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TMI Blog2012 (8) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... this common order at the outset both ld. AR and DR agreed that the facts involved and the issue involved in all these appeals relating to both the assessees namely Jayalaxmi Mahila Vividodeshagala Souharda Sahakari Ltd., Karwar and Dwarka Souharda Credit Sahakari Ltd, Karwar. The common affective grounds taken in all these appeals are reproduced as under: - "1. Whether on the facts and circumstances of the case, the CIT(A) was correct in holding that the provisions of sub-section(4) of section 80P are applicable only to co-operative banks and not to credit co-operative societies, which are engaged in business of banking, including providing credit facilities to their members. 2. Whether on the facts and circumstance of the case, that CIT(A) was correct in holding that the assessee is a cooperative society and not a co-operative bank in terms of sub-section (4) of section SOP without considering the meaning of cooperative bank as envisaged under Part V of Banking Regulation Act 1949 wherein it is defined that co-operative bank includes primary co-operative bank, which is further defined as cooperative society with the primary object of transactions of banking business." 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive Society Ltd in ITA No. 1069/Bang/2010 for A.Y. 2007-08 dt. 08/04/2011 has held as under: "9. We have heard the rival submissions and perused the material on record. The assessee was denied the deduction u/s 80P (2) (a) ( i ) of the Act for the reason of introduction of sub-section (4) to section SOP. Section 80P(4) reads as under: - 'The provisions of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank." Explanation-for the purpose of this sub-section - ( a ) "Co-operative bank" and "primary agricultural society" shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949): ( b ) "Primary Co-operative Agricultural and Rural Development Bank" means a society having its area of operation confined to a taluk and the principal object of which is to provide for long term credit for agricultural and rural development activities." 9.1 The above sub-section 4 of section 80P provides that deduction under the said section shall not be available to any Co-operative bank other than a primary agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Inspection RBI has the power to inspect accounts and overall functioning of the bank Registrar has the power to inspect accounts and overall functioning of the bank Part V Part V of the banking Regulation Act is applicable to co-operative banks Part V of the Banking Regulation Act is not applicable to co-operative banks. Use of words The word 'bank', 'banker', 'banking' can be used by a co-operative bank. The word 'bank', 'banker', 'banking' cannot be used by a co-operative society. 9.3 If the intention of the legislature was not to grant deduction u/5 80P (2)(a)(i) to co-operative societies carrying on the business of providing credit facilities to its members, then this section would have been deleted. The new proviso to section 80P(4) which is brought into statute is applicable only to co-operative banks and not to credit co-operative societies. The intention of the legislature of brining in co-operative banks into the taxation structure was mainly to bring in par with commercial banks. Since the assessee is a co-operative society and not a co-operative bank, the provisions of section 80P(4) wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed that the assessee is not engaged in the banking business. He is not giving any loan to the public. He is advancing loan only to the members, for this attention was drawn to section 5(b) of the Banking Regulation Act. So far the Tax Audit . Report is concerned; he submitted it is not binding. The Tax Auditor simply expresses his opinion. If some income is taxable and the Tax Auditor expresses income is not taxable, the A.O. will not allow the exemption. The Judiciary is bound to give correct interpretation which will be binding on both the parties. He also relied on the decision of Bangalore Bench of the Tribunal in the case of ACIT v. Bangalore Commercial Credit Co-operative Society as has been reproduced by CIT(A). He agreed that the Bangalore Bench has not looked into the definition of the co-operative bank as given under Part V of the Banking Regulation Act. He submitted that the order of the CIT(A) be confirmed. 6. We have carefully considered the rival submissions along with order of the tax authority below as well as the decision and the entire material cited before us. The question before us is whether the assessee is entitled for the deduction u/s 80P(2)(a)(i). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is not a Co-operative Bank, it will not hit by Section 80 P(4) and the assessee will be entitled for the deduction u/s 80P(2)(a)(i). The Co-operative bank is defined in Part V of the Banking Regulation Act, 1949 as under: - "Section 5(cci) "Co-operative bank" means a state co-operative bank, a central co-operative bank and a primary co-operative bank:" 9. From the definition of Co-operative bank it is apparent that Co-operative bank means state' co-operative bank, a Central Co-operative Bank and a Primary Co-operative bank. It is not the case of the revenue that the assessee is a state Co-operative bank or Central Co-operative bank. We have therefore to find whether the assessee is a primary Co-operative bank. The Primary Co-operative bank is defined under section 5 clause (CCV) of Banking Regulation Act 1949 as under: - "(CCV) "primary co-operative bank" means a co-operative society, other than a primary agricultural credit society,- (1) the primary object or principal business of which is transaction of banking business: (2) the paid-up share capital and reserves of which are not less than one lakh of rupees: and (3) the bye-laws of which do not permit a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count. The aims and objects as given in the byelaws (as per English translation filed before us) are reproduced for our ready reference as under:- "5. Aims and Objects as follows : 1. To encourage the necessity to provide self help and contribute among the members of the co-operatives and shareholders of the co-operative. 2. To all loans and advances to meet various requirements of the members. 3. To educate the members about the saving schemes included by the Income Tax Department, the Government and to provide necessary services to utilize the same. 4. To purchase, sell and collect Govt. Securities on behalf of the members. 5. To purchase, sell and on behalf of the members. 6. To undertake all the claims with their to concentrate transactions of the co-operatives. 7. To hold and acquire sites, buildings, properties and to construct, renovate and demolish constructions or structures and to undertake such other activities for the benefit of the co- operatives. 8. Provide loans and advances for purchase of motor vehicle on hire purchase or hypothecation basis. 9. To open branches and sub-branches, remittance or offices by whatever name ..... X X X X Extracts X X X X X X X X Extracts X X X X
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