THE BARNALA PRIMARY COOPERATIVE AGRICULTURAL DEVELOPMENT BANK LIMITED,BARNALA vs. INCOME TAX OFFICER, BARNALA

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ITA 983/CHANDI/2024Status: DisposedITAT Chandigarh21 April 2025AY 2020-21Bench: SHRI RAJPAL YADAV (Vice President), SHRI MANOJ KUMAR AGGARWAL (Accountant Member)1 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that as per Supreme Court's ruling, a cooperative society not transacting banking business as defined in the Banking Regulation Act is not a cooperative bank. Therefore, the deduction under Section 80P(2)(a)(i) is allowable.

What were the facts?

The assessee, a cooperative society, claimed a deduction under Section 80P(2)(a)(i) for profits from banking activities. The Assessing Officer denied this deduction, considering it a cooperative bank and not a society eligible for the deduction. The CIT(A) confirmed this denial.

What were the issues?

Whether the assessee, a cooperative society engaged in banking/credit facilities, is eligible for deduction under Section 80P(2)(a)(i) or if it is to be treated as a cooperative bank.

Which sections of the Income-tax Act were involved?

Section 80P(2)(a)(i),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, CHANDIGARH

Before: HON’BLE SHRI RAJPAL YADAV & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

(िनधा�रणवष� / Assessment Year: 2020-21) The Barnala Primary Cooperative ITO Agricultural Development Bank Ltd. Barnala 148101. बनाम/ Vs. Dhanaula Road opp. PSPCL Office, Barnala.148001. �थायीलेखासं./जीआइआरसं./PAN/GIR No. AAAAT-4569-L (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Sh. Deepak Aggarwal(Adv.) – Ld. AR ��थ�कीओरसे/Respondent by : Smt. Kusum Bansal (CIT) – Ld. DR सुनवाईकीतारीख/Date of Hearing : 02-04-2025 घोषणाकीतारीख /Date of Pronouncement : 21-04-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2020-21 arises out of an order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 05-08-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 21-09-2022. The sole grievance of the assessee is rejection of claim u/s 80P(2)(a)(i) for Rs.168.23 Lacs. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under.

2.

The impugned deduction has been denied by Ld. AO on the ground that the assessee was a co-operative bank and not a cooperative society though the assessee claimed that it was co- operative society engaged in the business of banking or providing credit facilities to its members. The Ld. AO also held that the assessee has income from other sources from Rs.132.36 Lacs in the shape of interest on deposits from bank, commission income, dividend income and interest on investment. Finally, the deduction of Rs.168.23 Lacs as claimed by the assessee u/s 80P(2)(a)(i) was denied to the assessee. The Ld. CIT(A) confirmed the assessment for want of any response from the assessee. Aggrieved, the assessee is in further appeal before us.

3.

From case records, it emerges that the assessee is constituted as a cooperative society and it is providing credit facilities to its members as per guidelines framed by its parent body SADB and NABARD. As per the provisions of Sec.80P(2)(a)(i) any co-operative society which is engaged in carrying on the business of banking or providing credit facilities to its members, the whole of the amount of profits and gains of business attributable to such an activity would be eligiblefor deduction. The Hon’ble Supreme Court in the case of Kerala State Co-operative Agricultural and Rural Development Bank Ltd. (CA Nos.10069 of 2016 dated 14-09-2023)held that if a co-operative society does not transact the business of banking as defined in clause (b) of Section 5 of the Banking Regulation Act, 1949, it would not be a cooperative bank. In fact, similar deduction as claimed by the assessee has been granted by Ld. AO in scrutiny assessment proceedings for AY 2023-24 vide assessment order u/s 143(3) dated 21-12-2024, a copy of which has been placed on record.On these facts, we direct Ld. AO to allow impugned deduction to the assessee.

4.

The appeal stand allowed in terms of our above order. Order pronounced on 21-04-2025.

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