2023 (7) TMI 856 - AT - Income Tax

Appellate Tribunal allows deduction under sec. 80P(2)(a)(i) for Co-op Banks, nominal members not a bar

The Appellate Tribunal ITAT PANAJI allowed twin appeals ITA.Nos.228 & 214/PAN./2019 for assessment years 2015-2016 & 2016-2017. The disallowance ... Deduction u/s 80P - Claim denied as assessee having nominal members - HELD THAT:- Their lordships’ subsequent landmark decision in Mavilayi Service Co-operative Bank Ltd. [2021 (1) TMI 488 - SUPREME COURT] has settled the law that such a reason of an assessee having nominal members as well would hardly disentitle it for the impugned sec. 80P(2)(a)(i) deduction. Faced with the situation, we accept the assessee’s instant identical sole substantive ground - Decided in favour of assessee. Issues involved: Appeal against CIT(A)'s orders regarding sec. 80P(2)(a)(i) deduction disallowance for assessment years 2015-2016 & 2016-2017 u/s 143(3) of the Income Tax Act, 1961.The Appellate Tribunal ITAT PANAJI heard twin appeals ITA.Nos.228 & 214/PAN./2019 for the assessment years 2015-2016 & 2016-2017. The appeals arose against the CIT(A), Mangaluru's separate orders dated 19.03.2019 and 08.03.2019, involving proceedings u/s 143(3) of the Income Tax Act, 1961. The main issue was the disallowance of sec. 80P(2)(a)(i) deduction totaling Rs. 1,31,29,258/- and Rs. 62,99,798/- for the respective assessment years. Both lower authorities had denied the deduction based on the presence of regular as well as nominal members, citing the judgment in Citizen Co-operative Society Limited [2017] 397 ITR 1 (SC).During the hearing, it was noted that the main grievance of the assessee was the disallowance of sec. 80P(2)(a)(i) deduction. The learned lower authorities had held that the assessee was not eligible for the deduction due to having both regular and nominal members, following the apex court's judgment in Citizen Co-operative Society Limited. The Departmental Representative (DR) relied on this reasoning. However, it was pointed out that a subsequent decision in Mavilayi Service Co-operative Bank Ltd., vs. CIT [2021] 431 ITR 1 (SC) had clarified that the presence of nominal members does not disentitle an assessee from claiming the sec. 80P(2)(a)(i) deduction. Consequently, the Tribunal accepted the assessee's substantive ground and allowed the appeals.In conclusion, the Tribunal allowed the twin appeals of the assessee, noting that the presence of nominal members does not preclude the assessee from claiming the sec. 80P(2)(a)(i) deduction. The order was pronounced in the open court on 19.07.2023.