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2020 (12) TMI 179 - AT - Income TaxDeduction u/s.80P(2)(a)(i) denied - assessee is engaged in the business of providing the credit facilities to its members. It accepts deposits from its members and provides credit facilities to its members - HELD THAT:- From the definitions provided for the expression “primary Co-operative bank” and for the expression “banking” as per the Banking Regulation Act 1949, it could be safely concluded that unless the person collects deposits from the general public and provides credit facilities to the general public (both members and non-members), they cannot fall within the category of “co-operative bank”, “primary co-operative bank” or said to have engaged in the business of banking. In the instant case it is undisputed that assessee does not have any transaction with non-members of the credit society - assessee had collected deposits only from its members and had provided credit facilities to its members, in consonance with the powers provided in its bye laws. Hence, it could be safely concluded that the provisions of Section 80P(4) cannot be made applicable to the assessee society in the instant case. Hence, the assessee being a co-operative society would fall within the ambit of Section 80P(2)(a)(i) of the Act and hence, would be eligible for deduction thereon. Status of the assessee should be considered only as a co-operative credit society and not as a co-operative bank. Accordingly, the assessee is entitled for deduction u/s. 80P(2)(a)(i) of the Act for A.Y.2010-11 and we direct the ld. AO accordingly. Penalty u/s.271D - We find that assessee on realising its mistake had preferred an appeal before us against that order (though it is not aggrieved on the result of the order but aggrieved on the observations made thereon) for penalty u/s.271D of the Act for A.Y.2007-08, which is also listed alongwith these main appeals for other assessment years. It is trite law that no addition or denial of any deduction could be made by the revenue authorities merely based on admission of any person much less the authorised representative of the assessee without going into the actual charter documents i.e. in the instant case, objects of the society to ascertain and understand the status of the assessee. The objects of the society (bye laws of the assessee) which are enclosed in page 5 of the paper book filed before us categorically states that assessee society could transact only with its members. Hence, by no stretch of imagination, it could be considered as a co-operative bank. At the cost of repetition, a co-operative bank is one which transacts with general public which includes both members as well as non-members. In this regard, we would like to state that there is no estopel against the statute and therefore, it is open to the assessee to claim before the authorities that a particular item of income is not taxable despite having offered the same in its return of income or even having accepted the same as taxable before the authorities or even in the books of accounts - This appeal filed by the assessee against penalty u/s.271D of the Act for A.Y.2007-08 requires to be remanded back to the file of the ld. CIT(A) for denovo adjudication in accordance with law.
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