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TMI Blog2017 (10) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... ich in turn has arisen from an order passed by the Assessing Officer dated 21.12.2012 under section 143(3) of the Act. 2. Grounds of appeal taken by the assessee are as under : The ld. CIT(A) erred in confirming the disallowance of the deduction under section 80P(2)(d) of the Act, in respect of interest income aggregating to ₹ 21,40,550/- earned by the the appellant on the deposits placed with Co-operative Banks, relying on the provisions of section 80P(4) of the Act. 3. The issue raised by the assessee is against the confirming the disallowance of the deduction under section 80P(2)(d) of the Act, in respect of interest income aggregating to ₹ 21,40,550/- which was earned by the assessee on the deposits placed with Co-operative Banks. 4. Brief facts of the case are that the assessee filed return of income on 11.8.2010 declaring total income at NIL. Thereafter the case was selected for scrutiny under CASS and the statutory notices u/s 143(2) and 142(1) were issued and served upon the assessee. The AO, during the course of assessment proceedings, noticed that the assessee has earned an income from other sources comprising and interest and dividend of ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the meaning of Cooperative Society only while paying interest u/s 80P(2)(d) and not while receiving interest under the said provision appears to be inconsistent and absurd. Thus after due consideration of the facts of the Instant case and the judicial decision cited, I sustain the disallowance of ₹ 21,40,550/- u/s 80P(2)(d) and the ground raised by the appellant is dismissed. 6. The ld. AR submitted before the Bench that the issue of eligibility of deduction u/s 80P(2)(d)of the Act in respect of interest and dividend income earned on the deposits placed with the cooperative banks stands covered in favour of the assessee by the series of decisions of the Hon ble Supreme Court, Jurisdictional High Court and Co-ordinate Benches of the Tribunal and therefore the provisions of sub-section 4 as inserted by Finance Act, 2006 under section 80P(2)(d) of the Act were not applicable to the present case. The ld. AR took us through the Circular No.14/2006, dated 28.12.2006 issued by the BCDT which is placed in the paper books of the assessee and forming part of this record, which deals with the Finance Act, 2006-Explanatory Notes on provisions relating to direct taxes. The ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsertion of Sub-section (4) of Sec. 80P does not change status of Aurangabad District Central Co-operative Bank as a co-operative society which is contemplated in Sec. 80P(1) of the Act. We, therefore, hold that the interest received on the deposit with the Aurangabad District Central Co- operative Bank by the assessee on the deposits are squarely covered u/s. 80P(1)(d) and the interest received on deposit kept with the Aurangabad District Central Co-operative Bank is an allowable deduction. So far as the finding of the Ld. CIT(A) that the provisions of Sec. 80P(2)(a)(i), in our opinion the decision of the Hon'ble Supreme Court in the case of ITA No.1047/PN/2012, Bajaj Auto Ltd,. Aurangabad Totagars Cooperative Vs. ITO (supra) is against the assessee as interest received on deposits with Aurangabad District Central Co-operative Bank cannot be said to be the income derived from providing credit facilities to its members. We, accordingly, answer the ground taken by the revenue. But, finally we have confirmed order of Ld. CIT(A) giving relief to the assessee u/s. 80P(2)(d). 6. In the result, the revenue's appeal is dismissed. In the case of M/s Janata Grahak Madhy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) that the provisions of Sec. 80P(2)(a)(i), in our opinion the decision of the Hon'ble Supreme Court in the case of Totagars Cooperative Vs. ITO (supra) is against the assessee as interest received on deposits with Aurangabad District Central Co-operative Bank cannot be said to be the income derived from providing credit facilities to its members. We, accordingly, answer the ground taken by the revenue. But, finally we have confirmed order of Ld. CIT(A) giving relief to the assessee u/s. 80P(2)(d). 2.1 Facts being similar, so following the same reasoning, the assessee is entitled to deduction u/s.80P(2)(d). In view of above, assessee is eligible for claiming deduction u/s.80P(2)(d) of I.T Act, which is available for income earned from business and not from other sources as rightly held by CIT(A). We uphold the same. 3. In the result, appeal filed by revenue is dismissed. In the case of Sindhudurg Zilla Madhyamik Adhyapak Sahakar Patpedhi Maryadit (supra), it has been held : 7. