2017 (10) TMI 1460 - HC - Income Tax

Deduction u/s 80P(2)(a)(i) - whether the assessee is a co- operative society or a co-operative bank? - HELD THAT - No finding is forthcoming regarding the aspect of the activities carried out by the respondent- assessee, whether as a co-operative society or not. In the absence of such factual finding, the legal propositions rendered by the Hon'ble Apex Court cannot be applied. As such, we are of the considered opinion that the matter requires reconsideration by the AO to the effect whether the assessee comes within the realm of co-operative society to get entitlement of deduction under Section 80P(2)(a)(i) of the Act. Hence, we remand the matter to the AO to answer this question and then decide the matter in the light of the judgment of the Hon'ble Apex Court in the case of Citizen Co-operative Society Limited 2017 (8) TMI 536 - SUPREME COURT as expeditiously as possible. Thus, without rendering any finding on the substantial question of law raised, order of the Income Tax Appellate Tribunal impugned herein, is set aside. We direct the Assessing Officer to reconsider the matter in the light of the observations aforesaid.

Summary

Issues:
1. Entitlement for deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961 for an assessee dealing with the general public apart from regular members.

Analysis:

Issue 1: Entitlement for Deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961
The appeal raised the question of whether the respondent-assessee, engaged in activities with the general public apart from regular members, is eligible for deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961. The Assessing Authority initially denied the deduction under Section 80P(4) of the Act. The Commissioner of Income Tax allowed the appeal, but the revenue challenged this decision before the Income Tax Appellate Tribunal. The Tribunal dismissed the appeal based on a previous judgment. The revenue argued that the respondent's activities were commercial in nature, akin to a finance business, and not that of a cooperative society, thus not qualifying for the deduction. On the other hand, the respondent contended that the determination of whether the respondent is a cooperative bank should be made by the Reserve Bank of India before applying Section 80P of the Act. The High Court noted the absence of a factual finding on the nature of activities by the respondent and remanded the matter to the Assessing Officer for reconsideration. The court emphasized the need for a determination on whether the respondent qualifies as a cooperative society to ascertain the entitlement to the deduction under Section 80P(2)(a)(i) of the Act.

This detailed analysis of the judgment highlights the core issue of entitlement to a deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961 for an assessee dealing with the general public apart from regular members. The judgment underscores the importance of determining whether the respondent qualifies as a cooperative society before deciding on the eligibility for the deduction.