2016 (11) TMI 1630 - AT - Income Tax

Disallowance u/s 80P - income earned on providing credit facilities to its members as provided under Section 80P(2)(a)(i) - HELD THAT - Assessee society was not doing the banking business having no licence from RBI therefore the claim of the assessee was not hit by the provision of Section 80P(4). CIT(A) while deciding the matter of controversy relied upon the decision of Bombay High Court in the case of Quepem Urban Co-operative Credit Society Ltd. 2015 (6) TMI 573 - BOMBAY HIGH COURT and KALPADI CO-OPERATIVE TOWNSHIP LIMITED 2016 (9) TMI 952 - MADRAS HIGH COURT

Summary

Issues:
- Disallowance of deduction claimed under section 80P(2)(a)(i) by the Appellant.

Detailed Analysis:
1. The appeal was directed by the revenue against the order of Commissioner (Appeals) for AY 2012-13, questioning the disallowance of a deduction claimed by the Cooperative Credit Society under section 80P(2)(a)(i). The AO disallowed the claim, but the Commissioner (Appeals) allowed it, leading to the revenue's appeal.

2. The revenue contended that the society's activities were akin to a bank's primary activities, justifying the disallowance. On the other hand, the Appellant argued that various High Court decisions supported their claim for the deduction under section 80P(2)(a)(i), including the decision in Quepem Urban Co-operative Credit Society Ltd (2015) and CIT versus Kalpadi Co-operative Township Ltd [2016].

3. The Commissioner (Appeals) relied on the definition of a Cooperative Bank under the Banking Regulation Act to determine if the Appellant qualified as a primary Cooperative Bank. The Commissioner found that the Appellant did not meet the conditions to be classified as a primary Cooperative Bank, therefore, was entitled to the deduction under section 80P(2)(a)(i).

4. The Madras High Court's decision in CIT versus Kalpadi Co-operative Township Ltd further supported the Appellant's entitlement to the deduction under section 80P(2)(a)(i). The judgment emphasized that the Appellant, as a Cooperative Credit Society, did not meet the criteria of a Cooperative Bank and was eligible for the deduction.

5. The Tribunal found that the decisions of the jurisdictional High Court and the Madras High Court were applicable to the present case, confirming the Appellant's entitlement to the deductions claimed under section 80P(2)(a)(i). Consequently, the Tribunal dismissed the revenue's appeal, upholding the order passed by the Commissioner (Appeals).

This detailed analysis outlines the key arguments, legal interpretations, and judgments that led to the Tribunal's decision in favor of the Appellant regarding the disallowance of the deduction claimed under section 80P(2)(a)(i).