UPLIFTMENT OF POPULATION OF THE AREA AN D OTHER DEVELOPMENTA L ACTIVITIES OF THE LOCALIT Y TO BE PERFORMED BY THE M E M B ERS OF THE SOCIETY . 8. IT IS ALSO RESPECTFULLY SUBMITTED THAT SECTION BO P O F THE ACT PROVIDES FOR DEDUCTION FROM GROSS TOTAL I NCOME , INCOME REFER R ED T O IN SUB SECTION (2) OF SECTION BOP , IN ACCORDANCE WITH AND SUBJECT TO T HE P ROV I SIONS OF SECTION IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE . 9. CLAUSE A(1) AND SUB SECTION ( 2) PROVIDES FOR DE D U C TI ON OF THE I NCOME FROM CARRYING ON BUSINESS OF BANKING OR PROVIDING CRE D I T F ACILITIES TO ITS MEMBERS AS WELL AS ANY OTHER INCOME FALLING UN DER SUB CL A US ES (I I ) , ( II I) , (I V) , (V) , (VI) AND (VII ) . ITA NO. 355 / COCH / 2020 SA NO. 194 / COCH / 2020 M/S. MUGU SERVICE CO - OPERATIVE BANK LTD. 4 10. SU B SECT I ON ( 4) OF BOP RESTRICTS THE CLAIM FOR D EDU CTION TO A CO - OPERATIVE B A NK , OTHER THAN A PRIMA R Y AGRICULTURAL CRED IT S OCIETY O R PRIMARY CO - OPER A TI VE AGR I CULTU R AL AND RURAL DEVELOPMENT B ANK . 11. THE CIT( A ) A L SO FA I LED TO CONSIDER THAT IN PART - V O F T HE BANK I NG REGULATION ACT , 19 4 9 , A ' P R IMARY AGRICULTURAL CREDIT SOCIET Y ' W HOSE PRIMARY OBJECT OR P RIN C I PA L B U SINESS , IS ( I) TO PROVIDE FINANCI A L ACCOMMODATION TO ITS MEMBE R S FO R AGR I CULTURAL PURPOSES OR FOR THE PU R POSES CONNECTED WITH AGRICULTURAL ACT I VIT I ES , INCLUDING THE MARKETING O F C ROPS ; AND (II) THE BYE - L AWS OF WHICH DO NOT PERMIT ADMISSION OF ANY O T H ER CO - OPERATIVE SOCIETY AS A MEMBER ARE ELIGIBLE FOR EXEMPTION/DEDUCT ION . THES E PROVISIONS WERE HIGHLIGHTED BEFORE THE CIT ( A ) , WHO HAS FAILED TO A PPRECIATE AND CONSIDE R THE ABOVE GROUNDS JUDICIOUS LY . 12. A PERUSAL OF THE ORDER OF THE CIT(A) , WOULD ALSO S H O W THAT THE IMPUG N E D ORDER PASSED BY HIM IS MECHANICALLY AND WITHOUT A P PLICATION O F M IN D A N D HENCE, LIABLE TO BE SET ASIDE . 13. KIND ATTENTION OF THIS HON ' BLE TRIBUNAL IS ALSO INV IT ED TO THE CBDT CIRCULAR NO . 133 OF 2007 DATED 9.05.2007 EXPLAINING THE S CO PE OF SUB SEC . (4) OF SEC.80P. IT WAS CLARIFIED THAT SEC . 80P(4) WILL EX CL U DE ONLY CO - OPE RATIVE BANKS WHICH ARE NOT CREDIT SOCIETIES. SO MUCH S O , CREDIT CO - OPERATIVE SOCIETIES, WHICH ARE NOT CO - OPERATIVE BANKS ARE NO T EXCLUDED UNDER SUB SEC.(4) OF SEC.80P AND THAT SUB SECTION WOULD NO T A PPLY . 14. THIS HON'BLE APPELLATE TRIBUNAL HAS TAKEN A DEC IS I O N , IN THE CASE OF M/ S PATTAMBI SERVICE CO - OPERATIVE BANK LTD., IN FAV O UR OF THE SOCIETY UNDER SIMILAR CIRCUMSTANCES AND THE SAME PRINCIPLE I S APPLICABLE TO THE ASSESSEE'S CASE VIDE I . T . A . NO.97/COCH/2020 AND SI MILAR OTHER CONNECTED APPEALS. 15. THE APPELLANT HUMBLY PRAYS THAT THE GROUNDS OF A P P EAL BEFORE THE CIT(A) , MAY KINDLY BE TREATED AS PART OF THESE GROUNDS. 