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2024 (7) TMI 1103 - AT - Income TaxDisallowance of Deduction claimed u/s. 80P - interest income received by the appellant from entities enjoying the status of a co-operative society as per law - HELD THAT - The issue is settled by the principle of law laid down by the Hon'ble Supreme Court in the case of M/S. Annasaheb Patil MathadiKamgarSahakariPathpedi Limited 2023 (5) TMI 372 - SC ORDER as held Assessee cannot be termed as Banks/Cooperative Banks and that being a credit Society, they are entitled to exemption under section 80(P) (2) of the Income Tax Act. Such finding of fact is not required to be interfered with by this Court in exercise of powers under Article 136 of the Constitution of India. Even otherwise on merits also and taking into consideration the CBDT Circular and even the definition of Bank under the Banking Regulation Act, the respondent/Assessee cannot be said to be co-operative Bank/Bank and therefore, section 80(P) (4) shall not be applicable and that the respondent/Assessee shall be entitled to exemption/benefit under section 80(P) (2) . Decision of the Ld. CIT(A) in denying the deduction to the assessee is perverse to the facts on record and against the spirit of law, in view of the provisions of sub section 4 of section 80(P) - Assessee appeal allowed.
Issues:
Challenge to disallowance of Deduction u/s. 80P of the Income Tax Act in an appeal against the order of the ld. National Faceless Appeal Centre [NFAC/CIT(A)], Delhi for Assessment Year 2017-18. Detailed Analysis: 1. The appellant challenged the disallowance of Deduction u/s. 80P of the Income Tax Act in the appeal against the order of the ld. National Faceless Appeal Centre [NFAC/CIT(A)], Delhi for Assessment Year 2017-18. The appellant, a cooperative agricultural society providing credit facilities for agricultural development, deposited reserve funds in cooperative banks and received interest income. The Ld. AO disallowed a portion of this interest income under section 80-P(2)(d) of the Income Tax Act, resulting in an addition to the returned income. The Ld. CIT(A) upheld this decision, citing a judgment related to a different section of the Act, which the appellant argued was not applicable to their case. 2. The appellant contended that the interest income received from cooperative banks should be deductible under section 80P(2)(d) as the banks are registered under the Cooperative Societies Act, 1961, and qualify as cooperative societies. The appellant emphasized that although cooperative banks are no longer eligible for deduction under section 80P due to a statutory amendment, they still retain the status of cooperative societies. The appellant highlighted that cooperative banks are regulated under both banking and cooperative legislation, further supporting their eligibility for the deduction. 3. Referring to legal precedents, including a Supreme Court judgment in a similar case, the Tribunal established that entities functioning as cooperative societies, like the appellant, are entitled to exemption under section 80P(2) of the Income Tax Act. The Tribunal cited a recent judgment by the Jurisdictional ITAT, Amritsar Bench, affirming the deduction of interest income earned from other cooperative societies. Relying on these precedents and the specific provisions of the Act, the Tribunal concluded that the Ld. CIT(A)'s decision to deny the deduction to the appellant was erroneous and not in line with the law. 4. Based on the principles established by the Supreme Court and their own judgment, the Tribunal ruled in favor of the appellant, allowing the deduction claimed under section 80P(2)(d) and annulling the impugned order. The Tribunal emphasized that the denial of the deduction by the Ld. CIT(A) was contrary to the facts on record and the spirit of the law. As a result, the appellant's appeal was allowed, and the deduction of Rs. 54,00,164/- claimed under section 80P(2)(d) was permitted. 5. The Tribunal pronounced the order in open court on 26.06.2024, thereby resolving the dispute in favor of the appellant, a cooperative agricultural society seeking the rightful deduction under the Income Tax Act for the interest income received from cooperative banks.
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