2018 (11) TMI 210 - AT - Income Tax

Entitlement to deduction u/s. 80P(2)(a)(i) - assessee is a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969 - denying the claim of deduction u/s. 80P was that the assessee was primarily engaged in the business of banking - Held that - Admittedly, the assessee is primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969. 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). The assessee-society is entitled to the benefit of deduction u/s. 80P of the Act. - Decided in favour of assessee.

Summary

Issues:
- Whether the assessee is entitled to deduction u/s. 80P(2)(a)(i) of the I.T.Act?

Analysis:
1. Background: The appeals were filed by the Revenue against the common order of the CIT(A) concerning the deduction u/s. 80P(2)(a)(i) of the I.T.Act for the assessment years 2008-2009 and 2013-2014.

2. Facts: The assessee, a primary agricultural credit society under the Kerala Cooperative Societies Act, claimed deduction u/s. 80P of the I.T. Act. The Assessing Officer denied the deduction, stating the assessee was primarily engaged in banking, hence not eligible for the deduction per section 80P(4) inserted from 01.04.2007.

3. Appellate Authority: The CIT(A) allowed the deduction based on the judgment of the Jurisdictional High Court in a similar case, holding the assessee entitled to deduction u/s. 80P(2) of the I.T. Act.

4. Arguments: The Revenue challenged the CIT(A)'s decision, while the assessee's counsel cited the High Court's judgment supporting the assessee's entitlement to the deduction.

5. Court's Decision: The Tribunal considered the assessee's classification as a primary agricultural credit society under the Kerala Cooperative Societies Act, 1969. Citing the High Court's judgment, the Tribunal held that such societies are entitled to the deduction u/s. 80P(2) of the I.T. Act.

6. High Court's Findings: The High Court emphasized that societies classified as primary agricultural credit societies under the State law are entitled to the exemption under section 80P of the IT Act. The bye-laws and classification by the competent authority under the State law determine the entitlement to the exemption.

7. Conclusion: Relying on the High Court's decision, the Tribunal dismissed the Revenue's appeals, affirming the assessee's entitlement to the deduction u/s. 80P of the Act. The order was pronounced on November 1, 2018.