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2020 (10) TMI 1122 - AT - Income TaxDeduction u/s. 80P(2)(a)(i) - HELD THAT - Hon ble Supreme Court in the case of The Citizens Cooperative Society Ltd. 2017 (8) TMI 536 - SUPREME COURT held that in order to do the business of a cooperative bank, it is imperative to have a licence from the Reserve Bank of India. It can therefore be said that a co-operative society which does not possess a license from RBI cannot be equated to a co-operative Bank, even though it might indulge in the business of banking. Co-operative Societies carrying on business of banking are therefore entitled to claim deduction u/s.80P(2)(a)(i). The CIT(A) s order was passed prior to the decision of the Hon ble Supreme Court in the case of The Citizens Co-operative Society Ltd., (supra) and hence the CIT(A) did not have the benefit of looking into the same. Appeal of the revenue is allowed for statistical purposes.
Issues:
- Whether the CIT(Appeals) was justified in allowing the claim of assessee for deduction u/s. 80P(2)(a)(i) of the Income-tax Act, 1961. Analysis: 1. Background: The appeal by the revenue pertains to the order of the CIT(Appeals) for the assessment year 2012-13. 2. Deduction Claim: The only issue in consideration is whether the CIT(Appeals) was correct in allowing the deduction claimed by the assessee under Section 80P(2)(a)(i) of the Act. 3. AO's Denial: The Assessing Officer (AO) denied the deduction claim on the basis that the assessee, being a cooperative bank, was not eligible for deduction under Section 80P(2)(a)(i) as per Section 80P(4) of the Act. 4. Legal Provisions: Section 80P was amended in 2006, introducing sub-section (4) which restricted the applicability of the deduction to certain types of cooperative banks, excluding others. 5. CIT(Appeals Decision: The CIT(Appeals) allowed the deduction based on the ITAT Bangalore Bench's decision in a similar case, without addressing the applicability of Section 80P(4) which was the basis of the AO's denial. 6. Tribunal's Intervention: The Tribunal, in previous cases related to the assessee for subsequent assessment years, remanded the issue to the AO in light of the Supreme Court's decision in The Citizens Cooperative Society Ltd. v. ACI. 7. Supreme Court Ruling: The Supreme Court clarified that cooperative societies engaged in banking activities, without requiring a license from RBI, are eligible for deduction under Section 80P(2)(a)(i). 8. Decision: Considering the similarity of facts with the previous cases and the timing of the CIT(Appeals) order before the Supreme Court's ruling, the Tribunal set aside the CIT(Appeals) decision and directed fresh consideration by the AO. In conclusion, the appeal by the revenue was allowed for statistical purposes, emphasizing the need for a fresh assessment by the AO in line with the directions provided by the Tribunal and the Supreme Court's interpretation of the relevant legal provisions.
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