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2014 (11) TMI 260 - AT - Income TaxClaim of deduction u/s 80P(2)(a)(i) disallowed - Nature of assessee – Cooperative bank or not – 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:- Banking means accepting deposit of money from the public which is repayable on demand or otherwise and withdrawal of these deposits by cheque, draft, order or otherwise and these deposits are accepted for the purpose of lending or investment - These deposits must be accepted from the public, not only from the members - These deposits must be repayable on demand or otherwise and could be withdrawn by the depositor by cheque, draft or otherwise - the assesse has accepted deposits from non-members - No evidence were filed before us by Ld. AR to contradict the finding given by CIT(A) - Even though he contended that none of the objects permits the assesse to accept deposits from the public – it cannot be held that the assesse did not accept the deposit from public during the year - The assesse since not discharged the onus. The deposits accepted are used by the Assessee co-operative society for lending or investment - Even out of the deposits so received, the loans have been given to the members of the society in accordance with the objects - the Assessee society was carrying on banking business as it was accepting deposits from the persons who were not members during the year - the paid up share capital and reserves in the case of the Assessee is more than ₹ 1 lac - Sec. 16 of The Karnataka State Co-operative Societies Act, 1959 permits admission of any other co-operative society as a member - 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 to be regarded to be a primary co-operative bank as all the three basic conditions are complied with, therefore, it is a co-operative bank and the provisions of Sec. 80P(4) are applicable in the case of the Assessee and Assessee is entitled for deduction u/s 80P(2)(a)(i) – the order of the CIT(A) is upheld – Decided against assessee.
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