2015 (10) TMI 2677 - AT - Income Tax

Denying deduction u/s 80P(2)(a)(i) - whether the assessee bank neither fulfills the condition of Primary Agricultural Credit Society or Primary Cooperative Agricultural & Rural Development Bank nor does it functions as a Primary Agricultural Credit Society or Primary Cooperative Agricultural & Rural Development Bank but engaged in the activity as defined in Explanation 2 to Sub-section (4) of Section 80P? - Held that - The department itself has allowed deduction U/s 80P(2)(a)(i) of the Act in A.Y. 2007-08 which has not been reopened U/s 148 and no order U/s 263 was passed by the department. The ld Dr had not brought on record any evidence that in preceding year the Assessing Officer s order in A.Y. 2007-08 had not been accepted by the department. By respectfully following the decision of Hon ble Gujarat High Court in the case of CIT Vs. Jafari Momin Vikas Cooperative Credit Society Ltd.(2014 (2) TMI 28 - GUJARAT HIGH COURT ) on identical issue we hold that the assessee is a cooperative society not a cooperative bank and is entitled for deduction U/s 80P(2)(a)(i) of the Act. Assessee s appeal is allowed

Summary

Issues:
Appeal against denial of deduction U/s 80P(2)(a)(i) of IT Act, 1961 for A.Y. 2010-11.

Detailed Analysis:
1. The assessee appealed against the order of the ld CIT(A) denying deduction of Rs. 83,67,254 U/s 80P(2)(a)(i) of the Income Tax Act, 1961. The assessee, a cooperative society engaged in banking, had claimed this deduction in its revised return but failed to provide a response to the Assessing Officer's queries. The Assessing Officer, after considering the submission, denied the deduction stating that the assessee did not meet the criteria of a Primary Agricultural Credit Society or Primary Cooperative Agricultural & Rural Development Bank as per Section 80P of the Act.

2. The ld CIT(A) upheld the Assessing Officer's decision based on previous years' rulings where similar deductions were disallowed for the assessee. The ld CIT(A) observed that the appellant was ineligible for the deduction under Section 80P post-amendment from 01/04/2007. The denial was confirmed for A.Y. 2008-09 and 2009-10 as well, leading to the disallowance of the claimed amount of Rs. 83,67,254.

3. The assessee, in its appeal before the Appellate Tribunal, argued that the Assessing Officer and ld CIT(A) had previously disallowed the deduction for the same issue in A.Y. 2008-09 and 2009-10, which was challenged and decided in favor of the assessee by the ITAT. The Tribunal noted that the assessee was a cooperative society, not a cooperative bank, and was entitled to the deduction U/s 80P(2)(a)(i) of the Act. Referring to a decision by the Hon'ble Gujarat High Court, the Tribunal allowed the appeal, citing identical circumstances to previous years.

4. The Tribunal emphasized that the department had allowed the deduction in A.Y. 2007-08 without any subsequent challenge or order under different sections. By following the precedent set by the Gujarat High Court and considering the consistent nature of the case, the Tribunal allowed the assessee's appeal, ruling in favor of the cooperative society's eligibility for the deduction U/s 80P(2)(a)(i) of the Act.

5. Consequently, the Tribunal allowed the assessee's appeal, holding that the cooperative society was entitled to the deduction U/s 80P(2)(a)(i) for A.Y. 2010-11, based on the previous decisions and legal interpretations cited during the proceedings.

This detailed analysis of the judgment highlights the key legal arguments, rulings, and interpretations made by the authorities and the Appellate Tribunal regarding the denial and subsequent allowance of the deduction under Section 80P of the Income Tax Act, 1961.