2018 (7) TMI 1990 - AT - Income Tax

Deduction u/s. 80P(2)(a)(i) - as per AO assessee was primarily engaged in the business of banking and therefore, in view of the provisions of section 80P(4) which was inserted with effect from 01.04.2007, the assessee was not entitled to deduction - entitlement for exemption under section 80P, ignoring the fact that the assessee is a primary agricultural credit society? - HELD THAT - The bye-laws of each of the appellants do not permit admission of any other co-operative society as member, except may be, in accordance with the proviso to sub-clause 2 of section 5(cciv) of the BR Act. The different orders of the Tribunal which are impeached in these appeals do not contain any finding of fact to the effect that the bye- laws of any of the appellant or its classification by the competent authority under the KCS Act is anything different from what we have stated herein above. For this reason, it cannot but be held that the appellants are entitled to exemption from the provisions of section 80P by virtue of sub- section 4 of that sect; on. In view of the judgment of Chirakkal Service Co-op Bank Ltd. 2016 (4) TMI 826 - KERALA HIGH COURT we hold that the assessee-Society is entitled to the benefit of deduction u/s. 80P(2) - Decided against revenue.

Summary

Issues Involved:
1. Entitlement to deduction u/s. 80P(2)(a)(i) of the I.T.Act.

Analysis:
The judgment by the Appellate Tribunal ITAT COCHIN involved the issue of whether the assessee, a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969, is entitled to deduction u/s. 80P(2)(a)(i) of the I.T.Act for the assessment year 2014-2015. The Assessing Officer had denied the deduction on the grounds that the assessee was primarily engaged in banking activities, falling under section 80P(4) of the I.T. Act. However, the CIT(A), relying on the judgment of the Jurisdictional High Court, held that the assessee was indeed entitled to the deduction under section 80P(2) of the Act.

The Tribunal noted that the Hon'ble High Court of Kerala in the case of Chirakkal Service Co-op Bank Ltd. had previously held that primary agricultural credit societies registered under the Kerala Cooperative Societies Act, 1969 are eligible for the benefit of deduction u/s. 80P(2). The High Court emphasized that the societies' classification as primary agricultural credit societies under the State law indicated their principal objective of engaging in agricultural credit activities and providing loans for agricultural purposes. The Tribunal, in alignment with this precedent, held that the assessee-Society, being similarly classified, was entitled to the deduction u/s. 80P(2) of the Act.

Therefore, based on the legal interpretation and precedent set by the Hon'ble High Court, the Appellate Tribunal ITAT COCHIN concluded that the assessee-Society was indeed entitled to the benefit of deduction u/s. 80P(2) of the I.T. Act for the relevant assessment year. Consequently, the appeal filed by the Revenue challenging this entitlement was dismissed by the Tribunal.