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2021 (3) TMI 1352 - AT - Income TaxDeduction u/s 80P - HELD THAT - A perusal of the decision of the Hon'ble Supreme Court in the case of The Mavilayi Service Co-operative Bank Ltd. 2019 (3) TMI 1580 - KERALA HIGH COURT clearly shows that the Hon'ble Supreme Court has set aside the decision of the Full Bench of the Hon'ble Kerala High Court in the case of The Mavilayi Service Co-operative Bank Ltd. (supra). Hon'ble Supreme Court has also further explained the decision in the case of Citizen Co-operative Society Ltd. in so far as the deduction that is given without any reference to any restriction or limitation cannot be restricted or limited by implication. In the circumstances in respectful obedience to the principles laid down by the Hon'ble Supreme Court in the case of The Mavilayi Service Co-operative Bank Ltd. (supra) the AO is directed to grant the assessee the benefit of deduction under Section 80P as claimed.
Issues involved:
Appeal against denial of deduction under Section 80P for a Credit Cooperative Bank's returns for AY 2009-10 & 2014-15. Analysis: The appeal was filed by the assessee against the order of the CIT(A) denying deduction under Section 80P for a Credit Cooperative Bank registered under the Kerala Cooperative Act. The denial was based on the bank not providing financial accommodation for agricultural purposes to its members. The CIT(A) upheld the denial, citing a decision of the Kerala High Court. However, the assessee argued before the Tribunal that the Kerala High Court's decision was set aside by the Supreme Court, emphasizing that Section 80P should be interpreted liberally in favor of the assessee. The Supreme Court held that the provision should be read liberally, and any ambiguity should benefit the assessee. It clarified that the deduction cannot be restricted by implication and that cooperative banks engaged in lending money to the public are entitled to the deduction under Section 80P. Loans to nominal members under the Kerala Act also qualify for the deduction. The Tribunal, following the Supreme Court's decision, directed the AO to grant the assessee the benefit of deduction under Section 80P. The Tribunal noted that the Supreme Court set aside the Kerala High Court's decision and emphasized that deductions under Section 80P should not be restricted by implication. In compliance with the Supreme Court's principles, the AO was directed to allow the deduction claimed by the assessee. Consequently, the appeals filed by the assessee were allowed, rendering the Stay Applications infructuous. In conclusion, the Tribunal allowed the appeals filed by the assessee and dismissed the Stay Applications as infructuous based on the Supreme Court's decision setting aside the Kerala High Court's ruling. The AO was directed to grant the assessee the benefit of deduction under Section 80P in accordance with the liberal interpretation of the provision favoring the cooperative banks engaged in lending activities.
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