2018 (9) TMI 1246 - AT - Income Tax

Entitled to deduction u/s. 80P(2)(a)(i) - Held that - In view of the judgment in the case of Chirakkal Service Co-op Bank Ltd. 2016 (4) TMI 826 - KERALA HIGH COURT we hold that the assessee-societies are entitled to the benefit of deduction u/s. 80P of the Act.

Summary

Issues Involved:
- Entitlement to deduction u/s. 80P(2)(a)(i) of the I.T.Act for primary agricultural credit societies registered under the Kerala Cooperative Societies Act, 1969.

Analysis:

Issue 1: Entitlement to deduction u/s. 80P(2)(a)(i) of the I.T.Act:
The primary issue in this case revolves around whether the assessee, being primary agricultural credit societies registered under the Kerala Cooperative Societies Act, 1969, are entitled to deduction u/s. 80P of the I.T. Act. The Assessing Officer initially denied the deduction citing that the assessees were primarily engaged in banking activities, invoking section 80P(4) of the I.T. Act. However, the CIT(A) ruled in favor of the assessee based on the judgment of the Jurisdictional High Court in a similar case. The High Court's judgment emphasized that societies classified as primary agricultural credit societies under the State law are entitled to the benefit of deduction u/s. 80P(2). The High Court highlighted that the bye-laws of the societies classified them as primary agricultural credit societies, focusing on providing loans and advances for agricultural purposes within a specific area of operation. The Tribunal concurred with the High Court's decision, thereby allowing the deduction u/s. 80P for the assessee-societies.

Judgment Outcome:
The Tribunal, after considering the arguments and the High Court's precedent, upheld the entitlement of the assessee-societies to the deduction u/s. 80P of the I.T. Act. Consequently, the appeals filed by the Revenue and the Cross Objection filed by the assessee were both dismissed, affirming the deduction for the primary agricultural credit societies under the Kerala Cooperative Societies Act, 1969.