The Mavliayi Service Cooperative Bank Ltd. & Ors. vs. Commissioner of Income Tax, Calicut & Anr.

Parties Involved

Facts Summary

These appeals have been filed by co-operative societies registered as 'primary agricultural credit societies', together with one 'multi-State co-operative society', raising questions about deductions that can be claimed under section 80P(2)(a)(i) of the Income-Tax Act, 1961, particularly whether these assessees are entitled to such deductions after the introduction of section 80P(4) of the IT Act by section 19 of the Finance Act, 2006. The assessees, providing credit facilities to their members for agricultural and allied purposes, were classified as primary agricultural credit societies by the Registrar of Co-operative Societies under the Kerala Co-operative Societies Act, 1969. However, with the introduction of section 80P(4) of the IT Act, the assessing officer denied their claims for deduction, holding that the agricultural credits given by the assessee-societies to its members were negligible. The decisions of the assessing officers were challenged up to the Kerala High Court, which held that the assessees were entitled to the deductions under section 80P(2)(a)(i) read with section 80P(4) of the IT Act. However, the Department contended that the judgment was rendered per incuriam by not having noticed an earlier decision of another Division Bench of the Kerala High Court, leading to a reference order to a Full Bench of the Kerala High Court. The Full Bench held that the assessees were not entitled to any deduction under Section 80P after the advent of Section 80P(4). Bei…

Legal Issues

• 1. Whether the assessees are entitled to deductions under section 80P(2)(a)(i) of the IT Act after the introduction of section 80P(4)?

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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