A Co-operative Society registered as Primary Agricultural Credit Society is entitled to 80P Deduction: ITAT [Read Order]

While refusing the decision of Supreme Court Cochin bench of Income Tax Appellate Tribunal (ITAT) recently held that a co-operative society which is registered as a primary agricultural society is entitled to get deduction under section 80P of the Income Tax Act 1961.

Assessee in the present case is a co-operative society registered under the Kerala Co-operative Societies Act, 1969 has duly filed its return of income for the relevant assessment year and claimed deduction under section 80P of the act also.

While completing the assessment proceedings the Assessing Officer (AO) has disallowed the claim of deduction under the said section. He was opinioned that The provisions of section 80P(4) of the Income-tax Act applies only to a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank and the same will not apply to any co-operative bank. Further he observed that the assessee carrying banking business and according to him all the three conditions for becoming a primary co-operative bank stand complied with in the case of the assessee. Hence he declared that it will fall within the provisions of section 80P (4) and is not eligible for deduction under section 80P (2)(a)(i) of the Income Tax Act.

On appeal, the CIT (A) granted relief to the assessee and directed the AO to grant deduction under section 80P of the Income Tax Act to the Assessee-society.

Aggrieved, the revenue preferred an appeal before the tribunal contending that Supreme Court in the case of Citizens Co-operative Society Ltd has already decided the issue and rejected deduction under section 80P of the Act to the assessee by considering the activities of the assessee society.

After hearing the contentions of both the parties, the Tribunal bench including of Judicial Member George George K also upheld the decision of CIT(A). The bench observed that the assessee in the present case is a primary agricultural credit society and they are registered as such under the Kerala Cooperative Societies Act and when a primary agricultural credit Society is registered as such under the Kerala Co-operative Societies Act, 1969, such society is entitled to the benefit of deduction under section 80P(2) of the Income-tax Act.

The division bench while dismissing the revenue’s appeal, said that “In view of the aforesaid reasoning, I hold that the judgment of the Hon’ble Apex Court in Citizen Co-operative Society Ltd. is not applicable to the facts of the present case. According to me, the judgment of the Hon’ble jurisdictional High Court is identical to the facts of the present cases and is squarely applicable. Therefore, I hold that the CIT(A) has correctly allowed the claim of deduction in the above cases and I uphold the orders of the CIT(A).”

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