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2022 (9) TMI 346 - AT - Income TaxDeduction u/s 80P(2)(a)(i) - income earned from associate/nominal members - HELD THAT - Admittedly, the assessee is a primary agricultural credit cooperative society and is governed by Karnataka Co-operative Societies Act, 1956 and it is carrying out its co-operative business with its members, the claim of deduction u/s 80P(2)(a)(i) of the Act cannot be denied. Also, assessee does not hold a banking license issued by RBI so as to give it a status of Co-operative Bank. Hence, respectfully following the decision of Hon ble Supreme Court In the case of the The Mavilayi Service Co-operative Bank Ltd 2021 (1) TMI 488 - SUPREME COURT and S1308 Ammapet Primary Agricultural Co-operative Bank Ltd. 2019 (1) TMI 116 - MADRAS HIGH COURT in the given similar facts and circumstances, we reverse the orders of lower authorities and allow this issue in the appeal of assessee for A.Y. 2009-10. Appeals of the assessee are allowed.
Issues:
Appeal against CIT(A)'s order denying deduction u/s 80P(2)(a)(i) of the Income-tax Act, 1961 for various assessment years. Analysis: 1. The appeals were filed by the assessee against CIT(A)'s orders denying deduction u/s 80P(2)(a)(i) of the Act. The primary issue revolved around the denial of the deduction concerning income earned from associate/nominal members. The AO considered the assessee as a primary co-operative bank, disentitling it from the deduction. The CIT(A) upheld this decision based on the Supreme Court's ruling in Citizen Co-operative Bank Ltd. vs ACIT. The Tribunal was approached by the assessee challenging this denial. 2. The counsel for the assessee argued citing The Mavilayi Service Co-operative Bank Ltd. case, emphasizing the liberal interpretation of section 80P and the exclusion of co-operative banks under section 80P(4). The Supreme Court's decision highlighted that the deduction under section 80P(2)(a)(i) should not be restricted by implication. The Court also discussed the definition of 'member' and the eligibility for deduction under section 80P(2)(a)(i). 3. Referring to the Madras High Court's judgment in PCIT vs S1308 Ammapet Primary Agricultural Co-operative Bank Ltd., it was established that the cooperative society's description as providing credit facilities to its members suffices for claiming relief under section 80P. The Court clarified that cooperative banks are excluded under section 80P(4), and primary agricultural credit societies are entitled to the deduction. 4. The Tribunal, considering the assessee as a primary agricultural credit cooperative society, reversed the lower authorities' orders. As the assessee did not hold a banking license, the denial of the deduction was deemed incorrect, following the decisions of the Supreme Court and Madras High Court. Consequently, all three appeals of the assessee were allowed, granting the deduction u/s 80P(2)(a)(i) for the respective assessment years. 5. The Tribunal's rulings were based on the interpretation of relevant legal provisions and judicial precedents, ensuring that the assessee's eligibility for the deduction under section 80P(2)(a)(i) was upheld in line with the legislative intent and judicial pronouncements. Judgment Summary: The Appellate Tribunal ITAT PANAJI allowed the appeals filed by the assessee against the denial of deduction u/s 80P(2)(a)(i) for various assessment years, following the Supreme Court's liberal interpretation of section 80P and the exclusion of cooperative banks under section 80P(4). The Tribunal reversed the lower authorities' orders, considering the assessee as a primary agricultural credit cooperative society not holding a banking license, thereby entitling them to the deduction as per the legal provisions and judicial decisions cited.
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