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2018 (8) TMI 1919 - AT - Income TaxDeduction u/s 80P - assessee carries on the banking business and other business in the name of a credit cooperative society - AO has disallowed the claim on the ground that deduction allowable u/s 80P(2)(a) (i) in case of cooperative society engaged in the business of banking has been withdrawn from the A.Y. 2007-08 by inserting sub-section(4) of section 80P - HELD THAT - If one has to go by the definition of co-opertive bank the assessee does not get covered thereby. That 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 aforesaid Hon ble Apex Court in the case of the Citizen Co-operative Society Ltd 2017 (8) TMI 536 - SUPREME COURT the assessee is not affected by the provisions of section 80P (4). Accordingly 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).
Issues:
1. Allowance of deduction u/s 80P to the assessee despite carrying on banking business. 2. Consideration of inserted section 80P(4) and sub-clause (viiia) to section 2(24) for deduction u/s 80P(2)(a)(i). Issue 1: Allowance of deduction u/s 80P to the assessee despite carrying on banking business: The appeal was filed by the revenue against the order passed by the Ld. Commissioner of Income Tax (Appeals), where the appellant, a cooperative credit society, claimed deduction u/s 80P(2) of the Income Tax Act, 1961. The appellant's activities were limited to its own members, and it did not provide banking facilities to the general public. The Ld. CIT (A) allowed the appeal, stating that the appellant did not qualify as a cooperative bank and was eligible for the deduction u/s 80P(2)(a)(i). The revenue contended that since the appellant was carrying on banking business, it was not entitled to the deduction u/s 80P. The Tribunal noted that the AO had disallowed the claim based on the withdrawal of deduction u/s 80P(2)(a)(i) for cooperative societies engaged in banking post A.Y. 2007-08. The Tribunal referred to a similar case and upheld the decision in favor of the assessee, concluding that the appellant, being a cooperative society and not a bank, was entitled to the deduction u/s 80P(2)(a)(i). Issue 2: Consideration of inserted section 80P(4) and sub-clause (viiia) to section 2(24) for deduction u/s 80P(2)(a)(i): The revenue argued that the Ld. CIT (A) erred in allowing the deduction u/s 80P(2)(a)(i) without considering the inserted section 80P(4) and sub-clause (viiia) to section 2(24) from the Finance Act 2006. The appellant's counsel supported the Ld. CIT (A)'s decision, stating that the appellant being a credit cooperative society, not a cooperative bank, was entitled to the deduction u/s 80P(2)(a)(i). The Tribunal analyzed the issue and referred to judgments by the Hon'ble Bombay High Court and the Hon'ble Supreme Court, which supported the appellant's position. The Tribunal upheld the Ld. CIT (A)'s order, confirming that the appellant was entitled to the deduction u/s 80P(2)(a)(i) based on the legal precedents and dismissed the revenue's appeal for the assessment year 2013-2014. In conclusion, the Tribunal dismissed the revenue's appeal, affirming the Ld. CIT (A)'s decision to allow the deduction u/s 80P(2)(a)(i) to the appellant, a cooperative credit society, based on the specific nature of its operations and legal interpretations provided by previous judgments.
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