Provision to allow deduction u/s 80P(2)(a) of the Income Tax Act

This Income Tax Appellate Tribunal (ITAT) Bangalore ruling addresses a co-operative society's claim for deduction under Section 80P(2)(a) of the Income Tax Act for the 2016-2017 assessment year. The Assessing Officer had denied this deduction, citing a violation of the principle of mutuality and income earned from investments with co-operative banks, referencing a Supreme Court judgment. The tribunal allowed the appeal for statistical purposes.

IN THE INCOME TAX APPELLATE TRIBUNAL
BANGALORE “SMC-B” BENCH, BANGALORE
Before Shri George George K, Judicial Member
ITA No.1263/Bang/2019 : Asst.Year 2016-2017

M/s.The Tappers Service Cooperative
Society Limited
Ground Floor,
Narayana Guru Sabha Bhavan,
Near Akashvani Circle,
Brahmavara, Udupi – 576 218.
PAN : AADAT3571F.

vs

The Income Tax Officer
Ward 2
Udupi.

Appellant by : Sri.Sandeep Chalapathy, CA
Respondent by : Sri.Ganesh R.Ghale, Standing Counsel
Date of Hearing : 17.09.2021
Date of Pronouncement : 20.09.2021

O R D E R

This appeal at the instance of the assessee is directed against the CIT(A)’s order dated 30.03.2019. The relevant assessment year is 2016-2017.

2. For the assessment year 2016-2017, the return of income was filed on 31.05.2017 declaring `NIL’ income after claiming deduction u/s 80P(2) of the I.T.Act amounting to Rs.14,59,623. The return of income was selected for scrutiny. The Assessing Officer noticed that the assessee has violated the principle of mutuality and denied the benefit of deduction u/s 80P of the I.T.Act in view of the judgment of the Hon’ble Apex Court in the case of The Citizen Co-operative Society Ltd. v. ACIT reported in 397 ITR 1 (SC). The Assessing Officer also denied the claim of deduction u/s 80P(2) of the I.T.Act since interest / dividend income was earned out of investments with the co-operative banks.

3.The learned AR also placed on record copies of the orders of the ITAT in the case of M/s.Ravindra Multipurpose Co-operative Society Limited v. ITO in ITA No.1262/Bang/ 2019 (order dated 31.08.2021). The order of the CIT(A) in the case of M/s.Ravindra Multipurpose Co-operative Society Ltd. was also placed on record and the learned AR submitted that the same CIT(A) has passed the order in this case as well as in the case of M/s.Ravindra Multipurpose Co-operative Society Ltd. v. ITO (supra). It was submitted that the wordings of the CIT(A) in both the orders are identical.

4. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on this 20th day of September, 2021.

Please find attached the enclosed file for the full judgement