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2017 (9) TMI 564 - AT - Income TaxDisallowance of claim of deduction of interest on deposits with co-operative banks (co-operative society) u/s 80P(2)(d) - primary objects of society - Held that:- The primary objects of any society are prescribed in the bye laws. In order to become a bank, the principal business of the co-operative society should be transaction of banking business. A perusal of the audited accounts would indicate the same. The first and foremost requirement in India to do business of banking is to obtain a licence from the Reserve Bank of India (RBI). Without a valid licence from RBI, nobody can do business of banking. Also Urban Co-operative Bank is known as Primary Co-operative Bank. It is a bigger entity and fall under the ‘Banking Regulation Act’. It is also regulated by State Government and RBI. Primary Co-operative Banks, popularly called Urban Co-operative Banks, whose net worth is ₹ 1,00,000/- and above, who are recognized as banks, are members of payment system and also enjoy deposit insurance. Also some Urban Co-operative Banks are conferred with ‘Scheduled’ status by the RBI. The above factual aspects have not been examined either by the AO or the Ld. CIT(A). Therefore, we deem it proper to set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to make a fresh assessment after examining the facts mentioned at para 7.1 here-in-above. Needless to say, the AO would give a reasonable opportunity of being heard to the assessee before finalizing the assessment order. The assessee is directed to file the required details before the AO.
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