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2018 (12) TMI 1444 - AT - Income TaxEligibility for the claim of deduction u/s 80P(2) - whether the assessee was a Cooperative Bank and held a banking licence issued by RBI - Held that - The impugned orders of both the authorities below for both assessment years 2013-14 and 2014-15 are set aside and the matter remanded to the file of the AO for examining/ascertaining as to whether the assessee in the case on hand has obtained a licence from the RBI to conduct banking business. If the assessee is found to be possessing a licence from the RBI to conduct banking business, it will be hit by the mischief of sub-section (4) of Section 80P and thus would not be eligible to deduction under section 80P(2) of the Act as claimed. AO shall afford the assessee adequate opportunity of being heard and to file details/submissions required which shall be duly considered before deciding the issue in the light of the observations above and the aforesaid decision of the Hon ble Apex Court in THE CITIZEN CO-OPERATIVE SOCIETY LIMITED, THROUGH ITS MANAGING DIRECTOR, HYDERABAD VERSUS ASSISTANT COMMISSIONER OF INCOME TAX 2017 (8) TMI 536 - SUPREME COURT - Assessee s appeals allowed for statistical purposes.
Issues:
Identification of whether the assessee is a Cooperative Society eligible for deduction under section 80P(2) of the Income Tax Act or a Cooperative Bank ineligible for the deduction. Analysis: 1. Background: The appeals by the assessee were against the orders of the Commissioner of Income Tax (Appeals) for the Assessment Years 2013-14 and 2014-15. The Assessing Officer rejected the claims of the assessee, treating it as a cooperative bank and disallowing deductions under Section 80P of the Act. 2. Primary Issue: Cooperative Society vs. Cooperative Bank: The key contention was whether the assessee was a Cooperative Society entitled to deduction under Section 80P(2) or a Cooperative Bank ineligible for the deduction under Section 80P(4). The assessee argued it did not hold a banking license from RBI, making it a Society. The authorities failed to ascertain this crucial fact. 3. Legal Precedents: The assessee cited the Karnataka High Court's decision in CIT vs. Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha, Bengaluru, emphasizing the need for a banking license for classification. The Revenue challenged this citing an SLP admitted by the Supreme Court. The assessee relied on the Supreme Court's ruling in M/s. Citizens Co-operative Society Ltd. vs. ACIT, highlighting the importance of possessing an RBI license to be classified as a Cooperative Bank. 4. Tribunal Decision: The Tribunal set aside the orders of the lower authorities and remanded the matter to the Assessing Officer. The AO was directed to determine if the assessee held an RBI license for banking operations. If the license was found, the assessee would not be eligible for deductions under Section 80P(2). The assessee was granted an opportunity to present relevant details before a final decision. 5. Conclusion: The Tribunal allowed the appeals for statistical purposes, emphasizing the need to establish the nature of the assessee's operations as either a Cooperative Society or a Cooperative Bank. The decision was made to ensure a fair assessment based on the presence or absence of an RBI license for banking activities. This detailed analysis highlights the critical issue of classification between a Cooperative Society and a Cooperative Bank for determining eligibility for deductions under Section 80P(2) of the Income Tax Act. The Tribunal's decision focused on the need to establish whether the assessee held a banking license from RBI, as per legal precedents and the specific facts of the case.
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