2021 (1) TMI 1108 - AT - Income Tax

Deduction u/s 80P - AO treated the assessee as a cooperative bank other than primary agricultural credit society and denied the claim of deduction u/s 80P - HELD THAT - As relying on decisions in the case of the appellant 2018 (6) TMI 1746 - ITAT MUMBAI and the decision of the Hon'ble High Court of Karnataka in the case of Tumkur Merchants' case 2015 (2) TMI 995 - KARNATAKA HIGH COURT it is held that the appellant is eligible for deduction u/s. 80P(2)(a)(i) in respect of the income and it is also eligible for deduction in respect of dividend income of ₹ 1,19,589/- u/s. 80P(2)(d) of the Act. The AO is directed to allow deduction u/s. 80P as claimed by the appellant and assess the total income at Rs. Nil. Ground no. 1 is allowed of assessee.

Summary

Issues:
1. Eligibility for deduction u/s 80P of the Income Tax Act, 1961 for a cooperative credit society.

Analysis:
The appeal before the Appellate Tribunal ITAT Mumbai involved the eligibility of a cooperative credit society for deduction under section 80P of the Income Tax Act, 1961. The case revolved around the classification of the assessee as a cooperative bank and the consequent denial of the deduction by the Assessing Officer (A.O) based on an amendment in the Finance Act 2006. The A.O treated the assessee as a cooperative bank other than a primary agricultural credit society, leading to the disallowance of the deduction u/s 80P of the Act.

Upon appeal by the assessee, the Commissioner of Income Tax (Appeals) - 32, Mumbai, granted relief by considering the judicial decisions and the submissions supported by financial statements. The CIT(A) relied on the assessee's own case for an earlier assessment year, where the Tribunal had dismissed the revenue's appeal. Dissatisfied with the CIT(A) order, the revenue filed an appeal before the Tribunal.

During the Tribunal proceedings, the Departmental Representative (DR) argued that the CIT(A) erred in granting relief under section 80P to the assessee, emphasizing the business activities of the cooperative society and the impact of the Finance Act 2006 amendment. The Authorized Representative (AR) supported the CIT(A)'s orders and cited previous years' decisions.

The Tribunal analyzed the disputed issue regarding the deduction u/s 80P and noted that the CIT(A) had correctly followed the decisions in the assessee's own case for the relevant assessment years. The Tribunal referred to specific paragraphs of the CIT(A) order, highlighting that the appellant was not carrying out banking business as defined under the Banking Regulation Act 1949. Relying on judicial precedents and the appellant's submissions, the Tribunal upheld the CIT(A)'s order, emphasizing the eligibility of the appellant for the deduction u/s 80P of the Act.

The Tribunal found no infirmity in the CIT(A)'s order, which considered the judicial decisions and granted relief to the assessee. Consequently, the Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision and affirming the eligibility of the cooperative credit society for the deduction u/s 80P of the Income Tax Act, 1961.