2012 (4) TMI 612 - AT - Income Tax

Deduction u/s 80P(2)(a)(i) - Held that - The assessee, being a credit cooperative society is entitled to the deduction under section 80P(2)(a)(i) claimed by it. We, therefore, hold that the order of the learned CIT(A) is in accordance with law and no interference is called for therein.

Summary

Issues:
Interpretation of section 80P(2)(a)(i) of the Income Tax Act for a credit co-operative society engaged in banking activities.

Analysis:
1. The case involved the interpretation of section 80P(2)(a)(i) of the Income Tax Act for a credit co-operative society. The assessee, a credit co-operative society, filed its return of income for Assessment Year 2007-08 claiming deduction under section 80P(2)(a)(i) of the Act. The Assessing Officer denied the deduction, considering the society as carrying on banking activities affected by the amended provisions in section 80P(4) of the Act applicable at that time.

2. The Commissioner of Income Tax (Appeals) held in favor of the assessee, distinguishing between a co-operative bank and a credit co-operative society. The CIT(A) relied on a decision of ITAT, Bangalore, emphasizing that section 80P(4) applies to cooperative banks, not credit co-operative societies. The CIT(A) allowed the deduction under section 80P(2)(a)(i) for the assessee.

3. The Revenue appealed before the Appellate Tribunal challenging the CIT(A)'s decision. The Revenue contended that the assessee, being a co-operative society engaged in banking transactions, should not be granted the deduction under section 80P(2)(a)(i) as per the amended provisions. The Tribunal analyzed the provisions of section 80P(4) and the distinction between cooperative banks and cooperative societies.

4. The Tribunal observed that section 80P(4) restricts the deduction under section 80P to cooperative banks, excluding credit co-operative societies. It highlighted the differences in registration, nature of business, filing of returns, and inspection between cooperative banks and societies. The Tribunal concluded that the assessee, being a credit co-operative society, was entitled to the deduction under section 80P(2)(a)(i) as per the clarification provided by the Central Board of Direct Taxes.

5. After considering the arguments and precedents, the Tribunal upheld the CIT(A)'s decision, stating that the facts and findings in the present case were similar to the earlier case involving a credit co-operative society. The Tribunal dismissed the Revenue's appeal, affirming that the assessee was eligible for the deduction under section 80P(2)(a)(i) and that no interference was warranted in the CIT(A)'s order.

In conclusion, the Tribunal's judgment clarified the applicability of section 80P(2)(a)(i) to credit co-operative societies, distinguishing them from cooperative banks, and upheld the deduction claimed by the assessee in this case.