2023 (5) TMI 1238 - AT - Income Tax

Deduction u/s 80P - assessee is a Credit Cooperative Society providing credit facilities to its members - Deduction denied on the ground that the assessee is neither a Primary Agricultural Credit Society nor a Primary Cooperative Agricultural Rural Development Bank but is a Cooperative Bank - HELD THAT - As decided in own case 2016 (1) TMI 1455 - ITAT MUMBAI Assessee cannot be termed as Banks/Cooperative Banks and that being a credit society they are entitled to exemption under Section 80(P)(2) of the Income Tax Act. Such finding of fact is not required to be interfered with by this Court in exercise of powers under Article 136 of the Constitution of India. Even otherwise on merits also and taking into consideration the CBDT Circulars and even the definition of Bank under the Banking Regulation Act the respondent/Assessee cannot be said to be Co-operative Bank/Bank and therefore Section 80(P)(4) shall not be applicable and that the respondent/Assessee shall be entitled to exemption/benefit under Section 80(P)(2) - Decided in favour of assessee.

Summary

Issues:
The main issue in this case is the denial of deduction claimed by the assessee under section 80P of the Income Tax Act, 1961.

Facts and Arguments:
The assessee, a Credit Cooperative Society providing credit facilities to its members, filed its return declaring total income of Nil. The Assessing Officer (AO) disallowed the deduction claimed under section 80P due to the insertion of sub-section (4) which excludes certain cooperative banks. The assessee contended that it is not a Cooperative Bank but a Society providing credit facilities to its members. The Commissioner of Income Tax (Appeals) upheld the AO's decision, stating that the assessee is engaged in banking business and therefore not eligible for the deduction. The Tribunal noted that in a previous case for AY 2010-11, a similar claim was allowed by the CIT (A) as the assessee was not considered a bank. The Tribunal also referred to a High Court judgment and a Supreme Court decision supporting the assessee's position.

Judgment:
The Tribunal allowed the appeal of the assessee, directing the AO to grant the deduction claimed under section 80P of the Act. The Tribunal relied on previous decisions and legal interpretations to conclude that the assessee, being a Credit Cooperative Society providing credit facilities to its members, does not fall under the definition of a Cooperative Bank. Therefore, the assessee is entitled to the deduction under section 80P. The appeal was allowed, and the order was pronounced in the open court on 30/05/2023.

Conclusion:
The Tribunal's decision in favor of the assessee highlights the distinction between a Credit Cooperative Society and a Cooperative Bank under the Income Tax Act. The judgment emphasizes the specific activities and nature of the organization in determining eligibility for deductions under section 80P.