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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 ..... Income Tax Act, 1961. 3. The facts of the case, in brief, are that the assessee filed its return of income at NIL after claiming deduction under sec. 80P(2)(a)(i) and 80P(2)(c)(ii) of the Act for Rs. 22,57,192/- and Rs. 19,018/- respectively. It was claimed that the society is entitled to deduction under sec. 80P(2) as it was a Cooperative Society carrying on the business of banking or providing credit facilities to its members. However, the claim of the assessee for deduction under sec. 80P(2) was rejected by the Assessing Officer in the order passed under sec. 143(3) of the Act on the ground that the assessee was a cooperative bank, and hence, not entitled to claim deduction by virtue of sec. 80P(4). 4. On appeal, Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 5(ccv) of the Banking Regulation Act defines a primary cooperative bank to mean a cooperative society which cumulatively satisfies the following 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 that rupees one lakh. 3) Its bye-laws do not permit admission of any other cooperative 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. Therefore the issue that arises for consideration is whether the appellant satisfies condit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ublic and therefore it is in banking business. In fact, the impugned order erroneously relies upon bye-law 43 of the society which enables the society to receive deposits to conclude that it can receive deposits from public. However, the impugned order relies upon bye-law 43 to conclude that it enables the appellant to receive deposits from any person is not correct. Thus in the present facts the findings that the appellant‟s principal business is of Banking is perverse, as it is not supported by the evidence on record. So far as the issue of primary object of the appellant is concerned the impugned order gives no finding on that basis to deprive the appellant the benefit of Section 80P of the Act The impugned order sets out the objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 hand distinct significance and the membership is only open to society and not to a 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 registered under the Co-operative Act. Besides the qualifying condition 3 for being considered as a Primary Cooperative Bank is that the bye laws must not permit admission of any other cooperative society This is a mandatory condition i.e. th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P of the Act only to the extent that the same is earned by the appellant in carrying on its business of providing credit facilities to its members. Accordingly, the substantial question of law as framed is answered in the negative i.e.in favour of the appellant and against the respondent-revenue. In view of the decision of the Hon‟ble High Court, the AO is directed to allow the deduction u/s.80P to the appellant. The appeal is allowed." 5. The Departmental Representative relied on the order of the Assessing Officer. He could not point out any specific error in the above quoted order of the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) has allowed the claim of deduction under sec. 80P(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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