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Appeal on Cooperative Society's Deduction Eligibility under Section 80P(2) The Revenue appealed against the CIT(A)'s order for AY 2010-11, challenging the eligibility of the assessee, a cooperative society, for deduction under ...
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Appeal on Cooperative Society's Deduction Eligibility under Section 80P(2)
The Revenue appealed against the CIT(A)'s order for AY 2010-11, challenging the eligibility of the assessee, a cooperative society, for deduction under Section 80P(2) of the Act. The Tribunal remitted the matter to the AO for further verification of the nature of the assessee's business activities to determine its eligibility for the deduction, citing a relevant Supreme Court decision. The appeal was partly allowed for statistical purposes, with the order pronounced in Chennai on 2nd January 2019.
Issues: - Appeal against CIT(A) order for AY 2010-11 - Eligibility of assessee for deduction U/s. 80(P)(2) of the Act
Analysis: 1. The appeal was filed by the Revenue against the CIT(A)'s order for AY 2010-11. The Revenue raised various grounds of appeal, challenging the eligibility of the assessee for deduction U/s. 80(P)(2) of the Act.
2. The Revenue contended that the assessee, a cooperative society, may not function as a normal scheduled bank but as a specialized bank in re-finance. The CIT(A) was criticized for not recognizing that the bank's lending activities extend beyond its members, contrary to Sec. 80P(2) provisions.
3. The Tribunal noted a delay in filing the appeal, which was condoned due to reasons beyond the Revenue's control. The facts revealed that the assessee society was formed under the Tamilnadu Cooperative Societies Act, catering to agricultural needs by providing loans to primary Cooperative Agricultural and Rural Development Banks.
4. The AO disallowed certain provisions made by the assessee, leading to a total income of 'NIL' after setting off losses. The CIT(A) allowed the deduction U/s. 80P based on a Tribunal decision from the previous year. The Revenue argued that the society's business operations were not limited to a taluk level, affecting its eligibility for the deduction.
5. The Tribunal deliberated on whether the assessee was entitled to the deduction U/s. 80P. It highlighted the exemption for cooperative societies providing credit to members, with an exception for cooperative banks. The issue revolved around determining if the assessee was a cooperative society or a bank, and if its operations were confined to a taluk level.
6. The Tribunal remitted the matter to the AO for further verification of the nature of the assessee's business activities to ascertain its eligibility for the deduction. The decision of the Hon'ble Supreme Court in a relevant case was cited for consideration.
7. Ultimately, the appeal filed by the Revenue was partly allowed for statistical purposes, with the order pronounced in Chennai on 2nd January 2019.
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