2016 (4) TMI 1095 - AT - Income Tax

ITAT confirms deduction for agricultural loans under section 80P: Key ruling on eligibility criteria

The ITAT Jaipur allowed the appeals for A.Y. 2008-09 and 2009-10, confirming the assessee's entitlement to deduction under section 80P(2)(a)(i) of the ... Claim of deduction u/s 80P(2)(a)(i) denied - Held that:- The assessee has clearly demonstrated through its loan disbursed statement that during A.Y. 2008-09, it had disbursed 89.10% of its total loan disbursed towards agricultural and allied activities. Similarly, during A.Y. 2009- 10, the disbursement towards these activities was to the tune of 86.41%. Hence, we hereby confirm the claim of assessee for deduction u/s 80P(2)(a)(i) of the Act for both the years - Decided in favour of assessee. Issues:- Disallowance of deduction u/s 80P(2)(a)(i) of the Income Tax Act for A.Y. 2008-09 and 2009-10.Analysis:1. The appeals were filed against the order of Ld. CIT(A) Ajmer for A.Y. 2008-09 and 2009-10 regarding the disallowance of the deduction u/s 80P(2)(a)(i) of the Act. The issue was whether the assessee was entitled to the benefit of section 80P as per the ITAT's decision for A.Y. 2007-08.2. The assessee provided detailed loan disbursed statements for A.Y. 2008-09 and 2009-10, showing a significant percentage of loans disbursed towards agricultural and allied activities, such as minor irrigation, farm machinery, diversified activities, and rural housing. The Coordinate Bench in a related case held that loans for agricultural purposes, including livestock, qualify for section 80P benefits.3. The Coordinate Bench's finding emphasized that loans for agricultural implements, seeds, and livestock are considered agricultural activities under the Act, entitling the assessee to deduction under section 80P. The Coordinate Bench directed the AO to grant all benefits under section 80P to the assessee.4. After considering the arguments and evidence, the ITAT Jaipur confirmed the assessee's claim for deduction u/s 80P(2)(a)(i) for both A.Y. 2008-09 and 2009-10. The ITAT noted that the assessee had disbursed a significant portion of loans towards agricultural and allied activities, aligning with the Coordinate Bench's decision. Consequently, the appeals of the assessee were allowed, granting the deduction under section 80P(2)(a)(i) of the Act.This judgment highlights the importance of the nature of loans disbursed for agricultural activities in determining eligibility for deductions under section 80P of the Income Tax Act. The decision underscores the significance of consistent application of legal principles across different assessment years based on precedents set by higher authorities.