2017 (12) TMI 1741 - AT - Income Tax

Deduction u/s. 80P - HELD THAT - The issue is covered in favour of the assessee by the decision of Hon ble jurisdictional High Court in the case of Quepem Urban Co-operative Credit Society Ltd. vs. Asst. CIT 2015 (6) TMI 573 - BOMBAY HIGH COURT Issue now is squarely covered in favour of the assessee by the decision Hon ble Apex Court in Citizen Co-operative Soceity Ltd. vs. ACIT 2017 (8) TMI 536 - SUPREME COURT has expounded that if one has to go by the definition of co-operative bank the assessee does not get covered thereby. That it is also a matter of common knowledge that in order to do the business of a co-operative bank it is imperative to have a license from the Reserve Bank of India which the assessee does not possess. In the present case before me also the assessee co-operative society is not licensed from the Reserve Bank of India to act as co-operative bank. Hence as per the ratio emanating from the afore-said Hon ble Apex Court judgment the assessee is not affected by the provisions of section 80P(4). Confirm the order of the ld. Commissioner of Income Tax (Appeals) and hold that the assessee is entitled to deduction u/s. 80P(2)(a)(i). - Decided against revenue

Summary

Issues:
- Whether the ld. Commissioner of Income Tax (Appeals) erred in deleting the addition made by the Assessing Officer regarding the deduction claimed under section 80P?

Analysis:

1. The appeal was filed by the Revenue against the order of the ld. Commissioner of Income Tax (Appeals) related to the assessment year 2014-15. The main issue raised was the deletion of the addition of &8377; 43,72,710/- made by the Assessing Officer concerning the claim of deduction under section 80P by the assessee.

2. The Assessing Officer denied the assessee's claim of deduction u/s. 80P, stating that the interest received on bank deposits was not eligible for deduction under section 80P(2)(ia) and should be treated as income from other sources taxable u/s. 56. Additionally, the Assessing Officer invoked section 80P(4), categorizing the assessee as a co-operative bank.

3. The ld. Commissioner of Income Tax (Appeals) reviewed the case and deleted the addition made by the Assessing Officer. The Revenue then appealed the decision.

4. During the appeal hearing, it was noted that the issue was favorably covered for the assessee by the decision of the jurisdictional High Court in a similar case. The High Court ruling clarified that the assessee was a co-operative society and not a co-operative bank, thus entitling them to the deduction under section 80P(2)(a)(i).

5. Furthermore, the issue was found to be in favor of the assessee based on a subsequent decision by the Hon'ble Apex Court in a different case. The Apex Court emphasized the necessity of a license from the Reserve Bank of India to operate as a co-operative bank, which the assessee did not possess. Therefore, the assessee was not affected by the provisions of section 80P(4).

6. Considering the legal precedents and the discussions presented, the Appellate Tribunal confirmed the decision of the ld. Commissioner of Income Tax (Appeals) and upheld that the assessee was entitled to the deduction under section 80P(2)(a)(i). As a result, the Revenue's appeal was dismissed.