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2015 (7) TMI 205

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..... IT has only directed the AO to examine whether the provisions can be applied or not. Admittedly, there was no enquiry by the AO on this aspect while concluding the original assessment, thereby rendering the order of the AO erroneous and prejudicial to the interests of the Revenue to this extent. We are therefore of the view that the order of the CIT insofar he directed the AO to make a fresh assessment in accordance with the law is correct and calls for no interference.- Decided against assessee. - ITA No.1060/Bang/2014 - - - Dated:- 29-6-2015 - Shri N.V. Vasudevan and Shri Abraham P. George, JJ. For the Petitioner : Smt. Prathibha, R., Advocate For the Respondent : Shri T.S.N. Murthy, CIT-III(DR) ORDER Per N.V. Vasudevan, Judicial Member This appeal by the assessee is against the order dated 14.3.2014 passed by the Commissioner of Income-tax [CIT], Gulbarga u/s. 263 of the Income-tax Act, 1961 [ the Act ]. 2. The assessee is a credit co-operative society. It filed return of income for the A.Y. 2009-10 declaring income of ₹ 7,15,860 and claimed the entire income as exempt u/s. 80P(2)(a)(i) of the Act. 3. The assessment was completed acceptin .....

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..... it for agricultural and rural development activities. 6. At the time of hearing, it was agreed by the parties that the issue raised by the Revenue has already been considered and decided by this Tribunal in the case of ACIT, Circle 3(1), Bangalore v. M/s. Bangalore Commercial Transport Credit Co-operative Society Ltd. in ITA No.1069/Bang/2010, wherein this Tribunal held that section 80P(4) is applicable only to cooperative banks and not to credit cooperative societies. The intention of the legislature of bringing in cooperative banks into the taxation structure was mainly to bring in par with commercial banks. Since the assessee is a cooperative society and not a cooperative 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. The following were the relevant observations of the Tribunal:- 9. We have heard the rival submissions and perused the material on record. The assessee was denied the deduction u/s 80-P(2)(a)(i) of the Act for the reason of introduction of sub section 4 to section 80P. Section 80P(4) reads as follows:- (4) The provisions of this section .....

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..... es, lockers, bank guarantees etc. 3. Cooperative Banks can act as clearing agent for cheques, DDs, pay orders and other forms. 4. Banks are bound to follow the rules, regulations and directions issued by Reserve Bank of India (RBI). 1. As per the bye laws of the cooperative society. 2. Society cannot open savings bank account, current account, issue letter of credit, discounting bills of exchange, issue cheques, demand drafts, pay orders, gift cheques, lockers, bank guarantees etc. 3. Society cannot act as clearing agent, for cheques, DDs, pay orders and other forms. 4. Society are bound by rules and regulations as specified by in the cooperative societies act. Filing of returns Cooperative banks have to submit annual return to RBI every year. Society has to submit the annual return to Registrar of Societies. Inspection RBI has the power to inspect accounts and overall functioning of the bank. Registrar has the power to inspect accounts and overall functioning of the bank. Part V Part V o .....

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..... tled to benefits of deduction under section 80P. CIT(Appeals) as well as the Tribunal reversed the decision of the Assessing Officer on the premise that the respondent assessee not being a bank, exclusion provided in subsection( 4) of section 80P would not apply. This, irrespective of the fact that the respondent would not fall within the expression primary agricultural credit society . 6. Had this been the plain statutory provisions under consideration in isolation, in our opinion, the question of law could be stated to have arisen. When, as contended by the assessee, by virtue of subsection(4) only co-operative banks other than those mentioned therein were meant to be excluded for the purpose of deduction under section 80P, a question would arise why then Legislature specified primary agricultural credit societies along with primary cooperative agricultural and rural development banks for exclusion from such exclusion and in other words, continued to hold such entity as eligible for deduction. However, the issue has been considerably simplified by virtue of CBDT circular No.133 of 2007 dated 9.5.2007. Circular provides as under:- Subject: Clarification regarding adm .....

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