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TMI Blog2012 (9) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... g Regulation Act, 1949. It is called Legislation by reference and we have to give the strict interpretation while interpreting the effect of Sub-sec. (4) to Sec. 80 P. In our opinion, Co-operative Credit Society is distinct and separate from the Co-operative Bank nor it can be said as a Primary Co-operative Bank within the meaning of Banking Regulation Act, 1949. Hence, the assessee being a Co-operative Credit Society is entitled for deduction u/s. 80 P(2)(a)(i) - Decided in favor of assessee. - IT APPEAL NO. 598 (PUNE) OF 2011 - - - Dated:- 26-6-2012 - R.S. PADVEKAR, AND R.K. PANDA, JJ. Alok Mishra for the Appellant. M.K. Kulkarni for the Respondent. ORDER R.S. Padvekar, Judicial Member - In this appeal, the assessee has challenged impugned order of the Ld CIT(A)-II, Aurangabad dated 25.2.2011 for the A.Y. 2007-08. The issue in controversy, whether the assessee Credit Society is entitled to the benefit of Section 80P(2)(a)(i). 2. The facts reveal from the record are as under. As observed by the A.O, the assessee is a Co-operative Credit Society engaged in providing credit facilities to its Member. It is claimed that the primary object of Society is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is engaged in business and is the primary Co-operative Bank. He, therefore, denied the deduction to the assessee claimed u/s. 80P(2)(a)(i) of the Act by giving the reason that the assessee is the primary Co-operative Bank referred to in Sec. 5(c)(i) of the Banking Regulation Act 1949 which is referred to in Explanation below Sub-sec. (4) of Sec. 80 P and assessee is not entitled for the deduction claimed of Rs. 32,15,717/-. The Assessee challenged the assessment order before the Ld CIT(A) on this issue and found favour. The Ld CIT(A) allowed the claim of the assessee and reversed the order of the A.O. The operative part of the order of Ld CIT(A) is as under: "6. I have carefully considered the assessment order of the A.O. and submissions of the appellant. The issue to be decided is whether the "credit cooperative societies" are "co-operative banks" as the deduction u/s 80P(2)(a)(i) is available to credit cooperative societies providing credit facilities to its members. The cooperative banks are not entitled to deduction u/s 80P(2)(a)(i) in view of amendment to section 80P(4) by Finance Act, 2006 w.e.f. 01/04/2007. The relevant portion of amended section 80P(4) reads as under - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regulation Act, 1949 "Co-operative Banks" means a State Co-operative Bank, a Central Co-operative Bank and Primary Co-operative Bank. From the clarification, it is evident that credit co-operative societies are not covered by the meaning of Co-operative Banks as defined in part-V of the Banking Regulation Act, 1949 and are entitled to deduction u/s 80P(2)(a)(i) of the Act. 6.5 The contentions raised by the A.O. are not in accordance with the provisions of the Income Tax Act and circular and clarification issued by the CBDT. The decisions relied on by the A.O. are not applicable to the facts of the case of the appellant. 6.6 In view of the above discussion, I am of the considered view that the co-operative society is not a co-operative bank and therefore, the appellant credit cooperative society is entitled to deduction u/s 80P(2)(a)(i) of the Act. The A.O. is not justified in disallowing the deduction of Rs. 32,15,717/- claimed by the appellant society and hence directed to allow the same. Ground No. 1 to 4 are, therefore, stand allowed. As the ground No. 1 to 4 are decided in favour of the appellant, the remaining grounds need no adjudication." 3. Now, the revenue is in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced for withdrawing the deduction to the Co-operative Bank other than Primary Agriculture Credit Society or Primary Co-operative Agriculture and Rural Development Bank. In view of Explanation below Sub-sec. (4) of Sec. 80P, the definition of the Co-operative Bank as assigned in Para 5 of the Banking Regulation Act is to be considered. In the opinion of the A.O. as the nature of the activities of the assessee Credit Society are analogous to the banking activities, which are more specifically describe in the Banking Regulation Act and hence, assessee partakes the character of 'Primary Co-operative Bank' as defined in clause (ccii) of the Banking Regulation Act 1949. Clause (cci) of Sec 5 of BR Act defines the Co-operative Bank means State Co-operative Bank, Central Co-operative Bank and Primary Co-operative Bank. 7. The primary co-operative Bank is treated as Co-Operative Bank in view of Cl. (cci) of sec 5 of the B.R. Act, 1949. Definition of 'Primary Co-operative Bank is given in cl. (ccv) of sec. 5 of B.R. Act, 1949, which reads as under; 'Primary co-operative bank means a co-operative society other than a primary agricultural credit society - ( i ) The primary object or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rative Bank. It is seen that Co-operative Bank is deprived of the benefit of the deduction u/s. 80P(2)(a)(i) of the Act. As per the interpretation given by the AO, assessee Co-Operative Credit Society partakes the character of the Primary Co-operative Bank and as the Primary Co-operative Bank is included in the definition of the Co-operative Bank and hence, is not entitled to the benefits of Sec. 80P(2)(a)(i) of I.T. Act. In our opinion, this is not the correct interpretation. It is well settled principle in the interpretation of the 'taxing provisions' that the same are to be strictly construed and there is n room for any intendment. There is no presumption as to tax. Nothing is to be read or nothing is to be implied. One has to fairly look into language used by the Parliament. The Parliament has adopted the definition of the Co-operative Bank by referring the same as given in the Banking Regulation Act, 1949. It is called Legislation by reference and we have to give the strict interpretation while interpreting the effect of Sub-sec. (4) to Sec. 80 P. In our opinion, Co-operative Credit Society is distinct and separate from the Co-operative Bank nor it can be said as a Primary Co- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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