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TMI Blog2012 (8) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... edit facilities to their members. 2. Whether on the facts and circumstance of the case, that CIT(A) was correct in holding that the assessee is a cooperative society and not a co-operative bank in terms of sub-section (4) of section SOP without considering the meaning of cooperative bank as envisaged under Part V of Banking Regulation Act 1949 wherein it is defined that co-operative bank includes primary co-operative bank, which is further defined as cooperative society with the primary object of transactions of banking business." 2. We are taking the brief facts relating to the A. Y. 2007-08 in the case of Jayalaxmi Mahila Vividodeshagala Souharda Sahakari Ltd., Karwar as the facts involved in all these appeals are common in the case of both the assesses in all the assessment years involved except the change in figures. The brief facts are that the assessee is involved in the business of providing credit facilities to its member by granting loans for various purposes like business, housing, vehicles, personal purposes etc to its members. It also collect fixed deposits, short term deposits, recurring deposits, and pigmy deposit up to A.Y. 2006-07. The society was allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricultural society" shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949): (b) "Primary Co-operative Agricultural and Rural Development Bank" means a society having its area of operation confined to a taluk and the principal object of which is to provide for long term credit for agricultural and rural development activities." 9.1 The above sub-section 4 of section 80P provides that deduction under the said section shall not be available to any Co-operative bank other than a primary agricultural credit society or rural development bank. For the purpose of the said sub-section, Co-operative bank shall have the meaning assigned to it in part V of the Banking Regulation Act, 1949. In Part V of the Banking Regulation Act, "co-operative bank" means a State Co-operative Bank, a Central Co-operative bank and a Primate Co-operative Bank. 9.2. From the above section, it is clear that the provisions of section 80P(4) has got its application only to co-operative banks. Section 80P(4) does not define the word : "Co-operative society". The existing sub-section 80P (2)(a)(i) shall be applicable to a co-operative society carrying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been deleted. The new proviso to section 80P(4) which is brought into statute is applicable only to co-operative banks and not to credit co-operative societies. The intention of the legislature of brining in co-operative banks into the taxation structure was mainly to bring in par with commercial banks. Since the assessee is a co-operative society and not a co-operative bank, the provisions of section 80P(4) will not have application in the assessee's case and therefore, it is entitled to deduction u/s 80P(2)(a)(i) of the Act. Hence, we are of the view that the order of the CIT(A) is correct and in accordance with law and no interference is called for." Following the judgment of the Hon'ble Jurisdictional Tribunal on this issue, it is held that the appellant is entitled for deduction u/s 80P(2)(a)(i) and the A.O. is directed to allow the same." 4. The ld DR relied on the order of the A.O. and vehemently contended that the assessee is not entitled for the deduction u/s 80P after the amendment made w.e.f. 01/04/2007 in sub section - 4 of section 80P. He submitted that the assessee is a co-operative bank engaged in banking business, therefore, in view of section 80P(4), the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... definition of the co-operative bank as given under Part V of the Banking Regulation Act. He submitted that the order of the CIT(A) be confirmed. 6. We have carefully considered the rival submissions along with order of the tax authority below as well as the decision and the entire material cited before us. The question before us is whether the assessee is entitled for the deduction u/s 80P(2)(a)(i). According to this section, if a co-operative society is engaged in carrying on the business of banking or providing credit facilities to its members and its gross total income includes any income therefrom, the co-operative society is entitled for the deduction. Section 80P(2)(a)(i) is explicitly clear that if the co-operative society is engaged in the business of banking or providing credit facilities to its members the co-operative society is entitled for the deduction. There is an embargo put by section 80P(4) which was introduced into the statute by the Finance Act 2006 w.e.f. 01/04/2007. This section denies the deduction to a co-operative society even if the co-operative society is carrying on the business of banking or the co-operative society is providing credit facilities to it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Banking Regulation Act 1949 as under: - "(CCV) "primary co-operative bank" means a co-operative society, other than a primary agricultural credit society,- (1) the primary object or principal business of which is transaction of banking business: (2) the paid-up share capital and reserves of which are not less than one lakh of rupees: and (3) the bye-laws of which do not permit admission of any other co-operative society as a member: Provided that this sub-clause shall not apply to the admission of a co-operative bank as a member by reason of such co-operative bank subscribing to the share capital of such co-operative society out of funds provided by the State Government for the purpose:" 10. From the aforesaid definition, it is apparent that if the co-operative society complied with all the three conditions namely that Firstly the primary object or principle business transacted by it is a banking business, Secondly, the paid-up share capital and reserve of which are 1 lakh or more and thirdly by laws of the co-operative society do not permit admission of any other co-operative society as a member. The condition number 2 & 3, no doubt are applicable in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th their to concentrate transactions of the co-operatives. 7. To hold and acquire sites, buildings, properties and to construct, renovate and demolish constructions or structures and to undertake such other activities for the benefit of the co- operatives. 8. Provide loans and advances for purchase of motor vehicle on hire purchase or hypothecation basis. 9. To open branches and sub-branches, remittance or offices by whatever name with all firm rules regarding their business prior to the general body whenever necessary. 10. To encourage co-operative education and to establish fund for promoting co-operative education by the Sahakari. 11. The board of directors authorised to established funds from profit earned by the Sahakari for welfare of members and employees with the previous permission of Federal Souharda Sahakari. 12. To establish a fund from contribution by the Sahakari with the approval of general body by the Board of Directors for education of members and their children of the Sahakari. 13. To have an understanding with other Souharda Sahakari pursuing similar objectives on co-operative-basis within the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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