Tribunal remands deduction issue under section 80P, allows appeals for AY 2009-10 and 2014-15.

The Tribunal set aside the Ld. CIT(A)'s order and remanded the issue to the AO to reconsider the deduction under section 80P(2)(a)(i) in line with the Supreme Court's ruling. The appeals for AY 2009-10 and AY 2014-15 were allowed for statistical purposes, and Stay Petitions were dismissed as infructuous.

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Issues Involved:
1. Denial of deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961.
2. Belated filing of return beyond the period stipulated under section 139(1), section 139(4), section 142(1), or section 148.
3. Classification of the assessee as a Primary Agricultural Credit Society (PACS).

Summary:

Issue 1: Denial of Deduction under Section 80P(2)(a)(i)
The main grievance of the assessee, Thalore Service Co-operative Bank Ltd, was against the action of the Ld. CIT(A) in confirming the AO's denial of deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961. The AO denied the claim on the grounds that the assessee provided banking facilities to the general public, classifying it as a Co-operative Bank, thereby making it ineligible for the deduction under section 80P(4). The Ld. CIT(A) upheld this view, emphasizing that the certificate from the Registrar of Co-operative Societies alone was insufficient to qualify for the deduction.

Issue 2: Belated Filing of Return
The Ld. CIT(A) also denied the deduction on the basis that the assessee filed its return of income beyond the due date as prescribed under section 139(1) and only in response to a notice under section 148. However, the Tribunal noted that the Hon'ble Kerala High Court in the case of Chirakkal Service Co-operative Bank Ltd. Vs. CIT (384 ITR 490) held that returns filed beyond the period stipulated under section 139(1) or 139(4) or in response to sections 142(1) or 148 should be accepted and acted upon in accordance with the law. Therefore, the Tribunal found that the Ld. CIT(A)'s reason for denying the deduction on the grounds of belated filing could not be sustained.

Issue 3: Classification as PACS
The Ld. CIT(A) and AO contended that the assessee could not be classified as a Primary Agricultural Credit Society (PACS) because it provided financial accommodation not exclusively for agricultural purposes. The Tribunal referred to the Hon'ble Supreme Court's decision in Malvilayi Service Co-operative Bank Ltd. & Ors Vs. CIT (431 ITR 1), which clarified that section 80P(2)(a)(i) should be interpreted liberally and reasonably, and that the deduction applies even if loans are given to members for non-agricultural purposes. The Supreme Court also noted that loans to nominal members qualify for the deduction under section 80P(2)(a)(i).

Conclusion:
The Tribunal set aside the order of the Ld. CIT(A) and restored the issue back to the AO to re-examine the claim for deduction under section 80P(2)(a)(i) in light of the Supreme Court's decision in Malvilayi Service Co-operative Bank Ltd. The appeals for both AY 2009-10 and AY 2014-15 were allowed for statistical purposes, and the Stay Petitions were dismissed as infructuous.

Order Pronounced:
The order was pronounced in the open court on 19/05/2023.

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