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TMI Blog2018 (10) TMI 1690X X X X Extracts X X X X X X X X Extracts X X X X ..... ided against revenue. - I.T.A. No.5175/Mum/2017 (Assessment Year: 2013-14) - - - Dated:- 31-10-2018 - Shri B. R. Baskaran, AM And Shri Amarjit Singh, JM Revenue by: Shri Manoj Kumar Singh (DR) Assessee by: Shri V. G. Ginde Kumar Kale ORDER Amarjit Singh, The revenue has filed the present appeal against the order dated 26.05.2017 passed by the Commissioner of Income Tax (Appeals) -1, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the A.Y.2013-14. 2. The revenue has raised the following grounds: - .1 Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of ₹ 68,21,517/- on account of disallowance u/s 80P(2)(a)(i) of the Act. 2 Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in granting above relief to the assessee without appreciating the fact that the assessee is carrying on the business of accepting deposits and advancing loans to its members which are the primary activities of any bank whether co-operative or otherwise. 3 Whether on the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom and to its members only. The issue involved in this case is whether the appellant is a Co-operative Bank or not because if the appellant is held to be a Co-operative Bank as has been held by the AO, men deduction allowed u/s. 80P(l) is taken away in terms of section 80P{4) of the I.T. Act, otherwise, if the appellant is a Co-operative Credit Society providing credit facilities to members, then whole of the profits earned by the appellant Society arc allowed to the society as deduction u/s, 80P(2)(a)(i), as claimed by the appellant. The main reason why the AO has disallowed deduction to the appellant is that according to the AO though the appellant is not a Co-operative Bank but as the appellant had accepted deposits and provided credit facilities to its members, the same was the primary activity of any bank. The same issue has been discussed and decided in detail in the appellants' own case for A.Y. 2012-13 by the CIT(A) by holding as under - 8. I have carefully considered the appellant's submissions, observations of the AO in the assessment order and the facts of the case. The appellant is a Primary Co-operative Credit Society accepting deposits and providin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Regulation Act defines a primary cooperative bunk 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 no! satisfied. 10. Therefore the issue that arises for consideration is -whether the appellant satisfies condition No. (I) 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 Banking Regulation Act defines banking to mean accepting of deposits for the purpose of lending of investment^ of deposit of money from the which: repayable on demand or otherwis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Primary 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 bye-taw 9(d) clearly provided no cooperative society shall he admitted to She membership of the society. Thus there was a bar but the same was amended w.e.f. 12 January, 2001 is 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 and one of three cumulative conditions precedent to be it cooperative hank is not satisfied. However the impugned order the amended clause 9(d) of the appellant's bye lows to mean that it ii society lo be admitted to the membership of the appellant and '-operative society. According to the impugned order, a society and a cooperative society are clearly words of different and distinct significance and the membership w only open so society aid not to a co-operative society. As rightly pointed out on behalf of the appellant the word society ax referred to bye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussed above, it is held that the appellant is a primary Credit Society providing credit facilities to its members and Co-operative Bank. Therefore, the provisions of section 80P(4) of are not applicable in the appellant's case and the appellant is eligible for deduction u/s 80P(2)(a)(i) of the I.T. Act, as claimed. The AO is therefore, directed to allow the same. 5. On appraisal of the above said finding, we noticed that the assessee society was not doing the banking business having no licence from RBI, therefore, the claim of the assessee was not hit by the provision of Section 80P(4) of the Act. The CIT(A) while deciding the matter of controversy relied upon the decision of Bombay High Court in the case of Quepem Urban Co-operative Credit Society Ltd. We also noticed that the claim of the assessee has also been decided in favour of the assessee by the Hon ble ITAT in the assessee s own case in ITA. No. 369/M/2016 for the A.Y. 2012-13. The CIT(A) has also followed the finding of the said case in the present case also. No distinguishable material has been placed on record. Taking into account, all the facts and circumstances, we are of the view that the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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