Agricultural Credit Society qualifies for tax deduction under IT Act: ITAT ruling

The Appellate Tribunal ITAT COCHIN ruled that the assessee, a primary agricultural credit society, is entitled to deduction u/s. 80P(2)(a)(i) of the I.T.Act for the assessment year 2014-2015. The Tribunal relied on the precedent set by the High Court of Kerala, emphasizing that such societies, classified under the State law, are eligible for the deduction due to their primary objective of agricultural credit activities. The Tribunal dismissed the Revenue's appeal, affirming the assessee's entitlement to the deduction under section 80P(2) of the Act.

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Issues Involved:
1. Entitlement to deduction u/s. 80P(2)(a)(i) of the I.T.Act.

Analysis:
The judgment by the Appellate Tribunal ITAT COCHIN involved the issue of whether the assessee, a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969, is entitled to deduction u/s. 80P(2)(a)(i) of the I.T.Act for the assessment year 2014-2015. The Assessing Officer had denied the deduction on the grounds that the assessee was primarily engaged in banking activities, falling under section 80P(4) of the I.T. Act. However, the CIT(A), relying on the judgment of the Jurisdictional High Court, held that the assessee was indeed entitled to the deduction under section 80P(2) of the Act.

The Tribunal noted that the Hon'ble High Court of Kerala in the case of Chirakkal Service Co-op Bank Ltd. had previously held that primary agricultural credit societies registered under the Kerala Cooperative Societies Act, 1969 are eligible for the benefit of deduction u/s. 80P(2). The High Court emphasized that the societies' classification as primary agricultural credit societies under the State law indicated their principal objective of engaging in agricultural credit activities and providing loans for agricultural purposes. The Tribunal, in alignment with this precedent, held that the assessee-Society, being similarly classified, was entitled to the deduction u/s. 80P(2) of the Act.

Therefore, based on the legal interpretation and precedent set by the Hon'ble High Court, the Appellate Tribunal ITAT COCHIN concluded that the assessee-Society was indeed entitled to the benefit of deduction u/s. 80P(2) of the I.T. Act for the relevant assessment year. Consequently, the appeal filed by the Revenue challenging this entitlement was dismissed by the Tribunal.

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