2018 (9) TMI 1172 - AT - Income Tax

Deduction u/s 80P - addition holding that dividend income received from IFFCO is not exempt - Held that - As decided in assessee s own case as verified that it is cooperative society as is ascertainable from the Registration Certificate produced by the appellant and on my behest the appellant has also produced I.T. Return of the Bank wherein the status is mentioned to be cooperative society. Even otherwise it is not the case of the A.O. that U.P. Cooperative Bank Ltd. is a company. Thus, the amount being dividend received from the aforesaid cooperative societies is expressly exempt u/s 80P (2)(d) of the Act. Similar view has also been taken by the CIT (A) in appellant s own case for A.Ys. 2007-08, 2009- 10, 2010-11 & 2011-12. In view of the above, it is held that the Assessing Officer is not justified to make addition - Decided in favour of assessee

Summary

Issues:
- Exemption under section 80P of the Income Tax Act for cooperative banks
- Disallowance of dividend income received from cooperative societies
- Interpretation of relevant provisions of the Act for exemption eligibility

Exemption under Section 80P for Cooperative Banks:
The appeal involved a dispute regarding the availability of deduction under section 80P of the Income Tax Act for Regional Rural Banks (RRBs) from Assessment Year (A.Y.) 2007-08 onwards. The Revenue contended that the provisions of section 80P were no longer applicable to any cooperative bank post the amendment by the Finance Act, 2006. The Assessing Officer disallowed the deduction claimed by the appellant, leading to an appeal before the CIT(A). The CIT(A) allowed the appeal, relying on circulars clarifying that RRBs were not eligible for deduction under section 80P from A.Y. 2007-08. The tribunal upheld the CIT(A)'s decision, emphasizing that the dividend income received from cooperative societies was exempt under section 80P(2)(d) of the Act, following consistency with earlier years' orders.

Disallowance of Dividend Income Received from Cooperative Societies:
The case involved a disallowance of dividend income received by the appellant from a cooperative society, IFFCO, due to non-deduction of dividend distribution tax. The Assessing Officer added the amount of dividend income to the appellant's total income. However, the CIT(A) allowed the appeal, stating that the dividend income from IFFCO and U.P. Cooperative Bank Ltd. was exempt under section 80P(2)(d) of the Act as both were cooperative societies. The tribunal upheld the CIT(A)'s decision, noting that the appellant's claim for exemption was valid under the relevant provisions of the Act, emphasizing the cooperative nature of the dividend-paying entities.

Interpretation of Relevant Provisions for Exemption Eligibility:
The tribunal extensively analyzed the provisions of section 80P(2)(d) of the Act, which exempted income derived by a cooperative society from interest or dividends received from another cooperative society. The CIT(A) considered the appellant's submissions and past decisions, concluding that the dividend income received from IFFCO and U.P. Cooperative Bank Ltd. was exempt under section 80P(2)(d) as both entities were cooperative societies. The tribunal upheld this interpretation, emphasizing the cooperative nature of the dividend-paying entities and the consistency with earlier years' orders. The Revenue's appeal was dismissed, maintaining the exemption granted by the CIT(A) based on the provisions of the Act and past decisions.