Tribunal grants deduction under IT Act for cooperative society activities

The Tribunal allowed the appeals for statistical purposes, directing the Assessing Officer to examine the society's activities under the Kerala Co-operative Societies Act, 1969, and grant the deduction u/s 80P(2)(a)(i) if compliant with cooperative society activities, in accordance with the law. The decision emphasized the significance of filing returns, verifying eligibility annually, and complying with cooperative society regulations for claiming deductions under the IT Act, citing relevant case law precedents.

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Issues:
- Denial of deduction u/s 80P(2) for non-filing of income tax return by the assessee.

Analysis:
1. The appeals were against the CIT(A)'s order denying deduction u/s 80P(2) due to non-filing of income tax return by the assessee for the assessment years 2010-2011 and 2011-2012. The assessee, a primary agricultural credit society, contended that being exempt from filing returns due to its cooperative society status, it belatedly filed returns and sought the deduction.

2. The High Court judgment in the case of Chirakkal Service Co-operative Bank Ltd. was pivotal. It clarified that belatedly filed returns must be considered for claiming deductions u/s 80P(2) of the IT Act. The Court emphasized that the inhibition against allowing deductions applies when no returns are filed. It also highlighted that returns filed beyond stipulated periods can be accepted for exemption consideration.

3. The Full Bench of the High Court in The Mavilayi Service Co-operative Bank Ltd. v. CIT further emphasized that the Assessing Officer must inquire into the factual activities of the assessee society to determine eligibility for deduction u/s 80P. Each assessment year is separate, and eligibility must be verified annually. The Court stressed that the registration certificate alone does not guarantee eligibility; the AO must assess the society's activities.

4. Consequently, the Tribunal allowed the appeals for statistical purposes, restoring the issue of deduction u/s 80P(2)(a)(i) to the Assessing Officer. The AO was directed to examine the society's activities under the Kerala Co-operative Societies Act, 1969, and grant the deduction if compliant with cooperative society activities, in line with the law.

This detailed analysis showcases the legal intricacies and precedents considered in the judgment, emphasizing the importance of filing returns, eligibility verification, and compliance with cooperative society regulations for claiming deductions under the IT Act.

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