Appeal partly allowed: Assessee granted deductions under sec 80P. AO's order restored, CIT(A)'s decision set aside.

The Tribunal partly allowed the appeal, granting the assessee the benefit of deductions under section 80P of the Income Tax Act. The AO's order was restored, and the CIT(A)'s decision was set aside. The Tribunal directed the AO to verify the income earned from dealings with non-members and pass a consequential order accordingly.

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Issues:
1. Allowance of deductions u/s 80P(2)(a)(i) and u/s 80P(2)(d) of the Income Tax Act.
2. Consideration of insertion of sec. 80P(4) and sub-clause (viia) to section 2(24) vide Finance Act, 2006.
3. Classification of the assessee as a 'Primary Co-operative Bank' under the Banking Regulation Act, 1949.
4. Reliance on the decision of the Hon’ble Bombay High Court in a specific case by the CIT(A).
5. Restoration of the AO's order and setting aside of the CIT(A)'s order.

Analysis:

1. Allowance of deductions u/s 80P(2)(a)(i) and u/s 80P(2)(d) of the Income Tax Act:
The appeal involved the question of allowing deductions to the assessee under sections 80P(2)(a)(i) and 80P(2)(d) of the Income Tax Act. The AO had disputed the deductions based on the nature of activities carried out by the assessee, a Co-operative Credit Society, primarily involved in providing financial services, banking business, and credit facilities to its members. The CIT(A), however, allowed the deductions, considering precedents and holding the society eligible for the deductions under the mentioned sections.

2. Consideration of insertion of sec. 80P(4) and sub-clause (viia) to section 2(24) vide Finance Act, 2006:
The AO raised concerns regarding the insertion of sec. 80P(4) and sub-clause (viia) to section 2(24) by the Finance Act, 2006, effective from 01.04.2007. However, the CIT(A) did not find these provisions as hindrances to granting the deductions under sections 80P(2)(a)(i) and 80P(2)(d) to the assessee.

3. Classification of the assessee as a 'Primary Co-operative Bank' under the Banking Regulation Act, 1949:
The AO argued that the assessee fell under the category of a 'Primary Co-operative Bank' as per the definition in part V of the Banking Regulation Act, 1949. However, the CIT(A) disagreed, considering the nature of the society's activities and its classification as a Cooperative Credit Society, thereby justifying the eligibility for deductions under the Income Tax Act.

4. Reliance on the decision of the Hon’ble Bombay High Court in a specific case by the CIT(A):
The CIT(A relied on various judgments, including the decision of the Hon’ble Bombay High Court in a specific case, to support the allowance of deductions to the assessee. The CIT(A's decision was based on the interpretation of the nature of the society and its activities, aligning with the judicial precedents cited.

5. Restoration of the AO's order and setting aside of the CIT(A)'s order:
The revenue appealed for the restoration of the AO's order and setting aside the CIT(A)'s decision. However, the Tribunal partly allowed the appeal, following the judgment of the Hon’ble Jurisdictional High Court, granting the assessee the benefit of deductions under section 80P of the Income Tax Act. The Tribunal directed the AO to verify the income earned from dealings with non-members and pass a consequential order accordingly.

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