DCIT, BANGALORE vs. M/S ITI EMPLOYEES UNION CO-OP CREDIT SOCIETY, BANGALORE

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ITA 1169/BANG/2016Status: DisposedITAT Bangalore20 January 2017AY 2012-134 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that Section 80P(4) applies only to Co-operative Banks and not to Credit Co-operative Societies. Therefore, the assessee was entitled to the deduction under Section 80P(2).

What were the facts?

The assessee, a Co-operative Credit Society, claimed deduction under Section 80P(2) for its profits from providing credit facilities. The AO denied this deduction, invoking Section 80P(4) and treating the activity as banking.

What were the issues?

Whether a Co-operative Credit Society is considered a Co-operative Bank for the purpose of Section 80P(4) and thus disentitled to deduction under Section 80P(2).

Which sections of the Income-tax Act were involved?

Section 80P(2),Section 80P(4),Section 143(3)

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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE

Before: SHRI GEORGE GEORGE & SHRI INTURI RAMA RAO

For Respondent: Shri. M. K. Biju, JCIT
Hearing: 17.1.2017Pronounced: 20.1.2017

Per George George, Judicial Member

1.

This appeal at instance of the revenue is directed against CIT(A)’s order dated 18.03.2016. The relevant assessment year is 2012 – 2013.

2.

The solitary issue that arises for our consideration is whether the CIT(A) is justified in granting deduction under section 80P(2) of Act to the assessee society.

3.

Brief facts of the case are as follows:

The assessee is a Co-operative Society engaged in the business of providing credit facilities to its members. For the AY 2012-13, the return of income was filed on 15.9.2012 declaring ‘Nil’ income after claiming deduction under section 80P(2)(a)(i) of the entire profits of Rs.71,58,598/-. The assessment u/s 143(3) of the Act was completed vide order dated 6.3.2015. The AO held that provisions of section 80P(4) are attracted in the instant case as the assessee’s activity of granting financial credit constitutes income from banking and was not entitled to the deduction u/s 80P(2).

4.

Aggrieved by the denial of the benefit u/s 80P(2), the assessee preferred an appeal to the first appellate authority. The CIT(A), following the judgment of the Hon’ble Karnataka High Court in the case of CIT Vs. Viluru Gurubasava Pattina Sahakari Sangha Niyamitha (369 ITR 86) and the order of the Tribunal in the assessee’s own case for AY 2009-10, decided the issue in favour of the assessee and directed the AO to grant benefit of deduction u/s 80P(2) of the Act. The relevant finding of the CIT(A) reads as follows:

“It is apparent form the above discussion that the Hon’ble ITAT, Bangalore, in assessee’s own case, (in its order dated 14.08.2015 for A.Y. 2009-10 in has quashed the order u/s. 263 dated 27.03.2014, in pursuance to which the order of assessment u/s. 143(3) r.w.s. 263 was passed by the AO in respect of preceding A.Y. 2009-10. The Hon’ble ITAT, in its order has held that section 80P(4) is applicable only to Co- operative Banks and not to Credit Co-operative Societies and that the appellant was not a Co-operative Bank, as envisaged in Section 80P(4). The ITAT therefore, held that the assessee was entitled to the claim made u/s. 80P(2)(a)(i). Reliance has also been placed by the ITAT, on the decision of the Karnataka High Court in the case of CIT v. Biluru Gurubasava Pattina Sahakari Sangha Niyamitha (369 ITR 86). In the facts and circumstances of the case, the issue having been decided in principle, in the favour of the assessee, in its own case by the ITAT, Bangalore, the disallowance of Rs.71,58,598/- on rejection of assessee’s claim u/s. 80P(2)(A)(i) of the I.T. Act, is deleted.”

5.

The revenue being aggrieved is in appeal before us. At the very outset, the learned counsel for the assessee submitted the issue in question is squarely covered by the order of the Tribunal in the assessee’s own case for AY 2009-10 which had in turn followed the judgment of Hon’ble jurisdictional High Court in the case of CIT Vs. Viluru Gurubasava Pattina Sahakari Sangha Niyamitha (supra). The learned DR present was duly heard.

6.

We have heard the rival submission and perused the material on record. It is admitted that the issue in question is covered in favour of assessee by the judgment of Hon’ble Karnataka High Court in the case of CIT Vs. Viluru Gurubasava Pattina Sahakari Sangha Niyamitha (supra) and the order of the Tribunal in assessee’s own case for AY 2009-10. Following the above two jurisdictional pronouncements, we hold that assessee is not Co-operative bank and provisions of Section 80P(4) of the Act will not have application to the facts of the instant case. Therefore, order of the CIT(A) granting the benefit of deduction under section 80P(2) is correct in accordance with the law and no interference is called for. It is ordered accordingly.

7.

In the result, the appeal filed by the revenue is dismissed.

Order pronounced in the open court on 20-1-2017.

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