COMMISSIONER OF INCOME TAX - II vs. TALOD TALUKA PRIMARY TEACHER CO-OP. CREDIT SOCIETY LTD

Facts

The Revenue, Commissioner of Income Tax - II, filed a Tax Appeal before the High Court of Gujarat at Ahmedabad challenging an order dated January 31, 2014, passed by the Income Tax Appellate Tribunal (ITAT) in ITA No. 420/Ahd/2013. The appeal pertains to Assessment Year 2009-10. The ITAT had confirmed the order of the Commissioner of Income Tax (Appeals) [CIT(A)], which granted the assessee, Talod Taluka Primary Teacher Co-op. Credit Society Ltd., a deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961. This confirmation resulted in the deletion of an addition of Rs. 50,38,646/- made by the Assessing Officer.

Held

The High Court held that the appellate tribunal has not erred in confirming the order of the CIT(A) and allowing the deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961. The Court relied on its own decision in the case of Commissioner of Income Tax Vs. Jafari Momin Vikas Co-operative Credit Society Ltd. The reasoning was that Sub-Section (4) of Section 80P, which excludes co-operative banks, does not apply to the assessee, which is a co-operative credit society and not a co-operative bank. The Division Bench in the cited case had negatived the revenue's contention that Section 80P(4) also excludes credit societies that are not co-operative banks. Therefore, the exclusion of Section 80P(4) would not apply to the respondent-assessee. The proposed substantial question of law was held against the revenue. The appeal was dismissed.

Key Issues

1. Whether the appellate tribunal has substantially erred in confirming the order of the CIT(A) holding that the assessee is entitled to deduction under Section 80P(2)(a)(i) of the Act thereby deleting the addition of Rs.50,38,646/-? (Question of law) The Revenue contended that the ITAT erred in allowing the deduction under Section 80P(2)(a)(i) and deleting the addition. The Revenue's argument, as understood from the judgment, likely revolved around the applicability of Section 80P(4) of the Income Tax Act, 1961, which excludes co-operative banks from the benefit of Section 80P. The Assessee argued, and the Tribunal held, that the assessee is a co-operative credit society and not a co-operative bank, thus Section 80P(4) does not apply to it. The Tribunal relied on a previous decision of the High Court in Commissioner of Income Tax Vs. Jafari Momin Vikas Co-operative Credit Society Ltd.