2019 (9) TMI 735 - HC - Income Tax

Deduction u/s 80P(2)(a) (i) - Appellant is admittedly a Primary Agricultural Co-operative Credit Society Registered under Tamil Nadu Co-operative Societies Act - HELD THAT - Issue decided in M/S. S. 1234 UDAYAPTTI PACCS LTD., SALEM VERSUS THE INCOME TAX OFFICER, WARD 1 (4) , SALEM-7. 2019 (8) TMI 186 - MADRAS HIGH COURT wherein as referred case of M/S. AA 713 THE KODUMUDI GROWERS COOPERATIVE BANK LTD., KODUMUDI VERSUS THE INCOME TAX OFFICER, WARD-II (1) , ERODE. 2018 (12) TMI 127 - MADRAS HIGH COURT wherein held activity done by the appellant society cannot be truncated from the activity as a credit society and we are of the considered view that the Authorities below as well as the Tribunal committed an error in rejecting the stand taken by the appellant/ assessee. - Decided in favour of assessee.

Issues involved:
1. Interpretation of Section 80P(2)(a)(i) of the Income Tax Act for a Primary Agricultural Co-operative Credit Society.
2. Differentiation between Class A and Class B Members for deduction under Section 80P(2)(a)(i).
3. Application of Section 80P(2)(i) regarding deduction for transactions with members.
4. Permissibility of Re-Assessment under Section 143(3) of the Income Tax Act.
5. Rejection of Application for Rectification of Mistake under Section 254(2) of the Income Tax Act.

Issue 1:
The primary issue involved the interpretation of Section 80P(2)(a)(i) of the Income Tax Act for a Primary Agricultural Co-operative Credit Society. The Tribunal rejected the deduction claimed by the appellant under this section, leading to a legal challenge by the assessee.

Issue 2:
Another issue raised was the differentiation made by the Tribunal between Class A and Class B Members for claiming deductions under Section 80P(2)(a)(i) without any specific provision for such discrimination in the Act.

Issue 3:
The Tribunal's interpretation of Section 80P(2)(i) regarding the term "Members" and its application only to transactions with Class A Members was questioned by the appellant, arguing that there was no reference to different kinds of Members in the section.

Issue 4:
The permissibility of Re-Assessment under Section 143(3) of the Income Tax Act was raised as an issue, with the appellant contesting whether it was initiated on a change of opinion, which required legal scrutiny.

Issue 5:
The rejection of the Application for Rectification of Mistake filed under Section 254(2) of the Income Tax Act was also challenged by the appellant, questioning the Tribunal's decision in this regard.

The judgment extensively analyzed the legal provisions, referring to previous decisions and legal interpretations. The Court examined the activities of the appellant society, the directives issued by the Government, and the By-laws governing the society. It emphasized that the appellant's activities fell within the definition of a "credit society" under the TNCS Act, 1983, and were authorized by the Government directives.

The Court also cited a relevant case from the Bombay High Court to support the appellant's position regarding the exemption under Section 80P(2)(a)(i) of the IT Act. It highlighted that the By-laws of the society permitted the activities in question and that the society was bound by Government directives, reinforcing the appellant's entitlement to the claimed deduction.

Additionally, the Court distinguished a Supreme Court decision cited by the Revenue, emphasizing that the appellant's case was factually different and aligned with the broader definition of a "credit society." The judgment concluded by allowing the appeal, setting aside the lower authorities' orders, and directing the Assessing Officer to grant the deduction under Section 80P(1) read with Section 80P(2)(a)(i) of the IT Act to the appellant.

Overall, the judgment provided a detailed analysis of each issue raised by the appellant, supported by legal references and interpretations, ultimately ruling in favor of the appellant and granting the requested deduction under the Income Tax Act.

← Previous Next →