Deduction u/s 80P(4) allowable to Cooperative Society involved in the Business of Banking: Orissa HC [Read Order]

While considering a writ petition, the Orissa High Court (HC) has held that deduction under section 80P(4) of the Income Tax Act, 1961 is allowable to Cooperative Societies involved in the business of banking.

Cuttack Central Co-operative Bank Ltd, the petitioner challenged the order dated 14th September 2012 passed by the Income Tax Appellate Tribunal, Cuttack Bench, Cuttack (ITAT) for the Assessment Year 2009-10.

The ITAT has noted that the Assessee bank was entitled to an additional 10% deduction along with the 7.5% calculated by the Assessing Officer (AO) under Section 36(1)(vii)(viii) of the Income Tax Act, 1961 (Act).

The matter was remanded to the AO by the ITAT and additionally, a direction was issued to the AO to grant deduction under Section 36(1)(vii-a) of the Act.On remand, the AO passed a fresh order on 31st August 2017 allowing the deduction as claimed in full.

A deduction that is given without any reference to any restriction or limitation cannot be restricted or limited by implication, as is sought to be done by the Revenue in the present case by adding the word “agriculture” into Section 80P(2)(a)(i) when it is not there.

Further, Section 80P(4) is to be read as a proviso, which proviso now specifically excludes co-operative banks which are co-operative societies engaged in banking business i.e. engaged in lending money to members of the public, which have a licence on this behalf from the RBI.

Chief Justice M S Raman held that the Appellant-Assessee would be entitled to the benefit of the deduction under Section 80P(4) of the Act since it is a Cooperative Society involved in the business of banking. It is open to the Assessee after the appeal effect is given based on the present order, to apply for a refund bythe law.

To Read the full text of the Order CLICK HERE

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