INCOME TAX OFFICER, HUBLI vs. M/S.POOJYA SHRI MAHANTAPPA CREDIT CO-OP SOCIETY LTD., DHARWAD

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ITA 577/BANG/2017Status: DisposedITAT Bangalore19 May 2017AY 2012-134 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The CIT(A) allowed the deduction, relying on jurisdictional High Court judgments. The Tribunal found no infirmity in the CIT(A)'s order, as the revenue could not point out specific defects and the decision followed established High Court precedents.

What were the facts?

The assessee, a cooperative society, claimed deduction under Section 80P for interest earned on loans advanced to its members. The Assessing Officer denied this deduction, considering the society's activities to be akin to banking.

What were the issues?

Whether a cooperative society engaged in extending credit facilities to its members is entitled to deduction under Section 80P(2)(a)(i) despite its activities resembling banking and potentially falling under Section 80P(4).

Which sections of the Income-tax Act were involved?

Section 80P,Section 80P(2)(a)(i),Section 80P(4),Section 2(24)(viia)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC-B” BENCH : BANGALORE

Before: SHRI SUNIL KUMAR YADAV

For Appellant: Shri. Pranav Krishna, Advocate
For Respondent: Smt. Swapna Das, JCIT, Shri. Pranav Krishna, Advocate
Hearing: 16.05.2017Pronounced: 19.05.2017

Per Sunil Kumar Yadav, Judicial Member

1.

This appeal is preferred by the revenue against the order of CIT(A), interalia, on the following ground:

1. Whether, on fact and circumstances of the case and in law, the Ld. CIT(A), Hubballi was justified in law in holding that the assessee society is entitled to deduction under section 80P(2)(a)(i) of the Income tax Act even when the assessee-society is mainly involved in extending

Page 2 of 4 credit facilities to its members which is in the nature of a bank transaction, treated on part with the new clause introduced in the definition of Income in Section 2(24)(viia) of the Act and comes under the purview of section 80P(4) w.e.f. 01.04.2007.

During the course of hearing, the learned counsel for the 2. assessee invited our attention to the order of the CIT(A) with the submission that CIT(A) has adjudicated the issue following the judgment of the jurisdictional High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd., vs ITO, Shri. Biluru Gurubasava Sahakari Sangh Niyamit, Bagalkote and Belgaum Merchants Co-op Credit Society Ltd., Vs. CIT. Besides CIT(A) has also followed the other judgments of different High Courts in this regard. Since the CIT(A) has decided the issue in the light of the judgment of jurisdictional High Court, no interference therein is called for.

3.

The learned DR, on the other hand, has submitted that the AO while making the disallowance under section 80P claimed by the assessee has taken into account the distinguished facts and the bye laws of the cooperative societies. Since the assessee was engaged in Page 3 of 4 banking activities, the AO disallowed the deduction claimed under section 80P(2)(a)(i) of the Income Tax Act.

4.

Having carefully examined the orders of the authorities below, in the light of rival submissions, we find that the assessee is a cooperative society registered under cooperative societies Act which claimed deduction under section 80P on an income by way of interest earned from its members on the loan advanced to them. The AO denied the deduction under section 80P(2)(a)(i) of the Act claimed by the assessee on the ground that the assessee is engaged in banking activities. But the CIT(A) re-examined the claim of the assessee in the light of the judgment of jurisdictional High Court as well as judgments of Hon’ble Gujarat High Court and was of the view that the assessee’s income earned in the course of providing credit facilities to its members is eligible for deduction under section 80P(2)(a)(i) of the Act.

During the course of hearing, the learned DR could not specifically point out any specific defect in the order of the CIT(A). Since the CIT(A) decided the issue following the judgment of Hon’ble jurisdictional High Court, I find no infirmity therein. Accordingly, I confirm his order.

5.

In the result, the appeal of the revenue stand dismissed.

Pronounced in the open court on 19th May, 2017.

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