2017 (2) TMI 1015 - AT - Income Tax

Appeal Dismissed on Deduction Eligibility for Credit Cooperative

ITO, Ward-1 (5), Belgaum Versus The Ramdurg Taluka Primary Teachers Cooperative Society Ltd. And Vice-Versa

The Tribunal dismissed the appeal filed by Revenue and Cross Objection by the assessee against the CIT (Appeals) order for AY 2012-13 regarding the ... Claim of deduction u/s 80P(2)(a)(i) - Held that:- The issue is now covered by the decision in favour of the assessee in the case of CIT Vs. Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha, Bagalkot [2015 (1) TMI 821 - KARNATAKA HIGH COURT] as held that a co-operative society registered as co-operative society, providing credit facilities to its members and not registered with the RBI cannot be denied the exemption under section 80P(1) of the IT Act. Respectfully following the same, we uphold that the assessee is a cooperative society and not a cooperative bank and, therefore, entitled to deduction under sec. 80P of the Act - Decided in favour of assessee Issues involved:- Appeal filed by Revenue and Cross Objection by assessee against CIT (Appeals) order for AY 2012-13- Allowance of deduction under sec. 80P(2)(a)(i) of the Income Tax Act, 1961Analysis:Issue 1: Appeal and Cross ObjectionThe case involves an appeal by the Revenue and a Cross Objection by the assessee against the order of the Commissioner of Income Tax (Appeals) for the Assessment Year 2012-13. The appeal pertains to the allowance of deduction under sec. 80P(2)(a)(i) of the Income Tax Act, 1961.Issue 2: Deduction under sec. 80P(2)(a)(i)The primary issue in this case is whether the assessee is entitled to deduction under sec. 80P(2)(a)(i) of the Act. The assessee, a cooperative society registered under the Karnataka Cooperative Societies Act, 1959, claimed deduction for providing credit facilities to its members. The Assessing Officer initially rejected the claim, citing that the assessee was a cooperative bank and not eligible for the deduction under sec. 80P(4). However, the Commissioner of Income Tax (Appeals) allowed the claim, emphasizing that the assessee was a cooperative society providing credit facilities, not a cooperative bank, and hence, entitled to the deduction under sec. 80P(2)(a)(i).Analysis of Commissioner of Income Tax (Appeals) DecisionThe Commissioner of Income Tax (Appeals) supported the assessee's claim by highlighting that the society was registered under the Karnataka Cooperative Societies Act, engaged in providing credit facilities to its members, and did not possess a banking license from the RBI. The Commissioner noted that the case was similar to previous decisions of the Jurisdictional High Court of Karnataka, which held that cooperative societies providing credit facilities and not registered as banks were entitled to exemption under sec. 80P(1) of the IT Act. The Commissioner concluded that the assessee, being a cooperative society and not a cooperative bank exclusively carrying on banking business, was eligible for the deduction under sec. 80P(2)(a)(i).Judgment and Dismissal of Appeal and Cross ObjectionThe Tribunal upheld the Commissioner's decision, citing the precedents set by the Hon'ble Karnataka High Court in favor of the assessee. It confirmed that the assessee, being a cooperative society providing credit facilities to its members and not a cooperative bank, was entitled to the deduction under sec. 80P of the Act. Consequently, the appeal by the Revenue and the Cross Objection by the assessee were dismissed.In conclusion, the Tribunal's decision aligned with the legal interpretation that a cooperative society providing credit facilities, not registered as a bank, is eligible for the deduction under sec. 80P(2)(a)(i) of the Income Tax Act, 1961.