2012 (11) TMI 1279 - AT - Income Tax

Summary

Issues:
The appeal concerns the deduction u/s 80P of the Income Tax Act, 1961 amounting to Rs. 16,55,500/- allowed by the Ld. Commissioner of Income Tax (Appeals).

Details of the Judgment:

Issue 1: Eligibility for Deduction u/s 80P
The assessee, a Primary Agriculture Co-op Society Ltd., engaged in banking activities and providing credit facilities to its members, claimed deductions u/s 80P(2)(a)(i) and u/s 80P(2)(a)(iv). The Assessing Officer questioned the eligibility of the deductions based on the acceptance of deposits from non-members. However, the Ld. Commissioner of Income Tax (A) ruled in favor of the assessee, stating that acceptance of deposits from non-members does not impact the revenue generated from providing credit facilities and supplies to members. The Commissioner distinguished the case laws relied upon by the Assessing Officer and upheld the deductions claimed by the assessee.

Issue 2: Tribunal's Decision
The ITAT, Delhi considered the submissions and precedents cited by both parties. The Tribunal noted that the Assessing Officer's proposition that accepting deposits from non-members equates to providing banking facilities to non-members was not acceptable. It was established that the revenue generated by the assessee was primarily from providing credit facilities and supplies to its members, not from deposits. Referring to relevant provisions of section 80P(2)(ii), the Tribunal emphasized that the assessee fell within the category of carrying on the business of banking and providing credit facilities to its members, making it eligible for the deductions claimed. The Tribunal upheld the order of the Ld. Commissioner of Income Tax (A) based on the discussions and precedents, dismissing the appeal filed by the Revenue.

In conclusion, the ITAT upheld the Ld. Commissioner of Income Tax (A)'s decision, confirming the eligibility of the assessee for deductions u/s 80P.