2015 (12) TMI 1411 - AT - Income Tax

Entitlement for deduction u/s 80P - CIT(A) deleted the addition holding that the assessee being Cooperative Credit Society is not a Co-operative bank hence is entitled for deduction - Held that - CIT(A) is justified in directing the AO to allow the deduction claimed by the assessee u/s 80P of the Act on the reason that the assessee, a cooperative credit society is not a bank for the purposes of section 80P(4) of the Act. - Decided against revenue.

Summary

Issues involved:
Interpretation of section 80P of the Income Tax Act, 1961 regarding the eligibility of a Cooperative Society for exemption.

Detailed Analysis:

1. Issue: The main issue in this case was whether a Cooperative Society providing credit facilities to its members qualifies for exemption under section 80P of the Income Tax Act, 1961.

Analysis: The Revenue contended that the Cooperative Society should be treated as a Cooperative Bank and denied the exemption claimed under section 80P. However, the assessee argued that being a Cooperative Society, it should not be considered a Cooperative Bank and thus should be entitled to the exemption. The CIT(A) relied on a previous decision in the assessee's favor for the assessment year 2008-09 and allowed the exemption under section 80P.

2. Issue: The interpretation of the term "Cooperative Bank" as per section 80P(4) of the Act.

Analysis: The Tribunal analyzed the definition of "Cooperative Bank" as per the Banking Regulation Act, 1949, and concluded that Cooperative Banks include State, Central, and Primary Co-operative Banks only. The Tribunal further highlighted that the Cooperative Society in question did not have a banking license from the Reserve Bank of India and did not fall under the purview of a Cooperative Bank as defined under section 80P(4) of the Act.

3. Issue: Consideration of the distinction between Cooperative Societies and Cooperative Banks.

Analysis: The Tribunal examined the differences between Cooperative Societies and Cooperative Banks based on various criteria such as registration, acceptance of deposits, lending activities, regulatory oversight, and licensing requirements. It was established that the Cooperative Society in question did not meet the criteria to be classified as a Cooperative Bank, reinforcing its eligibility for exemption under section 80P of the Act.

4. Issue: Admissibility of a claim not made in the return of income.

Analysis: The Tribunal addressed the Revenue's argument regarding the admissibility of a deduction claim not initially made in the return of income. Citing relevant case law, the Tribunal upheld the CIT(A)'s decision to allow the deduction at the appellate stage, emphasizing the authority of appellate bodies to consider claims not raised in the original return of income.

In conclusion, the Tribunal affirmed the CIT(A)'s order, upholding the assessee's claim for exemption under section 80P of the Income Tax Act, 1961. The Revenue's appeal was dismissed, and the Cross Objection raised by the assessee was deemed infructuous.