2015 (12) TMI 1648 - AT - Income Tax

Entitled to the exemption u/s 80P(2)(a)(i) - Held that - There is no dispute that the assessee is a co-operative credit society registered under the Karnataka State Cooperative Societies Acct, 1959. The income earned by the assessee during the year is from the activity of providing credit facilities to its members. Therefore, the case of the assessee is covered by the judgment of the Hon ble jurisdictional High Court in the case of CIT Vs Sri Biluru Gurubasava Pattina Sahakari Sangh Niyamit, Supra 2015 (1) TMI 821 - KARNATAKA HIGH COURT wherein held that when the status of the assessee is a Co-operative society and is not a Co- operative bank, the order passed by the Assessing Authority extending the benefit of exemption from payment of tax under Section 80P(2)(a)(i) of the Act is correct. - Decided in favour of assessee

Summary

Issues:
Interpretation of provisions of section 80P(2)(a)(i) of the Income Tax Act, 1961 for a cooperative society engaged in banking business.

Analysis:
The appeal by the revenue was against the order of the CIT(A) for the assessment year 2012-13 concerning the eligibility of a cooperative society for deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961. The revenue contended that the assessee, a cooperative society, fulfilled the conditions of being a Primary Co-operative Bank as per the Banking Regulation Act, 1949, and thus, was not eligible for the deduction. The AO had denied the deduction under section 80P on the basis that the assessee was a cooperative bank. However, the CIT(A) allowed the claim of the assessee by relying on the judgment of the jurisdictional High Court in a similar case. The Tribunal noted that an identical issue had been considered in the assessee's case for the previous assessment year, where it was held that the assessee, a cooperative credit society providing credit facilities to its members, was entitled to the deduction under section 80P(2)(a)(i). The Tribunal further referenced the judgment of the High Court, emphasizing that a cooperative society not exclusively engaged in banking business and not registered with the RBI as a bank was entitled to the exemption under section 80P(2)(a)(i) of the IT Act. Consequently, the Tribunal upheld the decision of the CIT(A) and dismissed the appeal of the revenue, affirming the eligibility of the cooperative society for the deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961.