2018 (9) TMI 1555 - AT - Income Tax

Entitled to deduction u/s. 80P(2)(a)(i)- denial of claim as the assessee was primarily engaged in the business of banking - assessee is a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969 - Held that - Admittedly, the assessee is primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969. The Hon ble High Court of Kerala in the case of Chirakkal Service Co-op Bank Ltd. 2016 (4) TMI 826 - KERALA HIGH COURT had held that a primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969 is entitled to the benefit of deduction u/s. 80P(2). - Decided in favour of assessee

Summary

Issues Involved:
- Entitlement to deduction u/s. 80P(2)(a)(i) of the I.T. Act

Analysis:
1. Issue of Deduction u/s. 80P(2)(a)(i) of the I.T. Act:
- The appeal questioned whether the assessee, a primary agricultural credit society, was entitled to deduction u/s. 80P of the I.T. Act for the assessment year 2013-2014.
- The Assessing Officer denied the deduction, citing the society's primary engagement in banking activities, invoking section 80P(4) of the I.T. Act inserted from 01.04.2007.
- The CIT(A) allowed the deduction based on the judgment of the Jurisdictional High Court in a similar case, emphasizing the society's classification as a primary agricultural credit society under the Kerala Cooperative Societies Act, 1969.
- The Revenue challenged the CIT(A)'s decision, contending that the issue was settled in favor of the assessee by the High Court's judgment in the case of Chirakkal Service Co-op Bank Ltd.
- The ITAT Cochin, after reviewing the arguments and the High Court's judgment, upheld the assessee's entitlement to deduction u/s. 80P(2) of the I.T. Act, emphasizing the society's classification and primary activities as per the Kerala Cooperative Societies Act, 1969.
- The ITAT Cochin dismissed the Revenue's appeal, affirming the assessee's eligibility for the deduction u/s. 80P of the I.T. Act, in line with the High Court's precedent.

This comprehensive analysis of the legal judgment highlights the key issue of entitlement to deduction under section 80P of the Income Tax Act, emphasizing the classification and primary activities of the assessee as a primary agricultural credit society under the relevant state law.