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2014 (9) TMI 154 - AT - Income TaxDeduction u/s 80P(2)(a)(i) – Effect of amendment - banking or credit facilities to its members - admission of any other co-operative society as a member of the co-operative society - Whether the Assessee is entitled for deduction u/s 80P(2)(a)(i) and whether the Assessee is hit by the provisions of Sec. 80P(4) which was introduced in the statute by the Finance Act, 2006 w.e.f. 1.4.2007 – Held that:- The aforesaid provision of Sec. 20 to 21A mandates admission of any other co-operative society as a member of the co-operative society - Section 21A further states that the co-operative society can be admitted as nominal or associate member for any specific purpose for any specific period as may be mentioned in the bye-laws - the society being a co-operative bank providing banking facilities to members is not eligible to claim deduction u/s 80P(2)(a)(i) after the introduction of sub-section (4) to section 80P - the Assessee was denied deduction u/s 80P(2)(a)(i) – relying upon ACIT vs Palhawas Primary Agriculture Co-operative Society Ltd. [2012 (10) TMI 276 - ITAT DELHI] - Section 80P(4) clearly excludes primary agriculture credit society from its domain - section 80P(2)(a)(i) nowhere talks of co-operative credit society and therefore the distinction made under the Banking Regulation Act cannot be imported u/s 80P(2)(a)(i) - the Assessee has not to be regarded to be a primary co-operative bank as all the three basic conditions are not complied, it is not a co-operative bank and the provisions of Sec. 80P(4) are not applicable in the case of the Assessee and Assessee is entitled for deduction u/s 80P(2)(a)(i) – AO is directed to allow deduction to the assessee u/s 80P(2)(a)(i) on the income generated for providing banking or credit facilities to its members. Whether the Assessee is a co-operative bank or not – Held that:- If the co-operative society complied with all the three conditions - once the Assessee will not fall within the provisions of Sec. 80P(4), the Assessee will be eligible to get deduction u/s 80P(2)(a)(i) in respect of whole of the income which the Assessee derives from carrying on the business of banking or providing credit facilities to its members - it is not necessary that the co-operative society should have a banking licence as per the definition under the Income Tax Act for carrying on banking business - If licence is not obtained it may be an illegal banking business under the other statute - the paid up share capital and reserves in the case of the Assessee is more than ₹ 1 lac - the Assessee satisfies the second condition - Sec. 20 of The Karnataka Souharda Sahakari Act, 1997 permits admission of any other co-operative society as a member – Decided against Revenue.
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