2016 (7) TMI 692 - AT - Income Tax

Benefit of deduction u/s 80P(2) denied - assessee is a cooperative society registered under the Kerala Cooperative Societies Act, 1969 - Held that - The certificate of registration of the assessee under the Kerala Cooperative Societies Act and the bye-laws are placed on record. It is clear from the perusal of the same that the assessee is primary agricultural credit society and providing agricultural credit facilities to its members. The Hon ble Jurisdictional High Court in the case of The Chirakkal Service Cooperative Bank Ltd & others 2016 (4) TMI 826 - KERALA HIGH COURT has held that such societies are entitled to the benefit of deduction u/s 80P(2) of the Act. In view of the above findings of the Hon ble Jurisdictional High Court (supra), we allow these appeals of the assessee

Summary

Issues:
Whether CIT was justified in revising assessments for the assessment years 2008-09, 2009-10, and 2011-12 to deny the benefit of deduction u/s 80P(2) of the Act.

Analysis:
The appeals were directed against three separate orders of the CIT, all dated 27.11.2015, revising assessments under section 263 of the Act. The main issue was whether the CIT was correct in denying the deduction u/s 80P(2) of the Act. The original assessments allowed the deduction, but the CIT held that the assessee was not a primary agricultural credit society as its principal business was non-agricultural. The CIT set aside the assessments as erroneous and prejudicial to the revenue.

The assessee contended that it was registered under the Kerala Cooperative Societies Act, 1969 as a primary agricultural credit society. Reference was made to a recent judgment by the Kerala High Court in a similar case where the court decided in favor of the assessee. The Tribunal noted that the High Court had held that primary agricultural credit societies registered under the Kerala Cooperative Societies Act are entitled to the benefit of deduction u/s 80P(2). The court considered the substantial question of law and found that the societies classified as primary agricultural credit societies under the State law were entitled to the exemption under section 80P.

The Tribunal observed that the assessee's registration and bye-laws confirmed its status as a primary agricultural credit society providing agricultural credit facilities. Citing the High Court judgment, the Tribunal allowed the appeals of the assessee, stating that such societies are entitled to the benefit of deduction u/s 80P(2) of the Act. Consequently, the appeals filed by the assessee were allowed, following the findings of the High Court judgment.

In conclusion, the Tribunal ruled in favor of the assessee, allowing the appeals and confirming the entitlement to the deduction under section 80P(2) of the Act.