COMMISSIONER OF INCOME TAX - II vs. MODASA DHANSURA TALUKA PRIMARY TEACHERS CO-OP CREDIT SOCIETY LTD

Facts

The Revenue has filed a Tax Appeal against the order of the Income Tax Appellate Tribunal (ITAT) dated January 31, 2014, for Assessment Year 2009-10. The ITAT had confirmed the order of the Commissioner of Income Tax (Appeals) [CIT(A)], allowing a deduction of Rs. 38,70,740/- to the assessee under Section 80P(2)(a)(i) of the Income Tax Act, 1961. The assessee is Modasa Dhansura Taluka Primary Teachers Co-op Credit Society Ltd., which is a credit co-operative society and not a co-operative bank. The Revenue is aggrieved by the deletion of the addition made by the Assessing Officer.

Held

The High Court dismissed the appeal filed by the Revenue. The Tribunal had relied on a previous decision of the same High Court in the case of Commissioner of Income Tax Vs. Jafari Momin Vikas Co-operative Credit Society Ltd. In that precedent, the Division Bench had held that Sub-Section (4) of Section 80P would not apply to an assessee which is not a Co-operative Bank. The Revenue's contention that Section 80P(4) should exclude credit societies that are not co-operative banks was negatived in the cited case. Since the present assessee is admittedly a credit co-operative society and not a credit co-operative bank, the exclusion under Section 80P(4) was held not to apply. Therefore, the High Court found no reason to interfere with the Tribunal's order and held the proposed substantial question of law against the Revenue.

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.38,70,740/-? Assessee's Contention: The judgment does not record any specific contentions made by the assessee. However, the ITAT's decision, confirmed by the High Court, implies the assessee argued for eligibility for deduction under Section 80P(2)(a)(i). Revenue's Contention: The Revenue contended that the assessee, being a credit society and not a co-operative bank, should not be entitled to the deduction. They likely argued that Section 80P(4) of the Act, which excludes co-operative banks from the benefit of Section 80P, should be interpreted to exclude credit societies as well, or that the assessee did not fulfill the conditions for the deduction.