2018 (9) TMI 1556 - AT - Income Tax

Entitled to deduction u/s. 80P(2)(a)(i)- denial of claim as the assessee was primarily engaged in the business of banking - assessee is a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969 - Held that - Admittedly, the assessee is primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969. The Hon ble High Court of Kerala in the case of Chirakkal Service Co-op Bank Ltd. 2016 (4) TMI 826 - KERALA HIGH COURT had held that a primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969 is entitled to the benefit of deduction u/s. 80P(2). - Decided in favour of assessee

Summary

Issues:
- Entitlement to deduction u/s. 80P(2)(a)(i) of the I.T. Act.

Analysis:
The judgment by the Appellate Tribunal ITAT Cochin dealt with appeals by the Revenue and Cross Objections by the assessee against separate orders of the CIT(A). The primary issue raised was whether the assessee, a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969, was entitled to deduction u/s. 80P of the I.T. Act. The Assessing Officer had denied the deduction, citing the assessee's primary engagement in banking activities. However, the CIT(A) ruled in favor of the assessee, relying on the judgment of the Jurisdictional High Court in a similar case. The Revenue challenged this decision before the ITAT Cochin, arguing against the assessee's entitlement to the deduction.

Upon considering the submissions and the legal precedents, the ITAT Cochin referred to the judgment of the Hon'ble High Court of Kerala in the case of Chirakkal Service Co-op Bank Ltd. The High Court had held that primary agricultural credit societies registered under the Kerala Cooperative Societies Act, 1969, were entitled to the benefit of deduction u/s. 80P(2). The High Court emphasized the legislative recognition of the societies' objects and activities under the State law, thereby affirming their entitlement to the deduction. The ITAT Cochin, following this legal precedent, concluded that the assessee-society in question was indeed entitled to the benefit of deduction u/s. 80P of the Act.

Regarding the Cross Objections filed by the assessee, which supported the CIT(A)'s decision, they were deemed infructuous following the dismissal of the Revenue's appeals. Consequently, the ITAT Cochin dismissed both the Revenue's appeals and the Cross Objections filed by the assessee. The judgment was pronounced on September 24th, 2018, affirming the entitlement of the assessee-society to the deduction u/s. 80P of the I.T. Act.