Cooperative Society wins appeal for deduction under section 80P(2) of the Act

The Tribunal allowed the appeal of a Cooperative Society against the disallowance of deduction under section 80P(2)(a)(i) of the Act for A.Y. 2009-10. The Tribunal held that the appellant, not being a Cooperative Bank but providing credit facilities to members, was entitled to the deduction as per section 80P(2) of the Act. Relying on precedents, including a Karnataka High Court decision, the Tribunal directed the Assessing Officer to allow the deduction claimed by the appellant, setting aside the Ld. CIT(A)'s decision. The appeal was allowed, and the order was pronounced on 15.6.2015.

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Issues:
- Appeal against disallowance of deduction u/s. 80P(2)(a)(i) of the Act.

Analysis:
1. The appellant, a Cooperative Society, appealed against the disallowance of the deduction claimed u/s. 80P(2)(a)(i) of the Act by the Ld. CIT(A) for A.Y. 2009-10.

2. The Assessing Officer disallowed the deduction by applying section 2(24)(viia) of the Act, which was upheld by the Ld. CIT(A). The appellant contended that as a Cooperative Society registered under the Karnataka State Cooperative Societies Act, it was entitled to the deduction u/s. 80P(2) of the Act.

3. The Tribunal noted that the appellant was not a Cooperative Bank and did not hold a banking license. Its primary business was to provide credit facilities to its members. Section 80P of the Act allows deductions for income of the society, and the appellant's activities fell under sub-section (2) of the same. The introduction of section 80P(4) by the Finance Act 2006 excluded the benefit for Cooperative Banks exclusively engaged in banking business.

4. Relying on judicial precedents, including a decision of the Hon'ble Karnataka High Court, the Tribunal concluded that the appellant, being a Cooperative Society engaged in lending money to its members, was eligible for the deduction u/s. 80P(2)(a)(i). The Tribunal set aside the Ld. CIT(A)'s findings and directed the Assessing Officer to allow the deduction as claimed by the appellant.

5. Consequently, the appeal filed by the appellant was allowed, and the order was pronounced in the open court on 15.6.2015.

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