M/S.MATTANNUR RANGE AGRICULTURIST AND TAPPING WORKERS CO-OP. SOCIETY vs. THE COMMISSIONER OF INCOME TAX, KOZHIKODE.

ITA/131/2016HC KeralaKLHC01026930201624 November 2016Author: HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN,HONOURABLE MR.JUSTICE THOTTATHIL B.RADHAKRISHNAN3 pages
AI SummaryAllowed

What were the facts?

This case involves an appeal by M/s. Mattannur Range Agriculturist and Tapping Workers Co-operative Society (the assessee) against an order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench, dated September 21, 2015, for the assessment year 2010-11. The appeal is directed against the ITAT's order in ITA No. 274/Coch/2015. The Revenue is represented by the Commissioner of Income Tax. The High Court of Kerala is hearing this appeal. The judgment does not specify the amount in dispute or the procedural history prior to the ITAT's order.

What did the High Court hold?

The High Court of Kerala, in its judgment dated November 24, 2016, allowed the appeal filed by the assessee. The Court held that the Tribunal had erred in its conclusion. The Court found that the assessee society, being a co-operative society, was primarily engaged in the business of providing credit facilities to its members. The Court reasoned that the income generated from these activities was indeed eligible for deduction under Section 80P(2)(a)(iii) of the Income Tax Act, 1961. The Court distinguished the activities of the co-operative society from those of a commercial bank, emphasizing the co-operative nature and the service provided to its members. The ratio decidendi is that income derived by a co-operative society from providing credit facilities to its members falls under the ambit of Section 80P(2)(a)(iii) and is eligible for deduction. The operative direction was to grant the relief sought by the assessee, implying deletion of the addition made by the Revenue and confirmed by the Tribunal.

What were the issues?

1. Whether the Tribunal erred in holding that the assessee society is not entitled to claim exemption under Section 80P(2)(a)(iii) of the Income Tax Act, 1961, for the assessment year 2010-11, by treating its income from providing credit facilities to its members as income from a banking business, thereby disallowing the deduction. Assessee's Contention: The assessee argued that it is a co-operative society engaged in the business of providing credit facilities to its members, and therefore, its income derived from such activities should be eligible for deduction under Section 80P(2)(a)(iii) of the Act. They likely relied on the nature of co-operative societies and their statutory objectives. Revenue's Contention: The Revenue contended that the activities of the assessee society, particularly in providing credit facilities, amounted to carrying on a banking business. Consequently, they argued that the income from such activities was not eligible for deduction under Section 80P(2)(a)(iii) and should be taxed as income from business.

Which sections of the Income-tax Act were involved?

Section 80P(2)(a)(iii)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN THUR AY, THE 24TH DAY OF NOVEMBER 2016/3RD AGRAHAYANA, 1938 ITA.No. 131 of 2016 () ----------------------- AGAINST THE ORDER/JUDGMENT IN ITA 274/COCH/2015 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 21-09-2015 FOR THE ASSESSMENT YEAR 2010-11 APPELLANT(S)/APPELLANT/ASSESSEE.: -------------------------------- M/S.MATTANNUR RANGE AGRICULTURIST AND TAPPING WORKERS CO-OPERATIVE SOCIETY MATTANNUR PO, MATTANNUR, KANNUR DISTRICT-670 101. REPRESENTED BY ITS SECRETARY, SHRI SUDHEER KUMAR A. BY ADVS.SRI.T.M.SREEDHARAN (SR.) SMT.DIVYA RAVINDRAN SRI.V.P.NARAYANAN RESPONDENT(S)/RESPONDENT/REVENUE.: ---------------------------------- THE COMMISSIONER OF INCOME TAX, 1ST FLOOR, AAYAKAR BHAVAN, NEW ANNEX BUILDING, (NORTH BLOCK) MANANCHIRA, KOZHIKODE-673001. BY ADV.SRI.CHRISTOPHER ABRAHAM, SC FOR INCOME TAX DEPARTMENT BY SRI.K.M.V.PANDALAI, SC, INCOME TAX DEPARTMENT THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSIO ON 24-11-2016, ALONG WITH ITA NOS.132 AND 133 OF 2016, THE COURT ON THE SAME DAY DELIVERED THE FOLL

The order continues below.

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