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2023 (5) TMI 910 - AT - Income TaxDeduction u/s 80P(2)(a)(i) - reasons given by the CIT(A) to deny the claim of deduction u/s 80P was that the assessee society did not file its return of income within the due time as prescribed u/s 139(1) of the Act; and had filed the same only in response to notice u/s 148 - HELD THAT - We note that the Hon ble jurisdictional High Court had an occasion to examining this precise issue in respect of claim of deduction under section 80P of the Act wherein the issue of filing of return belatedly beyond the period stipulated in section 139(1) or section 139(4) of the Act as the case may be, as well as section 142(1) or section 148 of the Act as the case may be was considered at length by even considering section 80A(5)/80AC of the Act and the Hon ble Kerala High Court (DB) decided the same in the case of Chirakkal Service Co-operative Bank Ltd. 2016 (4) TMI 826 - KERALA HIGH COURT wherein it has held that the return filed by the assessee beyond the period stipulated u/s 139(1) or 139(4) of the Act was u/s 142(1) or section 148 of the Act need to be accepted by the AO and acted upon in accordance to law. Thus reasons given by Ld. CIT(A) about the omission on the part of assessee in filing the return of income u/s 139(1)/142(1)/148 of the Act cannot be a ground for these AY s before us. Other reason given by the Ld. CIT(A) to deny the claim of deduction under section 80P of the Act claim was that the assessee society cannot be termed as Primary Agricultural Credit Society PACS even though, there was a certificate of the Registrar of Co-operative Societies - We note that the AO/Ld. CIT(A) had no benefit of the decision rendered in the case of Malvilayi Service Co-operative Bank Ltd ( 2021 (1) TMI 488 - SUPREME COURT - Therefore, in the interest of justice and equity, the issue of claim for deduction u/s 80P(2)(a)(i) of the Act is restored back to file of AO who is directed to examine afresh the claim of assessee in the light of the Hon ble Apex Court decision in Malvilayi Service Co-operative Bank Ltd (supra). Therefore, the impugned order of Ld. CIT(A) is set aside, and issue is restored back to the file of the AO. Appeals of the assessee are allowed for statistical purposes.
Issues Involved:
1. Denial of deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961. 2. Belated filing of return beyond the period stipulated under section 139(1), section 139(4), section 142(1), or section 148. 3. Classification of the assessee as a Primary Agricultural Credit Society (PACS). Summary: Issue 1: Denial of Deduction under Section 80P(2)(a)(i) The main grievance of the assessee, Thalore Service Co-operative Bank Ltd, was against the action of the Ld. CIT(A) in confirming the AO's denial of deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961. The AO denied the claim on the grounds that the assessee provided banking facilities to the general public, classifying it as a Co-operative Bank, thereby making it ineligible for the deduction under section 80P(4). The Ld. CIT(A) upheld this view, emphasizing that the certificate from the Registrar of Co-operative Societies alone was insufficient to qualify for the deduction. Issue 2: Belated Filing of Return The Ld. CIT(A) also denied the deduction on the basis that the assessee filed its return of income beyond the due date as prescribed under section 139(1) and only in response to a notice under section 148. However, the Tribunal noted that the Hon'ble Kerala High Court in the case of Chirakkal Service Co-operative Bank Ltd. Vs. CIT (384 ITR 490) held that returns filed beyond the period stipulated under section 139(1) or 139(4) or in response to sections 142(1) or 148 should be accepted and acted upon in accordance with the law. Therefore, the Tribunal found that the Ld. CIT(A)'s reason for denying the deduction on the grounds of belated filing could not be sustained. Issue 3: Classification as PACS The Ld. CIT(A) and AO contended that the assessee could not be classified as a Primary Agricultural Credit Society (PACS) because it provided financial accommodation not exclusively for agricultural purposes. The Tribunal referred to the Hon'ble Supreme Court's decision in Malvilayi Service Co-operative Bank Ltd. & Ors Vs. CIT (431 ITR 1), which clarified that section 80P(2)(a)(i) should be interpreted liberally and reasonably, and that the deduction applies even if loans are given to members for non-agricultural purposes. The Supreme Court also noted that loans to nominal members qualify for the deduction under section 80P(2)(a)(i). Conclusion: The Tribunal set aside the order of the Ld. CIT(A) and restored the issue back to the AO to re-examine the claim for deduction under section 80P(2)(a)(i) in light of the Supreme Court's decision in Malvilayi Service Co-operative Bank Ltd. The appeals for both AY 2009-10 and AY 2014-15 were allowed for statistical purposes, and the Stay Petitions were dismissed as infructuous. Order Pronounced: The order was pronounced in the open court on 19/05/2023.
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