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2018 (10) TMI 1603 - HC - Income TaxDeduction u/s 80P - Whether the Assessee - Co-Operative Society which fulfills the conditions of being Primary Co-Operative Bank as provided under the provisions of Section 5(ccv) of Banking Regulations, 1949? - Held that - Hon ble Supreme Court in an identical circumstances in the case of the Citizen Co-Operative Society Ltd. Vs. ACIT (2017 (8) TMI 536 - SUPREME COURT) held that, business of the Society does not amount to that of Co-Operative Bank, so as to come within the mischief of Sub-Section (4) of Section 80P. Since the Assessee was catering to the needs of nonmembers also, the principle of mutuality is tainted and therefore the benefit of Section 80P was denied. Whether the appellant Assessee accepting the deposits even from the non-members has to be held enquiry afresh by the Assessing Authority. Therefore, the Tribunal has remanded the matter to the Assessing Officer for fresh enquiry and the same is in accordance with law. The Tribunal while remanding the matter ought not to have recorded any finding on merits of the case - No substantial question of law.
Issues:
1. Interpretation of Section 80P of the Income Tax Act. 2. Classification of the Assessee as a Co-Operative Bank. 3. Validity of the remand order by the Income Tax Appellate Tribunal. Issue 1: Interpretation of Section 80P of the Income Tax Act The appellant, an Assessee, filed an Income Tax Appeal against the order denying exemption under Section 80P of the Income Tax Act. The Assessing Officer disallowed the exemption under Section 80P, citing non-compliance with TDS provisions. The Commissioner of Income Tax (Appeals) allowed the appeal, stating the Assessee is not a Co-Operative Bank and granted relief on the Pigmi commission. The Income Tax Appellate Tribunal remanded the matter for fresh consideration based on the Supreme Court's decision in a similar case. The Tribunal found that the Assessee, by accepting deposits from non-members, loses the benefit of Section 80P due to the tainted principle of mutuality. The Tribunal's remand order was upheld, emphasizing the need for fresh inquiry by the Assessing Officer. Issue 2: Classification of the Assessee as a Co-Operative Bank The main issue was whether the Assessee, a Co-Operative Society fulfilling the conditions of a Primary Co-Operative Bank under Banking Regulations, could be classified as a Co-Operative Bank for Section 80P purposes. The Tribunal, guided by the Supreme Court's decision, concluded that the Assessee's business did not qualify as that of a Co-Operative Bank, thus denying the Section 80P benefit. The Tribunal highlighted the acceptance of deposits from non-members as a factor tainting the principle of mutuality, leading to the denial of the exemption. The Tribunal's decision to remand the matter for further inquiry was deemed appropriate and in line with the law. Issue 3: Validity of the remand order by the Income Tax Appellate Tribunal The appellant challenged the remand order by the Income Tax Appellate Tribunal, arguing errors in the Tribunal's findings regarding the Pigmi account and the Assessee's classification as a Co-Operative Bank. The respondent defended the Tribunal's order, claiming the appeal against the remand was not maintainable and lacked substantial legal questions. The High Court dismissed the appeal, upholding the Tribunal's remand order as lawful. Both parties were allowed to present their case independently before the Assessing Authority, with all contentions left open for consideration. The Assessing Authority was directed to review the case in line with the Supreme Court's decision and the law.
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