TMI Blog2014 (12) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be allowable also to co-operative banks - credit co-operative societies are not covered by the meaning of Cooperative Banks as defined in part V of the Banking Regulation Act, 1949 and are entitled to deduction u/s 80P(2)(a)(i) of the Act - similar issue has been decided in ITO v. Jankalyan Nagri Sahakari Pat Sanstha Ltd. [2012 (9) TMI 288 - ITAT, PUNE] - the CIT(A) was justified that co-operative society is not a co-operative bank and therefore, the assessee credit co-operative society is entitled to deduction u/s 80P(2)(a)(i) of the Act. Also in CIT v. Smt. Archana R. Dhanwatey [1981 (1) TMI 27 - BOMBAY High Court] it was held that under the I.T. Act, 1961, the authorities are obliged to act in accordance with law - Tax has to be collected as per the provision of the Act - If an assessee, under a mistake, misconceptions or on being not properly instructed is over assessed, the concerned authority under the Act is obliged, required to assist such an assessee by ensuring that only legitimate taxes are determined as collectible - If particular levy is not permissible under the Act, the tax cannot be collected – thus, the CIT(A) was justified in holding that the assessee is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xmann.com 265 (Mum), wherein a clerical error in e-return filing as the short term capital gain had not been shown under schedule-CG of e-return. The ITAT has held that in the present system of e-filing of return which is totally dependent upon usage of software, it was possible that some clerical errors may occur at the time of entering the data in the electronic form. Accordingly, it was held that such mistakes are to be rectified u/s.154 of the Act. Having accepted this contention, the CIT(A) held that even on merit, the assessee society is eligible for deduction u/s.80P(2)(a)(i) of the Act. In fact, the Assessing Officer has rejected the claim of the assessee on merit on the following reasons. (1) The appellant credit co-operative is a primary co-operative bank as per explanation below sub-section 4 of section 80P and hence not eligible to claim deduction u/s 80P(2)(a)(i) of the I.T. Act. (2) The clause (viia) inserted in section 2(24) by the Finance Act, 2006 to provide that the profits and gains of business of banking includes income of credit co-operative societies from providing credit facilities to its members. (3) The amendment to section 80(4) by Finance Act, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction u/s 80P(2)(a)(i) continues to be allowed to credit cooperative society. (2) As per amendment to sub-section-4 to section- 80P/explanation to the said sub-section Co-operative Bank and Primary Agricultural Credit Society shall have the meaning respectively assigned to him in Part-V of the Banking Regulation Act, 1949. Therefore, the expression Co-operative Bank referred to in Banking Regulation Act, 1949, section-56 part-V means State Co-operative Bank, Central Co-operative Bank and Primary Cooperative bank and obviously the credit co-operative society, the primary object of which is to provide financial accommodation to its members is not covered by the said expression Co- operative Bank . (3) The Finance Act, 2006 has inserted clause (viia) in section 2(24) w.e.f. 1st April, 2007 which lay down that income includes profit gains of any business of banking (including providing credit facilities) carried on by a co- operative society with its members. This amendment only clarifies that the income from above activity shall be regarded as income under the IT. Act. The A.O. seems to have been taking the view that the societies carrying on business of providing cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit society or a primary co-operative agricultural and rural development bank. Moreover, the date of withdrawal of section 80P for co-operative banks being 01/04/2007, this amendment has been made retrospectively from 01/04/2007 (Paragraph 20.7). The deduction specified under section 36(1)(viia) is thus not applicable to cooperative credit society for the obvious reason that the legislature believes that deduction under section 80P continues to be available to co-operative credit society even after 01/04/2007. (7) The co-operative credit society does not issue cheque books to its account holders. Cheque is a negotiable instrument which is to be cleared through clearing houses and no entity other than banks can issue cheque books. Section 56(ccii) states co-operative society means a co-operative society, the primary object of which is to provide financial accommodation to its members and includes a co-operative land mortgage bank. Thus, the specific definition to co-operative credit society will over ride the general definition provided for co-operative banks. The primary objects of the credit co-operative banks and credit co-operative societies. The object of credit co-operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce Act, 2007 w.e.f. 01.04.2007 also provides that the deduction in respect of bad debts shall be allowable also to co-operative banks. This amendment also suggests that the deduction u/s.80P has been withdrawn by Finance Act, 2006 w.e.f. 01.04.2007 in respect of co-operative banks only. The Central Board of Direct Taxes vide clarification bearing F.No.l33/06/2007-TPL vide letter dated 09.05.2008 has clarified that the Delhi Co-operative Urban Thrift Credit Society Ltd. does not fall within the meaning of co-operative banks as defined in part-V of the Banking Regulation Act, 1949. Sub-section-4 of section 80P will not apply in its case. The CBDT has also clarified that in part-V of the Banking Regulation Act, 1949 Co-operative Banks means a State Co-operative Bank, a Central Co-operative Bank and Primary Co-operative Bank. From the clarification, it is obvious that credit co-operative societies are not covered by the meaning of Cooperative Banks as defined in part V of the Banking Regulation Act, 1949 and are entitled to deduction u/s 80P(2)(a)(i) of the Act. 3.5 The ITAT, Pune in similar situation has decided the issue in favour of the assessee in the case of ITO v. Jankaly ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
