9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (10) TMI 1690 - AT - Income TaxDisallowance of deduction u/s 80P(2)(a)(i) - assessee is carrying on the business of accepting deposits and advancing loans to its members which are the primary activities of any bank whether co-operative or otherwise - 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 We also noticed that the claim of the assessee has also been decided in favour of the assessee by the Hon ble ITAT in the assessee s own case for the A.Y. 2012-13 2016 (11) TMI 1630 - ITAT MUMBAI . CIT(A) has also followed the finding of the said case in the present case also. No distinguishable material has been placed on record. CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfered with at this appellate stage. - Decided against revenue.
Issues Involved:
1. Disallowance under Section 80P(2)(a)(i) of the Income Tax Act. 2. Determination of whether the assessee is carrying on banking business. 3. Applicability of Section 80P(4) of the Income Tax Act. 4. Reliance on previous judicial decisions and their acceptance by the revenue. Detailed Analysis: 1. Disallowance under Section 80P(2)(a)(i) of the Income Tax Act: The primary issue in the appeal is whether the CIT(A) erred in deleting the addition of ?68,21,517/- on account of disallowance under Section 80P(2)(a)(i) of the Income Tax Act. The assessee had claimed this deduction in its return of income, which was subsequently disallowed by the Assessing Officer (AO) during scrutiny. The AO argued that the assessee was engaged in banking activities, thus ineligible for the deduction under Section 80P(2)(a)(i). However, the CIT(A) allowed the claim, leading to the present appeal by the revenue. 2. Determination of whether the assessee is carrying on banking business: The core argument revolves around whether the assessee is a Co-operative Bank or a Primary Co-operative Credit Society. The AO contended that the activities of accepting deposits and providing credit facilities to members were akin to banking activities, thus disqualifying the assessee from the deduction under Section 80P(2)(a)(i). The CIT(A) disagreed, stating that the assessee is a Primary Co-operative Credit Society and not a Co-operative Bank, as it only dealt with its members and did not have a banking license from the RBI. This distinction is crucial because if the assessee were deemed a Co-operative Bank, it would be excluded from the benefits of Section 80P(2)(a)(i) due to Section 80P(4). 3. Applicability of Section 80P(4) of the Income Tax Act: Section 80P(4) excludes Co-operative Banks from claiming deductions under Section 80P(2)(a)(i). The CIT(A) found that the assessee did not meet the criteria of a Co-operative Bank as defined under the Banking Regulation Act, 1949. Specifically, the assessee did not have a principal business of banking, did not possess a banking license, and its bye-laws did not prohibit the admission of other co-operative societies as members. Thus, the CIT(A) concluded that Section 80P(4) was not applicable, and the assessee was eligible for the deduction under Section 80P(2)(a)(i). 4. Reliance on previous judicial decisions and their acceptance by the revenue: The CIT(A) relied on the decision of the Bombay High Court in the case of Quepem Urban Co-operative Credit Society Ltd., which held that a co-operative society providing credit facilities to its members and not carrying on banking business is entitled to deductions under Section 80P(2)(a)(i). The CIT(A) also referred to the ITAT's decision in the assessee's own case for the A.Y. 2012-13, which supported the assessee's claim. The revenue argued that these decisions were not accepted on merits and that a Special Leave Petition (SLP) was filed against the Bombay High Court's judgment. However, no new material or distinguishing facts were presented to counter the CIT(A)'s findings. Conclusion: Upon reviewing the CIT(A)'s findings and the relevant judicial precedents, the ITAT upheld the CIT(A)'s decision, concluding that the assessee was not engaged in banking business and was eligible for the deduction under Section 80P(2)(a)(i). The appeal by the revenue was dismissed, affirming the CIT(A)'s order. Order: The appeal filed by the revenue is dismissed. Order pronounced in the open court on 31.10.2018.
|
