Case Law Details
Union Bank of India Staff Co-op Thrift and Credit Society Limited Vs ITO (ITAT Chennai)
The case of Union Bank of India Staff Co-op Thrift and Credit Society Limited vs. ITO (ITAT Chennai) revolves around the deduction claimed under Section 80P(2)(a)(i) of the Income Tax Act for dividends received from shares in a cooperative bank. The dispute arose from the Commissioner of Income Tax (Appeals)’s order, which the assessee contested before the Income Tax Appellate Tribunal (ITAT) in Chennai.
The crux of the matter was the disallowance of the deduction by the Assessing Officer and subsequent confirmation by the CIT(A). The Assessing Officer argued that since the dividends were received from shares held in Chennai Central Co-operative Bank, which is considered a bank under the Companies Act, the deduction under Section 80P(2)(a)(i) wasn’t applicable.
However, the ITAT Chennai analyzed the nature of the assessee, a Multi-State Cooperative Society registered under the Multi State Cooperative Societies Act, 2012. It noted that the members of the society were all employees of Union Bank of India and that the society primarily extended credit facilities to its members. Despite the Chennai Central Co-operative Bank being registered under the Tamil Nadu State Co-operative Act, the Assessing Officer disallowed the deduction.
In its deliberation, the ITAT Chennai referenced precedents, including the judgment of the Hon’ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd., which supported the eligibility of cooperative societies for deductions under Section 80P(2)(a)(i). It also cited a similar decision by the Tribunal and the Madras High Court.
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