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TMI Blog2014 (2) TMI 990X X X X Extracts X X X X X X X X Extracts X X X X ..... but also credit societies, which are not cooperative banks – thus, the assessee is not a credit co-operative bank but a credit cooperative society - Exclusion clause of sub-section(4) of section 80P would not apply – Decided against Revenue. - ITA No.72/Bang/2013 - - - Dated:- 7-2-2014 - Shri N. V. Vasudevan And Shri Jason P. Boaz,JJ. For the Appellant : Shri L.V. Bhaskara Reddy, Jt.CIT(DR) For the Respondent : None ORDER Per N. V. Vasudevan, Judicial Member This appeal by the revenue is against the order dated 01.11.2012 of the CIT(Appeals)-II, Bangalore relating to assessment year 2009-10. 2. The assessee is a co-operative society. It is engaged in banking business also. The assessee had claimed deduction u/s. 80P(2)(a)(i) of the Act. Under Sec.80P(2)(i) of the Act where the gross total income of a cooperative society includes income from carrying on the business of banking or providing credit facilities to its members, the same is allowed deduction. By the Finance Act, 2006 w.e.f. 1-4-2006, Sub-section (4) was inserted in Sec.80-P which provides as follows: (4) The provisions of this section shall not apply in relation to any co-operative bank othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and held that, broadly, they are in the nature of banking activity. According to the AO, the following features make the assessee ineligible to exemption contemplated in section 80P of the Act: i) Since membership is open to anyone paying a sum of Rs.10/- to Rs.100/- for membership and no other condition is imposed. In other words, membership as is available in any banking institution is available in the case of the appellant society. ii) The purpose of accepting deposits from the public is for making investments and for lending to members. Confining the lending only to members makes no difference. iii) Deposits collected from the depositors are repayable on demand and do not go into the corpus of the appellant. iv) Though withdrawal of money is not done by cheques, drafts or pay-out slips, pay orders are issued in favour of a person on behalf of the depositor. v) The assessee society came within the Explanation to subsection (4) of section 80P of the Act as a banking institution. 4. In the light of the above-mentioned observations, the AO held that the appellant was not entitled to exemption u/s 80P(2)(a)(i) of the Act and brought the same to tax. 5. On appeal by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct 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 cooperative bank other than a primary agricultural credit society or rural development bank. For the purpose of the said sub section, cooperative bank shall have the meaning assigned to it in part V of the Banking Regulation Act, 1949. In Part V of the Banking Regulation Act, cooperative bank means a State Cooperative Bank, a Central Cooperative Bank and a Primate Cooperative Bank. 9.2 From the above section, it is clear that the provisions of section 80P(4) has got its application only to cooperative banks. Section 80P(4) does not define the word cooperative society . The existing sub-section 80P(2)(a)(i) shall be applicable to a cooperative society carrying on credit facility to its members. This view is clarified by Central Board of Direct Tax vide its clarification No.133/06/2007-TPL dated 9th May, 2007. The difference between a cooperative bank and a cooperative society are as follows:- Nature Cooperative society registered under Banking Regulation Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of section 80P(4) will not have application in the assessee s case and therefore, it is entitled to deduction u/s 80P(2)(a)(i) of the Act. Hence, we are of the view that the order of the CIT(A) is correct and in accordance with law and no interference is called for. 8. The Hon ble Gujarat High Court in the case of Tax appeal No.442 of 2013 with Tax appeal No.443 of 2013 with Tax appeal No.863 of 2013 in the case of CIT Vs. Jafari Momin Vikas Co-op Credit Society Ltd. by judgment dated 15.1.2014 had to deal with the following question of law: Whether the Hon ble Tribunal is correct in allowing deduction under section 80P(2)(a)(i) to assessee s society even though same is covered under section 80P(4) rws 2(24) (viia) being income from providing credit facilities carried on by a co-operative society with its member? The Hon ble Court held as follows: 4. As per section 80P(4), the provisions of section 80P would not apply in relation to any co-operative bank other than primary agricultural credit society or primary co-operative agricultural and rural development bank. As per the explanation, the terms cooperative bank and primary agricultural credit society shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 80P will not apply in this case. 5. The issues with the approval of Chairman,Central Board of Direct Taxes. 7. From the above clarification, it can be gathered that subsection( 4) of section 80P will not apply to an assessee which is not a co-operative bank. In the case clarified by CBDT, Delhi Coop Urban Thrift Credit Society Ltd. was under consideration. Circular clarified that the said entity not being a cooperative bank, section 80P(4) of the Act would not apply to it. In view of such clarification, we cannot entertain the Revenue s contention that section 80P(4) would exclude not only the cooperative banks other than those fulfilling the description contained therein but also credit societies, which are not cooperative banks. In the present case, respondent assessee is admittedly not a credit co-operative bank but a credit cooperative society. Exclusion clause of sub-section(4) of section 80P, therefore, would not apply. In the result, Tax Appeals are dismissed. 9. In view of the aforesaid decisions, we are of the view that there is no merit in this appeal by the revenue. Consequently, the same is dismissed. Pronounced in the open court on this 7th day of Febru ..... X X X X Extracts X X X X X X X X Extracts X X X X
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