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TMI Blog2025 (3) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... h decision of Surat Vankar Sahakari Sangh Ltd. [2016 (7) TMI 1217 - GUJARAT HIGH COURT] has been followed in a serious of decisions by me or by the Division Bench of Surat Tribunal. Therefore, no merit in the grounds of appeal raised by the revenue - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... equired to be treated as 'income from other sources' as the same is not eligible for deduction under Section 80P(2)(a) of the Act. 3.3 The Ld. PCIT-3, Surat, accorded approval to reopen the proceedings in this case. Subsequently, the Assessing Officer issued notices under Sections 148, 143(2) and 142(1) of the Act on 27.04.2018, 04.07.2019 and 21.08.2019 respectively. 3.3 The Assessing Officer completed the re-assessment proceedings under Section 143(3) read with Section 147 of the Act, adding Rs.9,56,635/- to the returned income of the Assessee. 3.4 Aggrieved by the aforesaid order, the Assessee preferred an appeal before the Ld. CIT(A), who, vide order, dated 21.07.2023, allowed the Assessee's appeal. 3.5 Aggrieved by this order, the Revenue preferred an appeal before the Ld. ITAT, who vide order dated 28.11.2023, dismissed the Revenue's appeal. Hence, this Appeal. 4. Mr. Karan Sanghani, learned Senior Standing Counsel for the Appellant -Department has placed reliance on the decision of the Hon'ble Karnataka High Court in the case of Principal Commissioner of Income Tax Hubbali Vs.Totgars Cooperative Sales Societies reported in (2017) 83, taxmann.com 140(Karnataka) to stress ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions as under: "14.1. In Apex Co-operative Bank of Urban Bank of Maharashtra and Goa Ltd., it was categorically held that under Section 56 of the BR Act,1949 only three cooperative banks have been defined, namely, state cooperative bank, central co-operative bank and primary co-operative bank which are covered under Section 56 (cci) read with (ccvii) read with the provisions of the NABARD Act, 1981. Thus, it is only these three banks which are co-operative banks which require a licence under the BR Act, 1949 to engage in banking business. If any bank does not fall within the nomenclature of the aforesaid three banks as defined under theNABARD Act, 1981, it would not be a co-operative bank within the meaning of Section 56 of BR Act, 1949 irrespective of whatever nomenclature it may have or structure it may possess or incorporated under any Act. It was further stated that if a bank has to be a state co-operative bank, there has to be a declaration made by the State Government in terms of Section 2(u) of NABARD Act, 1981. Hence, it is necessary to go into the question as to, whether, the appellant herein has been so declared as a state cooperative bank. This question would ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee must be a "co-operative society". iii) Thirdly, the gross total income must include income that is referred to in sub-section (2). iv) Fourthly, sub-clause (2)(a)(i) speaks of a cooperative society being "engaged in", inter alia, carrying on the business of banking or providing credit facilities to its members. v) Fifthly, the burden is on the assessee to show, by adducing facts,that it is entitled to claim the deduction under Section 80P. vi) Sixthly, the expression "providing credit facilities to itsmembers" does not necessarily mean agricultural credit alone. It was highlighted that the distinction between eligibility for deduction and attributability of amount of profits and gains to an activity is a real one. Since profits and gains from credit facilities given to non-members cannot be said to be attributable to the activity of providing credit facilities to its members, such amount cannot be deducted. vii) Seventhly, under Section 80P(1) (c), the cooperative societies must be registered either under Cooperative Societies Act, 1912, or a State Act and may be engaged in activities which may be termed as residuary activities i.e. activities not covered by sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng business i.e. engaged in lending money to members of the public, which have a licence in this behalf from Reserve Bank of India." 33. In view of the above dictum of law as well as the provisions of the Act which are considered we are of the opinion that the provisions of section 80P(2)(d) would be applicable in the facts of the case and the PCIT was not justified in invoking revisional powers under section 263 of the Act which is rightly reversed by the Tribunal holding that the cooperative bank is a cooperative society registered under the Gujarat State Cooperative Societies Act and in view of the various decisions of the Court, the Tribunal after following the same has come to the conclusion that the assessment was not erroneous allowing deduction of section 80P(2)(d) of the Act which is in consonance with the various decisions of the Court as a twin condition invoking section 263 as to the assessment being erroneous and prejudicial to the interest of the revenue are not being fulfilled. 34. In view of the foregoing reasons we answer the question in favour of the assessee and against the Revenue. Tax Appeals are being devoid of any merit accordingly dismissed. No order a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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