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TMI Blog2012 (11) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... p capital and reserve attain the level of Rs. 1 lac, which can carry on business of banking until it is granted a license or notified that a license cannot be granted to it. These credit societies would not get the benefit of the deduction u/s 80P(2)(a)(i). Also as decided in Salgaon Sanmitra Sahakari Pathpedhi Ltd. Versus Additional Commissioner of Income-tax, Ward-17(3) [2011 (5) TMI 356 - ITAT, MUMBAI] hat the cooperative credit society is not a co-operative bank. Considering the above facts, it is clear that the appellant is not allowed to do banking business as defined under Banking Regulation Act and therefore, is not a co-operative bank. Therefore, it is not excluded from the benefit of deduction u/s 8OP(2)(a)(i) as it does not fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed the claim of the assessee for deduction u/s 80P of the Act. The assessee feeling aggrieved by the order preferred an appeal before the Ld. CIT(A) who after considering the submissions partly allowed the appeal of the assessee. 3. Now, the Revenue has filed this appeal against the order of Ld. CIT(A). There is no appearance on behalf of the assessee. The notice of hearing has been duly served and acknowledgement to this effect is placed on record. Therefore, the appeal was taken up for hearing in absence of the assessee. Ld. Sr. DR relied on the assessment order and submitted that the Ld. CIT(A) has wrongly allowed the claim of the assessee framing the assessee has not a co-operative bank. 4. We have heard the Ld. Sr. D.R. and peruse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... banking activities as defined in the sec 5(b) of Banking Regulation Act would quality to be a co-operative bank. In my considered view deposits from public .cannot be equivalent to taking deposits from members of the society only which has got a much restricted meaning and the relationship between a society and public has to be understood in a much larger sense. Meanwhile, to understand the issue better 1 went through the RBI website and found that it has been explained in a report of a high level committee appointed by the Reserve Bank of India in May 1999 under the Chairmanship of Shri K.Madhava Rao. Ex-Chief Secretary, Government of Andhra Pradesh to review the performance of Urban Cooperative Banks (UCBs) and suggest necessary measure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mary credit society and a cooperative credit is with reference to their nature of business. The primary object or principal business of a primary credit society is the transaction of banking business. When its up capital and reserves attain the level of Rs,l lakh, a primary credit society automatically becomes a primary cooperative bank. However, even after a primary credit society becomes a cooperative bank, it has to apply to RBI for a license to carry on banking business. But it can carry on banking business until it is granted a license or notified that a license cannot be granted to it. The above report clearly defines the circumstances in which a credit society can allowed to carry on business. These include 'Primary Credit Society' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aka, In the aforementioned judgment, the issue for determination was whether interest income on the short term bank deposits securities would be qualified as business income u/s. 80P(2)(a)(i) of the IT Act, 1961. The Hon ble Supreme Court had decided the issue as under: "At the outset an important circumstance needs to be highlighted. In the present case, the interest held not eligible for deduction u/s. 80P(2)(a)(i) of the Income tax Act is not the interest received from the members for providing the credit facilities to them. What is sought to be taxed u/s. s 36 of the Act is the interest income arising on the surplus invested in short term deposits and securities which surplus was not required for business purpose. Assessee markets the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t u/s 8OP(2)(d)] and include it in the total income as 'Income from Other Sources' and no deduction u/s 80P be allowed on it. The AO should give an opportunity of being heard to the appellant while determining such income, while giving effect to this order. 4. We do not find any infirmity into the order of Ld. CIT(A) as the Ld. CIT(A) has dealt with all aspects of the matter and has followed the decision of Hon ble Co-ordinate Bench in the case of Salgaon Sanmitra Sahkari Pathped Ltd. 12 taxman.com 246 wherein it has been held that the cooperative credit society is not a co-operative bank. Moreover, Ld. CIT(A) has directed the assessing officer to find out if there is any income taxable u/s 56 of the Act and include the same in the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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