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TMI Blog2014 (8) TMI 974X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year 2007-08. By the Finance Act, 2006, with effect from April 1, 2007, sub-section (4) was inserted in section 80P 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 long-term credit for agricultural and rural development activities." 3. The Assessing Officer was of the view that after the amendment by the Finance Act, 2006, with effect from April 1, 2007, by which sub-section (4) was inserted in section 80P of the Act, the assessee which was a co-operative society carrying on banking busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal in the case of Asst. CIT v. Bangalore Commercial Transport Credit Co-operative Society Ltd. in I. T. A. No. 1069/Bang/2010, wherein this Tribunal held that section 80P(4) is applicable only to cooperative banks and not to credit co-operative societies. The intention of the Legislature of bringing in co-operative banks into the taxation structure was mainly to bring in par with commercial banks. Since the assessee is a co-operative society and not a co-operative bank, the provisions of section 80P(4) will not have application in the assessee's case and therefore, it is entitled to deduction under section 80P(2)(a)(i) of the Act. The following were the relevant observations of the Tribunal : "9. We have heard the rival submissions and perused the mate rial on record. The assessee was denied the deduction under section 80-P(2)(a)(i) of the Act for the reason of introduction of sub-section (4) to section 80P. Section 80P(4) reads 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 pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, discounting bills of exchange, issue cheques, demand drafts, pay orders, gift cheques, lockers, bank guarantees, etc. 3. Co-operative banks can act as clearing agent for cheques, demand drafts, pay orders and other forms. 3. Society cannot act as clearing agent, for cheques, demand drafts, pay orders and other forms. 4. Banks are bound to follow the rules, regulations and directions issued by Reserve Bank of India (RBI). 4. Society are bound by rules and regulations as specified by in the Co-operative Societies Act. Filing of returns Co-operative 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 inspect accounts and overall functioning of the bank. Registrar has the power to inspect accounts and overall functioning of the bank. Part V Part V of the Banking Regulation Act is applicable to co-operative banks. Part V of the Banking Regulation Act is not applicable to co-operative banks. Use of words The word 'bank', 'banker', 'banking' can be used by a co-operative bank. The word 'bank', 'banker', 'banking' cannot be used by a co-operative society. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titled to benefits of deduction under section 80P. The Commissioner of Income-tax (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, irre spective 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 considera tion in isolation, in our opinion, the question of law could be stated to have arisen. When, as contended by the assessee, by virtue of sub- section (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 the 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 consid erably simplified by virtue of Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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