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of <h1>Court allows appeals challenging ITAT's order on assessment years under Income-tax Act, remands for reexamination.</h1> <h3>Bellad Bagewadi Krishi Seva Sahakari Bank Ltd. Versus Income-Tax Officer</h3> Bellad Bagewadi Krishi Seva Sahakari Bank Ltd. Versus Income-Tax Officer - [2019] 415 ITR 454 (Kar) Issues:Challenging the order of the Income-tax Appellate Tribunal regarding assessment years 2007-08, 2008-09, and 2009-10 under section 80P(2)(a)(i) of the Income-tax Act, 1961.Detailed Analysis:Issue 1:The primary issue in this case revolves around the eligibility of the appellant, a primary agricultural credit society, for the benefit of deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961. The Assessing Officer treated the interest earned from a nominal member, Vishwanath Sugars Limited, as income from other sources, leading to the denial of deductions. The Commissioner of Income Tax (Appeals) allowed the appeals, but the Tribunal set aside the order and remanded the matter. The Tribunal concluded that the interest earned should be considered as part of banking activities and eligible for exemption under section 80P(2)(a)(i). The substantial questions of law raised included the status of the appellant as a primary agricultural credit society and the application of section 80P(4) to disallow the claim under section 80P(2)(a)(i).Issue 2:The appellant argued that they fulfilled the criteria for a primary co-operative agricultural and rural development bank, as defined under section 80P(4) of the Act. The appellant contended that the Tribunal unjustly denied the benefit of section 80P(4) without providing an opportunity to establish their eligibility. The appellant sought a remand to the Assessing Officer to present their case regarding the exception clause permitted under section 80P(4) and its Explanation. The appellant highlighted the area of operation and membership criteria to support their claim as a primary co-operative agricultural and rural development bank.Issue 3:The Court considered the arguments presented by both parties and analyzed the provisions of the Act, particularly section 80P(4) and its Explanation. The Court found merit in the appellant's contention that the Tribunal should have provided an opportunity before deciding on the application under section 80P(4). Given the shifting focus from section 80P(2)(a)(i) to section 80P(4) without basis, the Court deemed it appropriate to remand the matters to the Assessing Officer for a fresh consideration. The Court emphasized the need to allow the appellant to present its case regarding the applicability of section 80P(4) and its Explanation.Conclusion:The Court allowed the appeals, setting aside the impugned orders and remanding the matters to the Assessing Officer for reexamination. The Assessing Officer was directed to consider the case in light of the observations made, relevant case law, and circulars, and to make a decision in accordance with the law promptly. The Court did not address the substantial questions of law due to the remand order, leaving all rights and contentions of the parties open.
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