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2015 (7) TMI 205 - ITAT BANGALORE

2015 (7) TMI 205 - ITAT BANGALORE - TMI - Revision u/s 263 - as per CIT(A) order of AO was erroneous and prejudicial to the interests of the Revenue for the reason that after the introduction of section 80P(4) deduction was not available to co-operative banks - Held that:- The Hon’ble Karnataka High Court in the case of CIT Vs. Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha, Bagalkot, [2015 (1) TMI 821 - KARNATAKA HIGH COURT] has held that a credit co-operative society giving credit to .....

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r of assessee.

Disallowance u/s. 40(a)(ia) - CIT 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 .....

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t 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 accepting the return of income filed by the assessee. The Assessing Officer in the order of assessment has observed that assessee has rightly claimed deduction u/s. 80P(2)(a)(i) of the Act. The CIT, in exercise of his powers u/s. 263 of the Act, was of the view that the aforesaid order of .....

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ucted by the assessee. According to the CIT, the AO ought to have disallowed a sum of ₹ 70,941 u/s. 40(a)(ia) of the Act. Since the AO failed to look into the aforesaid aspects, the CIT set aside the order of the AO and directed him to frame fresh assessment in accordance with law, after due opportunity to the assessee. 4. Aggrieved by the order of the CIT, the assessee has preferred the present appeal before the Tribunal. 5. We have heard the rival submissions. As far as deduction u/s. 80 .....

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pply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. Explanation : For the purposes of this sub-section,- (a) "co-operative bank" and "primary agricultural credit 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 soci .....

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tion 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 obser .....

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this sub-section, (a) co-operative bank and primary agricultural credit society shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949); (b) primary cooperative 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 tha .....

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rovisions of section 80P(4) has got its application only to cooperative banks. Section 80P(4) does not define the word cooperative society . The existing sub-section 80P(2)(a)(i) shall be applicable to a cooperative society carrying on credit facility to its members. This view is clarified by Central Board of Direct Tax vide its clarification No.133/06/2007-TPL dated 9th May, 2007. The difference between a cooperative bank and a cooperative society are as follows:- Nature Cooperative society reg .....

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Orders, Gift cheques, 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 .....

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bank. Part V Part V of the Banking Regulation Act is applicable to cooperative banks. Part V of the Banking Regulation Act is not applicable to cooperative banks. Use of words The word bank , banker , banking can be used by a cooperative bank. The word bank , banker , banking cannot be used by a cooperative society. 9.3 If the intention of the legislature was not to grant deduction u/s 80P(2)(a)(i) to cooperative societies carrying on the business of providing credit facilities to its members, .....

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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. 7. The Hon ble Gujarat High Court in the case of Tax appeal No.442 of 2013 with Tax appeal No.443 of 2013 with Tax appeal No.863 of 2013 in the case of CIT Vs. Jafari Momin Vikas Co-op Credit Society Ltd. by judgment dated 15.1.2014 on had to deal with the following question of law: Whether the Hon ble Tribunal i .....

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k. As per the explanation, the terms co-operative bank and primary agricultural credit society shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949. 5. Assessing Officer held that by virtue of section 80P(4), the respondent assessee would not be entitled 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, exclusio .....

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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 admissibly of deduct .....

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he purpose of the said subsection, co-operative bank shall have the meaning assigned to it in part V of the Banking Regulation Act, 1949. 3. In part V of the Banking Regulation Act, Co-operative Bank means a State Co-operative bank, a Central Cooperative Bank and a primary Co-operative bank. 4. Thus, if the Delhi Co op Urban T & C Society Ltd. does not fall within the meaning of Co-operative Bank as defined in part V of the Banking Regulation Act, 1949, subsection(4) of section 80P will not .....

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