16. THE APPELLANT CRAVES LEAVE TO RAISE ADDITIONAL GR O UNDS AT THE TIME OF HEARING . FOR THESE AND OTHER GROUNDS THAT MAY B E URGED AT THE TIME OF H EA RI NG , THE APPELLANT HUMBLY PRAYS THAT THE H ON ' BLE INCOME TAX A P P E LL ATE TRIBUNAL , COCHIN BENCH , COCHIN , MAY K IN DLY BE PLEASED TO SET AS I DE THE ORDER OF THE CIT(A) , KOZHIKODE , IN I . T . A . N O .11113/2019 - 20 DATED 8 . 09 . 2020 AND THE ORDER OF THE ASSESSING O FFI C ER DATED 13 . 12 . 2019, ALLOW THE APPEAL AND RENDER JUSTICE . 5.1 THE LEARNED AR RELIED ON THE GROUNDS RAISED. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, STRONGLY SUPPORTED THE ORDERS PASSED BY THE INCOME TAX AUTHORITIES . ITA NO. 355 / COCH / 2020 SA NO. 194 / COCH / 2020 M/S. MUGU SERVICE CO - OPERATIVE BANK LTD. 5 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CHIRAKKAL SERVICE CO - OPERATIVE CO - OPERATIVE BANK LTD. V. CIT [(2016) 384 ITR 490 (KER.)] HAD HELD THAT WHEN A CERTIFICATE HAS BEEN ISSUED TO AN ASSESSEE BY THE REGISTRAR OF CO - OPERATIVE SOCIETIES CHARACTERIZING 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. H OWEVER, THE FULL BENCH OF THE HONBLE KERALA HIGH COURT IN THE CASE OF THE MAVILAYI SERVICE CO - OPERATIVE BANK LTD. V. CIT (SUPRA) HAD REVERSED THE ABOVE FINDINGS OF THE HONBLE KERALA HIGH COURT IN THE CASE OF CHIRAKKAL SERVICE CO - OPERATIVE CO - OPERATIVE BA NK LTD. V. CIT (SUPRA) . THE LARGER BENCH OF THE HONBLE 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 HELD BY THE HONBLE HIGH COURT THAT THE ASSESSING OFFICER IS NOT BOUND BY THE REGISTRATION CERTIFICATE ISSUED BY THE REGISTRAR OF KERALA CO - OPERATIVE SOCIETY CLA SSIFYING THE ASSESSEE - SOCIETY AS A CO - OPERATIVE SOCIETY. THE HONBLE 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 H ONBLE 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 T HE 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 SOCIE TIES 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. ITA NO. 355 / COCH / 2020 SA NO. 194 / COCH / 2020 M/S. MUGU SERVICE CO - OPERATIVE BANK LTD. 6 33. IN CHIRAKKAL [384 ITR 490] THE DIVISION BENCH HELD THAT THE APPELLANT SOCIETIES HAVING BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CREDIT SOCIETIE S 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 AGRICULTURAL PURPOSES, THE RATE OF INTEREST ON SU CH 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 - SECTI ON (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 R EGISTERED AS SUCH UNDER THE KCS ACT 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 PA TTUKULANGARA [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 WH ETHER BENEFITS CAN BE EXTENDED OR NOT IN THE LIGHT OF THE PROVISIONS UNDER SUB - SECTION (4) OF SECTION 80P OF THE IT ACT. IN VIEW OF THE LAW LAID DOWN BY THE APEX COURT IN CITIZEN CO - OPERATIVE SOCIETY [397 ITR 1] THE LAW LAID DOWN BY THE DIVISION BENCH ERIN THALMANNA [363 ITR 268] HAS TO BE AFFIRMED AND WE DO SO. 35. IN VIEW OF THE LAW LAID DOWN BY THE APEX COURT IN ACE MULTI AXES SYSTEMS CASE (SUPRA), SINCE EACH ASSESSMENT YEAR IS A SEPARATE UNIT, THE INTENTION OF THE LEGISLATURE IS IN NO MANNER DEFEATED B Y 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. 