2024 (5) TMI 56 - AT - Income Tax

Eligibility for deduction u/s. 80P(1) r/w s. 80P(2)(a)(i) - assessee is registered as a Primary Agricultural Credit Society (PACS) - HELD THAT - The assessee/s satisfying the primary condition of s. 2(19) of the Act defining a society is thus a cooperative society a pre-requisite for deduction u/s. 80P(1). The resolution of the dispute as to whether the assessee is therefore eligible for deduction u/s. 80P(1) r/w s. 80P(2)(a)(i) and where so its extent thus rests solely on the assessee being or not being a co-operative bank a term again defined under BRA which stands adopted for the purpose of s. 80P determining the issue. The copy of the bye-laws only a certified translated copy of which in full can be taken cognizance of and regarded as a part of the record is not on record. As also noted by the Tribunal in it s orders afore-referred what value the restriction on the area for it s members if the assessee-society is otherwise eligible to accept deposits from non-members as well - Under the circumstances we for the reasons aforenoted as also the cases referred to set aside the orders by the Revenue authorities and restore the matter back to the file of the AO to determine the assessee s eligibility for deduction u/s. 80P(1) r/w s. 80P(2)(a)(i) on the basis of it being or as the case may be not being a co-operative bank i.e. on the basis of it s bye-laws read with the Kerala Act and the BRA as well as the quantum of the deduction there-under which we clarify would be in full where the assessee is a cooperative bank with it s entire income arising from the business of banking. Assessee s appeal is allowed for statistical purposes.

Summary

Issues involved: Denial of deduction u/s 80P(1) of the Income Tax Act, 1961 for Assessment Years (AYs) 2011-12 to 2018-19.

Summary:
The Appellate Tribunal ITAT COCHIN heard a set of eight Appeals by Assessee challenging the denial of deduction u/s 80P(1) of the Income Tax Act for AYs 2011-12 to 2018-19. The denial was confirmed in first appeal by the Commissioner of Income Tax (Appeals) in separate orders dated 13.03.2023.

The learned counsel for the assessee cited the decision of the Hon'ble Apex Court in Mavilayi Service Co-operative Bank Ltd. v. CIT [2021] 431 ITR 1 (SC) to support the claim. The Tribunal, based on previous decisions, noted that the assessee-society, despite being registered as a Primary Agricultural Credit Society (PACS), may be engaged in banking activities as per the Kerala Act. The Tribunal emphasized that the assessee's lending profile, predominantly for non-agricultural purposes, does not align with the definition of PACS under the Banking Regulation Act, 1949 (BRA), making it ineligible for deduction u/s 80P(1).

Since the certified translated copy of the bye-laws, which is crucial for determining the eligibility for deduction, was not on record, the Tribunal set aside the orders by the Revenue authorities. The matter was restored to the Assessing Officer (AO) to ascertain the assessee's eligibility for deduction u/s 80P(1) based on its status as a co-operative bank. The Tribunal clarified that if the assessee is a cooperative bank, it would be entitled to full deduction on its income from banking activities.

The Tribunal allowed the assessee's appeal for statistical purposes, and the order was pronounced on April 29, 2024 under Rule 34 of The Income Tax (Appellate Tribunal) Rules, 1963.