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TMI Blog2016 (3) TMI 1278X X X X Extracts X X X X X X X X Extracts X X X X ..... ) - Held that:- Commissioner of Income Tax (Appeals) correctly deleted the disallowance made under sec. 40(a)(ia) of the Act by observing that the assessee-society is not held to be a bank, therefore, TDS provisions are not applicable to the assessee-society. Hence, he deleted the addition made under sec. 40(a)(ia) of the Act.- Decided against revenue - ITA No. 463/PAN/2015 (Asst. Year : 2012-13) - - - Dated:- 2-3-2016 - N.S. SAINI AND GEORGE MATHAN ORDER PER GEORGE MATHAN, JUDICIAL MEMBER This is an appeal filed by the Revenue against the order of the Commissioner of Income Tax (Appeals), Panaji-1 in ITA No.342/CIT(A) PNJ-1/14-15, dated 24/08/2015 for the Assessment Year 2012-13. 2. The main issue involved in this appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s provided under section 80P(2)(a)(i) of the Act. It is appellant‟s case that, it is not carrying on the business of the banking. Consequently, not being a co-operative bank the provisions of Section 80P(4) of the Act would not exclude the appellant from claiming the benefit of deduction under Section 80P(2)(a)(i) of the Act. However in terms of Section 80P of the Act the meaning of the words Cooperative Bank is the meaning assigned to it in Chapter V of the Banking Regulation Act, 1949. A cooperative bank is defined in Section 5(cci) of Banking Regulation Act to mean a State Cooperative Bank-, a Central Cooperative Bank and a Primary Cooperative Bank. Admittedly, the appellant is not a State Cooperative Bank, a Central Cooperative Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds to the conclusion that it is carrying on banking business. This fact of accepting deposits from people who are not members has been so recorded by the CIT(A) in his order dated 15 July, 2014. Before the Tribunal also the appellant did not dispute the fact that in a few cases they have dealt with non members. However so far as accepting deposits from non members is concerned it is submitted that the Bye-law 43 only permits the society to accept deposits from its members. It is submitted that Bye .laws 43 does not permit receipt of deposits from persons other then members, the word any person is a gloss added in the impugned order as it is not found in Bye law 43. It is undisputed that the transactions with non members are insignificant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry Cooperative Bank as provided in section 5(ccv) of the Banking Regulation Act is concerned, the same requires the Bye laws of society to contain a prohibition from admitting any other cooperative society as its member. In fact the bye-laws of the appellant society originally in byelaw 9(b) 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 w.e.f. 12th January, 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 cooperative bank is not satisfied. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. Thus, the appellant is entitled to the benefit of deduction available under Section 80P(2)(a)(i) of the Act. The contention of Ms. Dessai, learned Counsel for the revenue that the appellant is not entitled to the benefit of Section 80P (2)(a)(i) of the Act in view of the fact that it deals with non-member cannot be upheld. This for the reason that section 80P(1) of the Act restricts the benefits of deduction of income of co-operative society to the extent it is earned by providing credit facilities to its members. Therefore, to the extent the income earned is attributable to dealings with the non-members are concerned the benefit of Section 80P of the Act would not be available. In the above view of the matter, at the time when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eleting the addition made under sec. 40(a)(ia) of the Act. 7. We have heard the submissions of Departmental Representative and perused the orders of the lower authorities and the material available on record. The Assessing Officer observed that the assessee has paid interest in excess of ₹ 10,000/- without making TDS and, therefore, he made disallowance of ₹ 32,84,449/- by invoking the provisions of sec. 40(a)(ia). 8. On appeal, Commissioner of Income Tax (Appeals) deleted the disallowance made under sec. 40(a)(ia) of the Act by observing that the assessee-society is not held to be a bank, therefore, TDS provisions are not applicable to the assessee-society. Hence, he deleted the addition made under sec. 40(a)(ia) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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