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2023 (6) TMI 1417 - AT - Income TaxDenial of deduction u/s 80P(2)(a)(i) - assessee society is doing banking business, therefore, he treated it as a Co-operative Bank - HELD THAT - We note that assessee is a Co-operative Society registered under the Kerala Co-operative Societies Act, 1969 and claims to be as a Primary Agricultural Credit Co-operative Society. The assessee society asserts that it provides credit facilities to its members; and its income earned while carrying on the business of providing credit facility to its members are eligible for deduction u/s 80P(2)(a)(i) of the Act. We note that the AO didn t had the benefit of the decision rendered by the Hon ble Apex Court in the case of Malvilayi Service Co-operative Bank Ltd. 2021 (1) TMI 488 - SUPREME COURT Therefore, in the interest of justice and equity, the issue of claim for deduction u/s 80P(2)(a)(i) of the Act is restored back to file of AO with a direction to examine afresh the claim of assessee in the light of decision in Malvilayi Service Co-operative Bank Ltd (supra). Therefore, the impugned order of Ld. CIT(A) is set aside, and issue is restored back to the file of the AO and the AO is directed to decide the claim of the assessee in respect of deduction claimed u/s 80P(2)(a)(i) of the Act accordingly.
Issues:
Appeal against denial of claim u/s 80P(2)(a)(i) of the Income Tax Act, 1961 for AY 2012-13 by the assessee Service Co-operative Bank Limited. Detailed Analysis: The appeal was filed by the assessee Service Co-operative Bank Limited against the order of the Ld. CIT(A)/NFAC for AY 2012-13, challenging the denial of claim u/s 80P(2)(a)(i) of the Income Tax Act, 1961. The assessee, registered under the Kerala Co-operative Societies Act, 1969, declared a total income of Rs.2,07,080/- after claiming a deduction of Rs.1,17,46,978/- under section 80P(2)(a)(i) which was disallowed by the Assessing Officer (AO). The AO contended that the assessee's main activity is banking business and not providing credit for agricultural purposes, thus treating it as a Co-operative Bank. The Ld. CIT(A) upheld the AO's decision, citing section 80P(4) of the Act, which excludes Co-operative Banks from claiming deductions under section 80P. The assessee argued that the Ld. CIT(A) did not properly consider the facts and the Supreme Court's decision in a similar case. The Tribunal noted that the issue was settled by the Supreme Court in a specific case, emphasizing a liberal interpretation of section 80P to promote the co-operative sector. The Tribunal directed the AO to re-examine the claim in light of the Supreme Court's decision. The Tribunal observed that the AO and the Ld. CIT(A) did not fully appreciate the Supreme Court's decision in a similar case regarding the interpretation of section 80P. The Supreme Court's ruling emphasized a broad and reasonable reading of section 80P to encourage the co-operative sector. The Tribunal highlighted that the Kerala Act allows loans to non-members, unlike the case considered by the Supreme Court, further supporting the assessee's claim for deduction u/s 80P(2)(a)(i). The Tribunal set aside the Ld. CIT(A)'s order and directed the AO to reconsider the claim based on the Supreme Court's decision, allowing the assessee to provide necessary documents and submissions to support its claim. In conclusion, the Tribunal allowed the appeal of the assessee for statistical purposes and dismissed the Stay Petition as infructuous. The order was pronounced in open court on 06/06/2023.
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