2014 (5) TMI 1220 - AT - Income Tax

Disallowance of deduction u/s 80P - As in scrutiny AO formed an opinion that being a co-operative bank, the assessee is not a primary agricultural society or a primary co-operative and rural agricultural development bank entitled for section 80P deduction - HELD THAT - It is made clear that no paper book or any other material has been filed before us to controvert the findings of the CIT(A) that the assessee is not engaged in any banking activity nor governed by the Banking Regulations Act. A perusal of relevant statutory provision i.e section 80P(4) reveals that this deduction is not available to any coI. operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. There is no cogent evidence to observe that the assessee is a co-operative bank under the banking regulation law. The Revenue fails to prove the assessee to be covered by explanation (a) and (b) to section 80P(4). In absence of all this, only a factual issue remains. It has also come on record that the assessee had advanced credit to its associate members only. The Revenue has also failed to rebut the findings of fact under challenge. Thus, we do not see any reason to interfere in CIT(A) s order and uphold the same. The Revenue s corresponding grounds are rejected.

Summary

Issues: Appeal against disallowance of deduction under section 80P for assessment year 2009-10.

Analysis:
1. Issue of Eligibility for Section 80P Deduction:
- The Assessing Officer disallowed the deduction under section 80P, considering the assessee as a cooperative bank providing credit beyond the statutory provisions.
- The CIT(A) categorized the assessee as a credit society not engaged in banking activities, relying on the Banking Regulation Act, 1945, and NABARD Act, 1981.
- The Tribunal noted that the deduction under section 80P is available only to primary agricultural credit societies or primary cooperative agricultural and rural development banks.
- Lack of evidence proving the assessee's classification as a cooperative bank under banking regulations led to the rejection of Revenue's arguments.

2. Interpretation of Statutory Provisions:
- The Tribunal emphasized the importance of statutory provisions in determining eligibility for tax deductions.
- The Tribunal highlighted that the Revenue failed to establish the assessee's classification as per the explanations provided in section 80P(4).
- The absence of evidence supporting the Revenue's contentions and the factual findings in favor of the assessee led to upholding the CIT(A)'s decision.

3. Judicial Analysis and Decision:
- The Tribunal reviewed the arguments of both parties and found no material contradicting the CIT(A)'s findings.
- The Tribunal concluded that the assessee did not engage in banking activities as per the statutory definitions.
- Due to the lack of evidence proving the assessee's classification as a cooperative bank eligible for section 80P deduction, the Tribunal dismissed the Revenue's appeal.

4. Final Order:
- The Tribunal dismissed the Revenue's appeal against the disallowance of deduction under section 80P for the assessment year 2009-10.
- The order was pronounced on May 1, 2014, in Chennai, upholding the CIT(A)'s decision and rejecting the Revenue's grounds for appeal.