6.1 I N THE INSTANT CASE, THE ASSESSING OFFICER HAD DENIED THE CLAIM OF DEDUCTION U/S 80P OF THE I.T. ACT FOR THE REASON THAT ASSESSEE WAS ESSENTIALLY DOING THE BUSINESS OF BANKING AND DISBURSEMENT OF AGRICULTURAL ITA NO. 355 / COCH / 2020 SA NO. 194 / COCH / 2020 M/S. MUGU SERVICE CO - OPERATIVE BANK LTD. 7 LOANS BY THE ASSESSEE WAS ONLY MINUSCULE. THEREF ORE, THE ASSESSING OFFICER CONCLUDED 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 PERIODS UNDER CONSIDERATION, CAME TO THE CONCLUSION T HAT 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 LOA N. 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 AGRICUL TURAL PURPOSE OR NON - AGRICULTURAL PURPOSE. IN THIS CASE, SUCH A DETAILED EXAMINATION HAS NOT BEEN CONDUCTED BY THE A.OS. IN THE LIGHT OF THE DICTUM LAID DOWN BY THE FULL BENCH OF THE HONBLE KERALA HIGH COURT IN THE CASE OF THE MAVILAYI SERVICE CO - OPERATI VE BANK LTD. V. CIT (SUPRA), WE ARE OF THE VIEW THAT THERE SHOULD BE FRESH EXAMINATION BY THE ASSESSING OFFICER AS REGARDS THE NATURE OF EACH LOAN DISBURSEMENT AND PURPOSE FOR WHICH IT HAS BEEN DISBURSED, I.E., WHETHER IT FOR AGRICULTURAL PURPOSE OR NOT. T HE A.O. SHALL LIST OUT THE INSTANCES WHERE LOANS HAVE DISBURSED FOR NON - AGRICULTURAL PURPOSES AND ACCORDINGLY CONCLUDE THAT THE ASSESSEES ACTIVITIES ARE NOT IN COMPLIANCE WITH THE ACTIVITIES OF PRIMARY AGRICULTURAL CREDIT SOCIETY FUNCTIONING UNDER THE KER ALA CO - OPERATIVE SOCIETIES ACT, 1969, BEFORE DENYING THE CLAIM OF DEDUCTION U/S 80P(2) OF THE I.T. ACT. FOR THE ABOVE SAID PURPOSE, THE ISSUE RAISED IN THIS APPEAL IS RESTORED TO THE FILES OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL EXAMINE THE A CTIVITIES OF THE ASSESSEE - SOCIETY BY FOLLOWING THE DICTUM LAID DOWN BY THE FULL BENCH OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THE MAVILAYI SERVICE CO - OPERATIVE BANK LTD. V. CIT (SUPRA) AND SHALL TAKE A DECISION IN ACCORDANCE WITH LAW. NEEDL ESS TO STATE, THE ASSESSEE SHALL CO - OPERATE WITH THE A.O. AND SHALL FURNISH THE NECESSARY DETAILS CALLED FOR. FURTHER, THE ASSESSEE SHALL NOT SEEK UNNECESSARY ADJOURNMENT. IT IS ORDERED ACCORDINGLY. ITA NO. 355 / COCH / 2020 SA NO. 194 / COCH / 2020 M/S. MUGU SERVICE CO - OPERATIVE BANK LTD. 8 7. SINCE WE HAVE DISPOSED OF THE APPEAL , THE STAY APPLIC ATION FILED BY THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PU RPOSES AND THE STAY APPLICATION IS DISMISSED. ORDER PRONOUNCED ON THIS 2 1 ST DAY OF OCTOBER, 2020. SD/ - SD/ - ( GEORGE MATHAN ) ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNTANT MEMBER COCHIN , DATED: 2 1 ST OCTOBER, 2020 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) - KOZHIKODE 4. THE PR. CIT - KOZHIKODE 5. THE DR, ITAT, COCHIN 6. GUARD FILE BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, COCHIN N.P