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2015 (3) TMI 1346 - AT - Income TaxDisallowance of deduction available to Co-operative society u/s 80P - assessee collecting deposits from members by way of corpus funds and other deposits - HELD THAT - As in the case of Jafari Momin Vikash Co-op. Credit Society Ltd 2014 (2) TMI 28 - GUJARAT HIGH COURT sub-section(4) of section 80P will not apply to an assessee which is not a co-operative bank. In the case clarified by CBDT Delhi Coop Urban Thrift & Credit Society Ltd. was under consideration. Circular clarified that the said entity not being a co-operative bank section 80P(4) of the Act would not apply to it. Revenue s contention cannot be entertained that section 80P(4) would exclude not only the co-operative banks other than those fulfilling the description contained therein but also credit societies which are not co-operative banks. In the present case respondent assessee is admittedly not a credit co-operative bank but a credit co-operative society. Exclusion clause of sub-section (4) of section 80P therefore would not apply. In the result Tax Appeals are dismissed. Referring to SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA BAGALKOT 2015 (1) TMI 821 - KARNATAKA HIGH COURT section 80P (4) was not applicable to cooperative societies and was restricted only to cooperative Banks which had got licence to do banking business from the RBI. As the assessee dealing only with its members so it is to be considered a cooperative society only and not a bank. Considering the facts and circumstances of the case we are reversing the order of the FAA. Effective ground of appeal filed by the assessee is decided in its favour.
Issues:
1. Disallowance of deduction available to Co-operative society u/s 80P of the Income Tax Act, 1961. 2. Interpretation of section 80P(4) and its applicability to primary co-operative banks. 3. Consideration of whether a co-operative society qualifies as a co-operative bank for the purpose of claiming deduction u/s 80P. 4. Analysis of judicial precedents and circulars to determine the eligibility of a co-operative society for deduction u/s 80P. Issue 1: Disallowance of deduction under section 80P: The Assessing Officer (AO) disallowed the deduction claimed by the assessee under section 80P of the Income Tax Act, 1961, as the AO categorized the assessee as a primary co-operative bank based on specific criteria. The First Appellate Authority (FAA) upheld the AO's decision, stating that the assessee fulfilled the conditions of a primary co-operative bank as per section 80P(4). The FAA also dismissed the relevance of a CBDT circular from 2006 in this context. The assessee challenged this decision before the Appellate Tribunal. Issue 2: Interpretation of section 80P(4): The Appellate Tribunal analyzed the provisions of section 80P(4) and the definition of a primary co-operative bank. The Tribunal considered the arguments presented by both the Departmental Representative (DR) and the Authorized Representative (AR) regarding the applicability of section 80P(4) to the assessee. The AR contended that the assessee was not a co-operative bank but a co-operative society, thus eligible for the deduction under section 80P. Issue 3: Qualification as a co-operative society for deduction u/s 80P: The AR argued that various judicial decisions, including those by the Hon'ble Gujarat High Court and Karnataka High Court, supported the assessee's position as a co-operative society entitled to claim deduction under section 80P. The Tribunal referred to these precedents and concluded that the assessee, dealing only with its members and not the public, should be considered a cooperative society and not a bank. Therefore, the Tribunal reversed the FAA's decision and allowed the appeal filed by the assessee. Issue 4: Analysis of judicial precedents and circulars: The Tribunal extensively discussed the judgments of Jafari Momin Vikash Co-op. Credit Society Ltd., Surat Vankar Sahkari Sangh Ltd., Biluru Gurubasava Pattina, and other relevant cases to determine the correct interpretation of section 80P(4) concerning cooperative societies. The Tribunal emphasized that section 80P(4) was not applicable to cooperative societies but only to cooperative banks licensed to conduct banking business by the RBI. Additionally, the Tribunal highlighted the importance of judicial precedents and circulars in clarifying the eligibility criteria for claiming deductions under section 80P. In conclusion, the Appellate Tribunal allowed the appeal filed by the assessee, emphasizing that the assessee, being a cooperative society and not a bank, was eligible for the deduction under section 80P. The Tribunal's decision was based on a thorough analysis of relevant legal provisions, judicial precedents, and the distinction between cooperative societies and cooperative banks.
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