2015 (10) TMI 1428 - AT - Income Tax

Tribunal overturns decision, emphasizes proper examination in determining credit co-operative status.

The Tribunal allowed the appeal, setting aside the lower authorities' decision to reject the claim under section 80P(2)(a)(i) of the Income-tax Act. It ... Rejection of claim under section 80P(2)(a)(i) - AO denied exemption on the ground that as per sub-section (4) of section 80P, the provision of section 80P is not applicable in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank - Held that:- As decided in case of Jafari Momin Vikas Co-op. Credit Society Ltd [2014 (2) TMI 28 - GUJARAT HIGH COURT] section 80P, sub-section (4), would be applicable only in the case of a credit co-operative bank and not a credit co-operative society. Still the dispute remains whether the assessee is a credit co-operative bank or a credit co-operative society. Admittedly, the Assessing Officer has not examined this aspect. The Commissioner of Income-tax (Appeals), of course, has dealt with on this, but he has not allowed any specific opportunity to the assessee so as to point out how the assessee is not a co-operative bank. In our opinion, it would meet the ends of justice if the orders of the authorities below are set aside and the matter is restored back to the file of the Assessing Officer for re-examination in the light of the decision of the hon'ble jurisdictional High Court in the case of Jafari Momin Vikas Co-op. Credit Society Ltd. (supra). - Decided in favour of assessee for statistical purposes. Issues:Appeal against rejection of claim under section 80P(2)(a)(i) of the Income-tax Act, 1961 - Dispute whether the assessee is a credit co-operative bank or a credit co-operative society.Analysis:1. The appeal was filed against the order of the Commissioner of Income-tax (Appeals) for the assessment year 2007-08. The main ground raised by the assessee was the rejection of the claim under section 80P(2)(a)(i) of the Income-tax Act, 1961, and the treatment of the co-operative credit society as a co-operative bank under section 80P(4) of the Act. The assessee argued that the deduction under section 80P(2)(a)(i) should be allowed against their income.2. During the hearing, the assessee's counsel cited a decision by the jurisdictional High Court in a similar case, which favored the assessee. The Departmental representative, however, supported the lower authorities' decision, stating that the definition of a co-operative bank as per the Banking Regulation Act led to the conclusion that the assessee-society fell within that definition.3. The Tribunal noted that the Assessing Officer had denied the exemption under section 80P to the assessee based on the exclusion clause in section 80P(4), which applies to co-operative banks. Referring to the High Court's decision, it was established that the exclusion clause did not apply to credit co-operative societies. The Tribunal emphasized that the dispute centered on whether the assessee was a credit co-operative bank or a credit co-operative society, which had not been adequately examined by the Assessing Officer.4. The Tribunal, considering the lack of detailed examination by the Assessing Officer and the need for the assessee to be heard on the matter, set aside the lower authorities' orders. The Tribunal directed the Assessing Officer to re-examine the issue in light of the High Court's decision and provide the assessee with a fair opportunity to present their case. Consequently, the assessee's appeal was deemed allowed for statistical purposes.5. In conclusion, the Tribunal's decision highlighted the importance of proper examination and due process in determining whether an entity qualifies as a co-operative bank or a co-operative society for the purposes of claiming deductions under section 80P of the Income-tax Act, 1961. The case was remanded back to the Assessing Officer for a fresh assessment in line with the High Court's ruling and ensuring the assessee's right to be heard.