Important Points:
In Chirakkal [384 ITR 490] the Division Bench expressed a divergent opinion, without noticing the law laid down in Antony Pattukulangara [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 whether 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 Cooperative Society [397 ITR 1] the law laid down by the Division Bench Perinthalmanna [363 ITR 268] has to be affirmed

ANIL K. NARENDRAN, J.

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 and going through the decisions in Perinthalmanna Service Cooperative Bank [363 ITR 268] and Chirakkal Service Co-operative 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 clue from the observations made by the Revisional Authority, which will provide an insight to the nature of enquiry and ascertainment of the factual situation. In Chirakkal, the Division 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 Act, 1949 the Division Bench held that the certificate of registration issued by the Department categorising the assessee as Primary Agricultural Credit Society could be relied on solely to grant deduction under Section 80P of the Income Tax Act.

3. Brief facts of the respective Income Tax Appeals, necessary for answering the reference, are as follows;

3.1. ITA No.97 of 2016:-The appellant, which is a Primary Agricultural Credit Society (for brevity 'PACS') registered under the Kerala Co-operative Societies Act, 1969 (for brevity 'the KCS Act') and the Rules made thereunder, i.e., the Kerala Co-operative Societies Rules, 1969 (for brevity 'the KCS Rules') is an assessee on the rolls of the Income Tax Officer, Ward-1, Kannur. The appellant has filed this appeal under Section 260A of the Income Tax Act, 1961 (for brevity 'the IT Act') challenging Annexure–C order dated 31.01.2013 of the Income Tax Appellate Tribunal, Cochin Bench in ITA No.255/Coch/2012 for the Assessment Year 2009-2010, arising out of Annexure-A assessment order dated 19.12.2011 of the Income Tax Officer, Ward-1, Kannur and Annexure-B appellate order dated 21.08.2012 of the Commissioner of Income Tax (Appeals)-II, Kozhikode.

3.2. ITA No.135 of 2016:-The appellant, which is a PACS is an assessee on the rolls of the Income Tax Offi