2014 (5) TMI 1058 - AT - Income Tax

Deduction u/s 80P - CIT(A) s only ground while denying claim of deduction is that the assessee has advanced loans to even the nominal/associate or B class members which is hit by section 80P(2)(a)(i) - Held that - The assessee has produced before us an order in case of M/s SL(SPL) 151 Karkudalpatty Primary Agricultural Co-operative Credit Society Ltd. vs ITO 2014 (5) TMI 556 - ITAT CHENNAI . Therein after taking into consideration section 2(16) of the Tamilnadu Co-operative Societies Act 1983 treating associate or B class members within section 2(16) of the State Co-operative Societies Act we have held that no such distinction could be drawn for the purpose of deduction u/s 80P(2)(a)(i) of the Act. We have also held that being a deduction provision there is no scope for further classification within members. On being pointed out the Revenue has failed to draw any distinction on facts. - Decided in favour of assessee

Summary

Issues Involved:
Appeal against denial of section 80P deduction under Income-tax Act, 1961 for agricultural co-operative credit society.

Analysis:
1. The batch of appeals challenged orders denying section 80P deduction by the Commissioner of Income-tax (Appeals). The issue revolved around the interpretation of section 80P2(a)(i) of the Income-tax Act, 1961.
2. The Assessing Officer invoked section 80P(2) r.w.s 80P(4) to restrict the deduction claimed by the primary agricultural co-operative credit society due to loans not purely for agricultural purposes. This led to a dispute regarding the nature of activities conducted by the assessee.
3. The CIT(A) upheld the cooperative society's entitlement for deduction u/s 80P(4) but enhanced the assessment due to credit facilities extended to 'A' and 'B' class members. The distinction between these members based on voting rights and liabilities under the State Co-operative Societies Act was a crucial point of contention.
4. The assessee raised multiple grounds challenging the CIT(A)'s decision, citing legal provisions and judicial precedents to support their claims. The issues included misreading of laws, incorrect interpretations of decisions, and failure to consider relevant judgments.
5. The ITAT Chennai Bench considered the arguments presented by both parties and ruled in favor of the assessee. It emphasized that no distinction could be made among members for the purpose of deduction u/s 80P(2)(a)(i) and that further classification was not permissible within the deduction provision.
6. The ITAT's decision rendered other pleas raised by the assessee as academic, given the resolution of the main issue regarding the deduction under section 80P. The ITAT's ruling in one case was applied to the entire batch of appeals.
7. Ultimately, the ITAT partly allowed the appeals, indicating a favorable outcome for the primary agricultural co-operative credit society regarding the section 80P deduction issue.

This detailed analysis of the judgment highlights the key legal issues, arguments presented, and the final decision rendered by the ITAT Chennai Bench in the case involving the denial of section 80P deduction for the agricultural co-operative credit society.