9911796707
TMI Blog2014 (11) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... tive bank and therefore, it is not entitled for deduction u/s 80P(2)(a)(i). On the other hand, stand of the assessee is that it is a cooperative society providing credit facilities to its members. The Assessing Officer did not accept this contention of the assessee and held that it is a cooperative bank and therefore, not entitled for the deduction. 3. Dissatisfied with the action of the Assessing Officer, the assessee carried the matter in appeal before the CIT (A). The learned first appellate authority has gone through the contention of the assessee and held that it is not engaged in banking activities. The following observation made by the CIT (A) is worth to read: "7. I have gone through the Assessing Officer's order, the appellant's submissin and the language of the various provisions of the IT Act as reproduced above. I find that the provision of section 80P(4) has got its application only to cooperative banks. Section 80P(2)(a)(i) shall therefore 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. It is confirmed that the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der 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 was allowed as deduction prior to Assessment Year 2007-08. By the Finance Act, 2006 w.e.f. 1-4-2007, 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 other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. Explanation : For the purposes of this sub-section,- (a) "co-operative bank" and "primary agricultural credit society" shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949); (b) "primary co-operative agricultural and rural development bank" means a society having its area of operation confined to a taluk and the principal object of which is to provide for longterm credit for agricultural and rural development activities." 3. The AO was of the view that after amended by the Finance Act, 2006 w.e.f. 1.4.2007 by which sub-section (4) was inserted, the Assessee wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 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. The CIT(A) confirmed the order of the AO. Hence this appeal by the Assessee before the Tribunal. 6. At the time of hearing, it was brought to our notice by the parties that the issue raised by the Assessee has already been considered and decided by this Tribunal in the case of ACIT, Circle 3(1), Bangalore v. M/s. Bangalore Commercial Transport Credit Co-operative Society Ltd. in ITA No.1069/Bang/2010, wherein this Tribunal held that section 80P(4) is applicable only to cooperative banks and not to credit cooperative societies. The intention of the legislature of bringing in cooperative banks into the taxation structure was mainly to bring in par with commercial banks. Since the assessee is a cooperative society and not a cooperative bank, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rative Societies Act, 1959. Cooperative Societies Act, 1959. Nature of business 1. As defined in section 6 of Banking Regulation Act. 2. Can open savings bank account, current account, overdraft account, cash credit account, issue letter of credit, discounting bills of exchange, issue cheques, demand drafts (DD), Pay Orders, Gift cheques, lockers, bank guarantees etc. 3. Cooperative Banks can act as clearing agent for cheques, DDs, pay orders and other forms. 4. Banks are bound to follow the rules, regulations and directions issued by Reserve Bank of India (RBI). 1. As per the bye laws of the cooperative society. 2. Society cannot open savings bank account, current account, issue letter of credit, discounting bills of exchange, issue cheques, demand drafts, pay orders, gift cheques, lockers, bank guarantees etc. 3. Society cannot act as clearing agent, for cheques, DDs, pay orders and other forms. 4. Society are bound by rules and regulations as specified by in the cooperative societies act. Filing of returns Cooperative banks have to submit annual return to RBI every year. Society has to submit the annual return to Registrar of Societies. Inspection RBI has the power to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P(4), the respondent assessee would not be entitled to benefits of deduction under section 80P. CIT(Appeals) as well as the Tribunal reversed the decision of the Assessing Officer on the premise that the respondent assessee not being a bank, exclusion provided in sub-section(4) of section 80P would not apply. This, irrespective of the fact that the respondent would not fall within the expression "primary agricultural credit society". 6. Had this been the plain statutory provisions under consideration in isolation, in our opinion, the question of law could be stated to have arisen. When, as contended by the assessee, by virtue of subsection(4) only co-operative banks other than those mentioned therein were meant to be excluded for the purpose of deduction under section 80P, a question would arise why then Legislature specified primary agricultural credit societies along with primary cooperative agricultural and rural development banks for exclusion from such exclusion and in other words, continued to hold such entity as eligible for deduction. However, the issue has been considerably simplified by virtue of CBDT circular No.133 of 2007 dated 9.5.2007. Circular provides as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
