2018 (1) TMI 1244 - HC - Income Tax

Eligibility to deduction u/s. 80P(2)(a)(i) - whether assessee society is covered u/s. 80P(4) r.w.s. 2(24)(viia) being income from providing credit facilities carried on by a co-operative society with its members? - ITAT allowed the deduction - Held that - The Tribunal has concurred with the view adopted by the Commissioner (Appeals). The above view of the Tribunal is fortified by a decision of this court in the case of CIT-II v. Surat Vankar Sahakari Sangh Limited, (2014 (2) TMI 76 - GUJARAT HIGH COURT), wherein the court has repelled the contention of the revenue that section 80P(4) would exclude not only the cooperative banks other than those fulfilling description contained therein but also credit societies, which are not cooperative banks. In the facts of the said case, the assessee was a credit cooperative society and not a cooperative bank. The court held that the exclusion clause of sub-section (4) of section 80P would, therefore, not apply. The above decision would be squarely applicable to the facts of the present case. - Decided against revenue

Summary

Issues:
Appeal under section 260A of the Income Tax Act, 1961 questioning the order of the Income Tax Appellate Tribunal regarding deduction under section 80P(2)(a)(i) for a cooperative society providing credit facilities to its members.

Analysis:
The appellant-revenue challenged the order of the Income Tax Appellate Tribunal, Ahmedabad, regarding the deduction claimed under section 80P(2)(a)(i) of the Income Tax Act, 1961. The Assessing Officer disallowed the deduction, citing that the society was engaged in providing credit facilities to its members and banking business. The Assessing Officer relied on sub-section (4) of section 80P, inserted by the Finance Act, 2006, which restricts deductions for certain cooperative banks. However, the Commissioner (Appeals) allowed the deduction, stating that the society did not fall under the category of cooperative banks as defined in the Banking Regulation Act, 1949.

The Tribunal upheld the decision of the Commissioner (Appeals) based on the interpretation of the term "cooperative bank" as per the Banking Regulation Act. The Tribunal's decision was supported by a previous judgment of the High Court, which clarified that the exclusion clause in sub-section (4) of section 80P does not apply to credit cooperative societies that are not classified as cooperative banks. Therefore, the Tribunal found no legal infirmity in the impugned order and dismissed the appeal, stating that no substantial question of law arose for consideration.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing that the society in question did not fall under the category of cooperative banks as defined in the Banking Regulation Act. The Court relied on previous judgments to support its decision and found no grounds for interference. Consequently, the appeal was summarily dismissed.