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TMI Blog2014 (4) TMI 306X X X X Extracts X X X X X X X X Extracts X X X X ..... justified in denying the benefit of section 80P(2) to the assessee society – Decided in favour of Assessee. - ITA No. 306/Bang/2014, S. P. No. 90/Bang/2014 - - - Dated:- 4-4-2014 - Shri George George K. And Shri Jason P. Boaz,JJ. For the Petitioner : Shri Mahesh, Advocate For the Respondent : Shri Pathanjali, CIT (DR) ORDER Per George George K. J.M. This appeal at the instance of the assessee is directed against the CIT's order dated 20.01.2014 passed u/s 263 of the Act. The relevant assessment year is 2009-10. 2. The solitary issue that arises for our consideration is whether the CIT is justified in invoking the revisionary jurisdiction u/s 263 of the Act and setting aside the assessment order dated 20.12.2011, directing the Assessing Officer to deny the benefit of deduction u/s 80P(2)(a)(i) of the Act to the assessee society. 3. Briefly stated the facts of the case are as follows. The assessee is a cooperative credit society. It is providing credit facilities to its members. For the relevant assessment year the assessee had e filed its return of income on 30.09.2009 declaring 'Nil' income after claiming deduction u/s 80P amounting to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g) The Kerala High Court in Kerala Co-operative Consumers' Federation Ltd., vs. CIT 170 ITR 455 and Additional CIT vs UP Co-operative Cane Union 114 ITR 70, wherein reliane has been placed on the Division Bench decision of Kerala High Court in CI vs. Parukutty Mooppilamma 149 ITR 131 (Ker), Additional CIT vs. UP Co-operative Cane Union 114 ITR 70 and CIT vs. Co-operative Supply Commission Shop Ltd., 204 ITR 173, arrived atthe conclusion that providing credit facilities to the members are part of banking business which is squarely applicable to the facts of this case. The assessee also has paid-up share capital and reserves far in excess of Rs.1,00,000/- as on 31.03.2009 and the byelaws do not permit membership of another co-operative society as a member. Hence the appellant has satisfied all the conditions required to come under the purview of the definition of primary co-operative bank. Under the above facts and circumstances, the assessee is clearly not eligible for deduction u/s 80P(2)(a)(i) in view of the specific provisions of section 2(24)(viia) read with Explanation to 80P(4) of the Income Tax Act, 1961 inserted w.e.f. 01.04.2007. The Assessing Officer is directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of CIT vs. Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha, Bagalkot (Supra) reads as follows: Therefore, the insertion of the legislature is clear. If a Co-operative bank is exclusively carrying on banking business, then the income derived from the said business cannot be deducted in computing the total income of the assessee. The said income is liable for tax. A Co-operative bank as defined under the Banking Regulation Act includes the primary agricultural credit society or a primary co-operative agricultural and rural development bank. The Legislature did not want to deny the said benefits to a primary agricultural credit society or a primary co- operative agricultural and rural development bank. They did not want to extend the said benefit to a Co- operative bank which is exclusively carrying on banking business i.e. the purport of this amendment. Therefore, as the assessee is not a Co-operative bank carrying on exclusively banking business and as it does not possess a license from Reserve Bank of India to carry on business, it is not a Co-operative bank. It is a Co-operative society which also carries on the business of lending money to its members which is cove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtue of CBDT Circular No.133 of 2007 dated 9.5.2007. Circular provides as under:- Subject: Clarification regarding admissibility of deduction u/s 80P of the Income Tax Act, 1961. 1. Please refer to your letter No.DCIS/30688/2007, dated 28.03.2007 addressed to Chairman, Central Board of Direct Taxes, on the above given subject. 2. In this regard I have been directed to state that sub-section 4 of section 80P provides that deduction under the said section shall not be allowable to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. For the purpose of the said sub-section, co-operative bank shall have the meaning assigned to it in part V of the Banking Regulation Act, 1949. 3. In part V of the Banking Regulation Act, Co-operative Bank means a State Co-operative bank, a Central Co-operative Bank and a primary Co-operative Bank. 4. Thus, if the Delhi Co op Urban T C Society Ltd does not fall within the meaning of Co-operative Bank as defined in part V of the Banking Regulation Act, 1949, sub-section (4) of section 80P will not apply in this case. 5. The issues with the approval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 circular No.133/06/2007-TPL dated 9th May, 2007. The difference between a cooperative bank and a cooperative society are as fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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