2015 (7) TMI 1239 - AT - Income Tax

Claim of deduction u/s 80P - whether CIT (A) erred in directing to allow deduction u/s 80P to the assessee even though assessee carries on the banking business and other business in the name of a credit cooperative society? - Held that - We find the judgment of the Hon ble Bombay High Court in the case of Quepem Urband Cooperative Credit Society Ltd (2015 (6) TMI 573 - BOMBAY HIGH COURT ) is relevant for the following proposition Where assessee-cooperative society could not be regarded as Co-operative Bank on, mere fact that an insignificant proposition of revenue was coming from non-members, and thus, was entitled for deduction under section 80P(2)(a)(i) of the Act. - Decided against revenue

Summary

Issues: Appeal against CIT (A) order allowing deduction u/s 80P, interpretation of cooperative society as a cooperative bank, applicability of section 80P(4) and sub clause (viia) to section 2(24), comparison with previous case laws, and consistency in applying deductions.

Analysis:
1. The appeal was filed by the Revenue against the CIT (A) order for the assessment year 2010-2011, challenging the allowance of deduction u/s 80P to the assessee, who operates a credit cooperative society alongside banking business. The Revenue contended that the CIT (A) erred in granting the deduction despite the nature of the assessee's business.

2. The relevant facts revealed that the assessee declared a total income of NIL after claiming a deduction u/s 80P of the Act. The assessment resulted in disallowance of the claimed deduction by the AO, leading the assessee to appeal before the CIT (A), where the deduction was allowed. Subsequently, the Revenue appealed to the Tribunal, emphasizing the classification of the assessee as a cooperative bank rather than a credit cooperative society.

3. The Tribunal deliberated on the primary issue of whether the assessee, a credit cooperative society, could be considered a cooperative bank for the purpose of claiming deduction u/s 80P(2)(a)(i) of the Act. The Tribunal referenced the judgment of the Hon'ble Bombay High Court in a similar case, emphasizing that a cooperative society not meeting the criteria of a cooperative bank is entitled to the deduction under section 80P(2)(a)(i) despite revenue from non-members.

4. Based on the precedent and the nature of the assessee's business, the Tribunal upheld the decision of the CIT (A) to allow the deduction u/s 80P, dismissing the Revenue's appeal. The Tribunal deemed the other grounds raised by the Revenue as argumentative and academic, leading to their dismissal without specific adjudication.

5. The Tribunal's final order pronounced on 29th July 2015 confirmed the dismissal of the Revenue's appeal, thereby affirming the allowance of deduction u/s 80P to the assessee, a credit cooperative society, in line with the legal interpretation provided by the Hon'ble Bombay High Court.

This detailed analysis outlines the key issues, arguments, legal interpretations, and the final decision rendered by the Tribunal in the referenced judgment.