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2018 (6) TMI 1863 - AT - Income TaxDenial of deduction u/s 80P(2)(a)(i) - as primary object of the assessee is to engage in providing credit facilities to its members and bylaws of the society do not permit admission of any other Co operative as member thus held that the assessee can be treated as a primary co operative bank hence the provisions of section 80P(4) will be applicable to the assessee. That being the case the assessee would not be eligible to claim deduction u/s 80P(2)(a)(i) HELD THAT - Commissioner (Appeals) relying upon the decision of the Tribunal in assessee s own case for assessment year 2010 11 has allowed assessee s claim of deduction under section 80P(2)(a)(i) of the Act. On a perusal of order 2018 (2) TMI 2137 - ITAT MUMBAI of the Co ordinate Bench passed in assessee s own case for assessment year 2012 13 (supra) it is noticed that by following its own order in assessee s case for assessment year 2010 11 the Tribunal has allowed assessee s claim of deduction under section 80P(2)(a)(i) of the Act. There being no difference in facts between the assessment year 2010 11 and 2012 13 and the impugned assessment year brought to our notice by the Department we uphold the decision of the learned Commissioner (Appeals) on this issue by dismissing the grounds raised. Revenue s appeal is dismissed.
Issues Presented and Considered
The core legal questions considered in this appeal are:
Issue-wise Detailed Analysis Issue 1: Eligibility for Deduction under Section 80P(2)(a)(i) of the Income Tax Act Relevant Legal Framework and Precedents: Section 80P(2)(a)(i) of the Income Tax Act provides deduction to co-operative societies engaged in providing credit facilities to their members. However, section 80P(4) restricts such deduction for co-operative credit societies engaged in banking activities except if they are primary agricultural credit societies or primary co-operative agricultural and rural development banks. The Banking Regulation Act, 1949, particularly section 56, regulates the banking activities of such societies. Court's Interpretation and Reasoning: The Assessing Officer (AO) initially disallowed the deduction, reasoning that the assessee's primary activity of providing credit to members amounted to banking activity. Since the assessee was not a primary agricultural credit society or a primary co-operative agricultural and rural development bank, the AO held that section 80P(4) applied, barring the deduction. The AO also relied on the Banking Regulation Act to classify the assessee as a primary co-operative bank. The assessee contended that it was not a banking institution requiring a banking license and thus not subject to section 80P(4). The Commissioner (Appeals) and the Tribunal, however, examined the nature of the assessee's activities and prior Tribunal rulings. Key Evidence and Findings: The assessee's main object was to provide credit and accept deposits from its members. The bylaws restricted membership to individuals, excluding other co-operatives. The assessee received substantial interest income from loans and bank deposits. The Tribunal had in previous years allowed the deduction under section 80P(2)(a)(i), considering the facts and the legal position. Application of Law to Facts: The Tribunal considered the repeated decisions in the assessee's own case for assessment years 2010-11 and 2012-13, where the deduction was allowed. It noted that the facts for the impugned year were identical to those years. The Tribunal held that the assessee did not fall within the restrictive ambit of section 80P(4) as interpreted in those precedents. Treatment of Competing Arguments: The Revenue's argument was that the assessee's activities amounted to banking and thus disqualified it from claiming deduction under section 80P(2)(a)(i) by virtue of section 80P(4). The Tribunal, however, gave weight to the assessee's submissions and prior Tribunal rulings, which recognized the assessee as a credit co-operative society eligible for deduction. The Departmental Representative conceded that the Tribunal had ruled in favour of the assessee in preceding years. Conclusions: The Tribunal upheld the Commissioner (Appeals) order allowing the deduction under section 80P(2)(a)(i), dismissing the Revenue's appeal. Significant Holdings The Tribunal emphasized the binding nature of its previous decisions in the assessee's own case, stating: "There being no difference in facts between the assessment year 2010-11 and 2012-13 and the impugned assessment year brought to our notice by the Department, respectfully following the decision of the Co-ordinate Bench in assessee's own case, as referred to above, we uphold the decision of the learned Commissioner (Appeals) on this issue by dismissing the grounds raised." The core principle established is that where facts remain unchanged and the Tribunal has consistently held in favour of the assessee's entitlement to deduction under section 80P(2)(a)(i), subsequent assessments for similar years must follow the same legal position, ensuring consistency and adherence to precedent. Further, the Tribunal implicitly recognized that the assessee's activities, although involving credit and deposits, did not convert it into a banking institution within the meaning of the Banking Regulation Act for the purpose of section 80P(4), thereby preserving the assessee's eligibility for deduction.
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