2022 (6) TMI 840 - AT - Income Tax

Deduction u/s.80P(2)(a)(i) - assessee society is a registered co-operative society under the Tamil Nadu Co-operative Societies Act, 1961 - CIT(A) deleted the addition and allowed the claim of deduction - HELD THAT - Even this issue is now covered by the Co-ordinate Bench decision in the case of Tamilnadu Co-operative State Agriculture and Rural Development Bank Limited 2022 (6) TMI 770 - ITAT CHENNAI wherein following the decision of Hon ble Supreme Court in the case of The Mavilayi Service Co-operative Bank Ltd., Mavilayi Service Co-operative Bank Ltd., vs. CIT, 2021 (1) TMI 488 - SUPREME COURT decided both the issues raised by AO. Respectfully following the same, we allow the claim of deduction u/s.80P(2) of the Act. Accordingly, the appeal of the Revenue is dismissed.

Summary

Issues:
1. Condonation of delay in filing the appeal by the Revenue.
2. Allowance of deduction to the assessee under section 80P(2)(a)(i) of the Income Tax Act.

Condonation of Delay:
The Revenue's appeal was found to be time-barred by 4 days, prompting the need for a condonation petition. The Revenue attributed the delay to postal delivery issues, supported by an affidavit from the AO. The counsel for the assessee did not object to the condonation of delay, and considering the short delay and reasonable cause, the Tribunal condoned the delay and admitted the appeal.

Allowance of Deduction under Section 80P(2)(a)(i):
The main issue in the appeal was the CIT(A)'s decision to allow the deduction claimed by the assessee under section 80P(2)(a)(i) of the Act. The assessee, a registered co-operative society, had claimed a deduction for the relevant assessment year. However, the AO denied the claim, stating that the deduction could only be granted if the society provided credit facility to its shareholding members, not to associated or 'B' class members. Additionally, the AO argued that the amended provisions of section 80P(4) rendered the assessee ineligible for the deduction as it was primarily engaged in banking activities despite being a 'primary agriculture co-operative society.'

Decision and Analysis:
The CIT(A) overturned the AO's decision based on a Co-ordinate Bench ruling in a similar case involving another co-operative bank. The CIT(A) referenced the decision and the dismissal of departmental appeals by the High Court, leading to the allowance of the deduction for the assessee. The Tribunal further supported this decision by citing a Co-ordinate Bench ruling in another case, aligning with a Supreme Court decision, and ultimately dismissed the Revenue's appeal, allowing the deduction under section 80P(2) of the Act.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to allow the deduction claimed by the assessee under section 80P(2)(a)(i) of the Income Tax Act. The judgment highlighted the importance of case law precedents and legal interpretations in determining the eligibility for tax deductions in co-operative society cases.