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TMI Blog2014 (11) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of banking for providing credit facilities to its members. Therefore, it claimed its income as exempt u/s 80P(2)(a)(i). However, the claim of the assessee for deduction was rejected by the Assessing Officer, on the ground that the assessee is a cooperative bank and hence not entitled to claim deduction. Assessing Officer relied upon section 80P(4). 3. Appeal to the CIT (A) did not bring any relief to the assessee. 4. Learned Counsel for the assessee at the very outset submitted that similar issue arose in the subsequent year i.e. assessment year 2009-10 and the Tribunal has allowed the appeal of the assessee bearing ITA No.1115/Bang/2013. The assessee has been treated as a society providing credit facilities to its members and entitled for deduction u/s 80P(2)(a)(i) of the Act. He placed on record copy of the Tribunal's order. 5. The learned DR was unable to controvert the contention of the learned Counsel for the assessee. 6. We have duly considered the rival contentions and gone through the record carefully. The order of the Tribunal in assessment year 2009-10 read as under: "This appeal by the assessee is against the order dated 20.03.2012 of the CIT(Appeals), Belgaum, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d rural development banks; and that the benefit of such deduction is not available to institutions like the assessee society. The AO also referred to section 5(b) of the Banking Regulation Act to hold that, if one of the two conditions of the appellant is fulfilled; i.e. its primary object should be banking or its principal business must be transaction in banking business, it is sufficient to bring the assessee into the concept of a banking institution. The AO referred to the objects of the assessee society in its bye laws that the activities of the assessee fall within the provisions of sections 5(b), 6(1)(a), 6(1)(g), 6(1)(k) and 6(1)(n) of the Banking Regulations Act 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 investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ea 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 clarification No.133/06/2007-TPL dated 9th May, 2007. The difference between a cooperative bank and a cooperative society are as follows:- Nature Coop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooperative society and not a cooperative bank, the provisions 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." 7.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 cooperative 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 "co-operative ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gulation Act, 1949, subsection(4) of section 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 sub-section(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 co-operative 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 co-operative society. Exclusion clause of sub-section(4) of section 80P, therefore, would not apply. In the result, Tax Appeals are dismissed." 8. In view of the aforesaid decisions of the Hon'ble Gujarat High Court in the case of Jafari Momin Vikas Co-op Credit Society Ltd. (supra) and of the co=ordin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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