2019 (3) TMI 284 - AT - Income Tax

Deduction u/s. 80P(2)(a)(i) - denying the claim was that the assessee were primarily engaged in the business of banking - provisions of section 80P(4) which was inserted with effect from 01.04.2007, the assessee were not entitled to deduction u/s. 80P - HELD THAT - Admittedly, the assessee is primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969. 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:
- Whether the assessees are entitled to deduction u/s. 80P(2)(a)(i) of the I.T.Act?

Analysis:
1. The judgment deals with seven appeals by the Revenue against three CIT(A) orders concerning different assessees for various assessment years. The common issue in question across these appeals is the entitlement of the assessees to deduction under section 80P(2)(a)(i) of the Income Tax Act.

2. The assessees, primary agricultural credit societies registered under the Kerala Cooperative Societies Act, filed returns claiming deduction under section 80P. However, the Assessing Officer denied the deduction, citing section 80P(4) inserted from 01.04.2007, as the assessees were primarily engaged in banking activities.

3. The CIT(A), following the judgment of the Jurisdictional High Court in a similar case, held that the assessees are indeed entitled to the deduction under section 80P(2) of the IT Act. The CIT(A) distinguished the decision in another case, emphasizing that it does not apply to primary agricultural credit societies, as per the ITAT Cochin Bench's order in a specific case.

4. The Revenue, aggrieved by the CIT(A) orders, filed appeals. The Departmental Representative relied on the grounds raised, while the learned AR argued that the issue is settled in favor of the assessees by the High Court judgment.

5. The High Court had previously ruled that primary agricultural credit societies registered under the Kerala Cooperative Societies Act are entitled to the deduction under section 80P(2). The High Court's findings emphasized the societies' classification and primary objectives, leading to the conclusion that they qualify for the exemption.

6. Considering the High Court's judgment, the ITAT Cochin held that the assessees, being primary agricultural credit societies, are indeed entitled to the benefit of deduction under section 80P of the Act. The Tribunal also noted that a previous Supreme Court decision relied on by the Revenue does not apply to such societies in Kerala, as per the ITAT Cochin Bench's order in a specific case.

7. Consequently, the ITAT dismissed the appeals filed by the Revenue, affirming the assessees' entitlement to the deduction under section 80P(2)(a)(i) of the Income Tax Act.