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law. Sec. 80P(2)(d) reads as under: 80P(1): Where, in the case of an assessee being a cooperative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in subsection (2), in computing the total income of the assessee. 80P(2): The sums referred to in sub-section (1) shall be the following, namely: (a) ........... (b) ........... (c) 2(d): In respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income; 5. Sub-sec. (4) of Sec. SOP has withdrawn the deduction to the co operative bank other than primary agricultural credit society or a primary co-operative agricultural and rural development bank w.e.f. the A.Y. 2007-08. The said provision is applicable to the Aurangabad District Central Co-operative Bank (ADCCB) in which the assessee society has kept deposit. The withdrawal of deduction by insertion of Sub-section (4) of Sec. SOP does not change status of Aurangabad District Central Co-operative Bank a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are of the opinion that decision of the CIT (A) is fair and reasonable and it does not call for any interference. Accordingly, issue raised in the Revenue‟s appeal is dismissed. 8. In the result, both the appeals of the Revenue are dismissed. In the case of Govt. Central Printing Press it has been held : 5. After hearing the both the parties in this regard, we find the said judgment of the Hon‟ble Bombay High Court in the case of Quepem Urband Cooperative Credit Society Ltd (supra) is relevant for the following proposition: Where assessee-cooperative society could not be regarded as Co-operative Bank‟ on, mere fact that an insignificant proposition of revenue was coming from non-members, and thus, was entitled for deduction under section 80P(2)(a)(i) of the Act. 6. Therefore, considering the above, we are of the opinion that the decision taken by the CIT (A) is fair and reasonable and it does not call for any interference. Accordingly, ground no.1 raised by the Revenue is dismissed. Rest of the grounds ie Ground no.2, 3 and 4 are argumentative in nature and therefore, they need no special adjudication. Accordingly, the same are dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank, a Central Co-operative Bank. Thus what has to be examined is whether the appellant is a primary co-operative bank as defined in Para V of the Banking Regulation Act. Section 5(ccv) of the Banking Regulation Act defines a primary co-operative bank to mean a co-operative society which cumulatively satisfies its three conditions: (1) Its principal business or primary object should be banking business of Banking; (2) Its paid up share capital and reserves should not be less than rupees one lakh. (3) Its bye-laws do not permit admission of any other co-operative society as its member. It is accepted position that condition no. (2) is satisfied as the share capital in an excess of rupees one lakh. It has been the appellant's contention that the conditions no. (1) and (3) provided above are not satisfied. [Para 9] Therefore the issue that arises for consideration is whether the appellant satisfies condition no. (1) and (3) above. The impugned order after referring to the definition of 'Banking Business' as defined in section 5b of the Banking Regulation Act, held that the principal business of the appellant is Banking. Section 5b of the banki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts member. In fact the bye-laws of the appellant society originally in bye-law 9(d) clearly provided that no co-operative society shall be admitted to the membership of the society. Thus there was a bar but the same was amended with effect from 12-1-2001 as to permit a society to be admitted to the membership of the society. Therefore for the subject assessment years there is no prohibition to admitting a society to its membership and one of three cumulative conditions precedent to be a primary co-operative bank is not satisfied. However the impugned order construed the amended clause 9(d) of the appellant's bye-laws to mean that it only permits a society to be admitted to the membership of the appellant and not a co-operative society. According to the impugned order, a society and a co-operative society are clearly words of different and distinct significance and the membership is only open to society and not to co-operative society. As rightly pointed out on behalf of the appellant the word society as referred to bye-law 9(d) would include the co-operative society. This is so as the definition of a society under the Co-operative Act is co-operative society registered under th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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