The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) allowed the appeal in favour of the assessee CIDCO and allowed income tax deduction under Section 80P(2)(a)(i) and 80P(2)(d) of the Income Tax Act.
In this case, the assessee, CIDCO is an employee co-operative credit society that has been registered under the Maharashtra State Co-operative Societies Act, 1960. The income tax return of the assessee was filed on 29.11.2014, for the assessment year (AY) 2014-15 declaring a total income of Rs. Nil.
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The case of the assessee was selected for scrutiny under Section 143(1) of the Income Tax Act,1961 ( ITA ) and statutory notices under Section 143(2) and under Section 142(1) of ITA were sent to the assessee. The assessee had shown income from business of Rs. 56,64,971/– and had claimed deduction under Section 80P of the Act of Rs. 56,64,971/–
The Assessing Officer ( AO ) held that the appellant’s co-operative credit society comes under the category of a primary co–operative bank and the provisions of Section 80P(4) are applicable in the assessee’s case. The AO disallowed the claim for deduction under Section 80P of Rs. 56,64,971/-.
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The assessee, who was aggrieved by the order of the AO, approached the Commissioner of Income Tax ( Appeals ) [ CIT(A) ]. CITA upheld the assessment order passed by AO, as according to CIT(A) that the assessee is neither a primary agricultural credit society nor a primary agricultural development bank but is a co-operative bank.
Later on, the assessee approached ITAT for relief. The main question raised in the appeal was whether the assessee is a co-operative bank within the meaning of Section 80P(4) of the Act. And the effect if not.
The ITAT bench observed that as the assessee does not conduct banking business with the general public in India, its primary line of business is not banking. The bench held that the appellant does not fall under the category either of a co-operative bank or a primary co-operative bank and does not come under the purview of sub-section 4 of Section 80P of the Act.
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The tribunal bench, comprising Gagan Goyal ( Accountant Member ) and Sunil Kumar Singh ( Judicial Member ) held that the AO should not have denied the benefit of Section 80P of the Act to the assessee society. The bench allowed the appeal in favour of the assessee and directed the AO to allow the benefit of deduction to the assessee under Section 80P(2)(a)(i) and 80P(2)(d) of the Income Tax Statute.
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