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2015 (8) TMI 1034 - ITAT HYDERABAD

2015 (8) TMI 1034 - ITAT HYDERABAD - [2015] 39 ITR (Trib) 1 (ITAT [Hyd]) - Disallowance made under section 80P(4) - non applicability to a co-operative bank other than a Primary Co-operative Agricultural and Rural Development Bank or Primary Agricultural Society - CIT(A) delted the disallowance - Held that:- No reason to interfere with the order of the learned Commissioner of Income-tax (Appeals). Obviously, the assessee is a co-operative society engaged in the business of providing credit facil .....

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rative societies/banks. Therefore, on the facts of the case, we do not see any reason to disallow the deduction under section 80P. The Revenue has raised the grounds that the provisions under section 80P(4) were applicable to the assessee. We do not see any reason to consider this ground as the restrictions brought out subsequently under section 80P(4) is applicable in the case of a co-operative bank not a co-operative society. - Decided against revenue. - I.T.A Nos. 1328, 1329 & 1330/HYD/20 .....

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r the assessment years 2007-08 to 2009-10 whereas the Commissioner of Income-tax (Appeals)-VI, has passed the order in the assessment year 2010-11 dated July 20, 2013. Since common issues are involved, these appeals are considered together disposed of by this common order. Assessment years 2007-08, 2008-09 and 2009-10 2. The Revenue has raised the following common grounds in all the impugned assessment years. "1. The order of the learned Commissioner of Income-tax (Appeals) is erroneous in .....

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n a co-operative society (sic) as the assessee is carrying out banking acti vities." 3. Briefly stated, the assessee is a co-operative society registered under the Andhra Pradesh Mutually Aided Co-operative Societies Act (APMACS Act) with membership consisting of all criminal court employees of twin cities and other towns. It collects interests from its members on loans provided and receives interests from banks/societies where it has placed fixed deposits. In the impugned assessment years, .....

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he circular is with reference to eligibility of deduction under section 80P to regional rural banks and does not apply to the assessee's case. Further, the learned Commissioner of Income-tax (Appeals) analysed the facts of the case with reference to the decision of the co-ordinate Bench at the Income-tax Appellate Tribunal, Bangalore, in the case of ACIT v. Bangalore Commercial Transport Credit Co-operative Society Ltd., in I. T. A. No. 1069/Bang/ 2010 and held that the assessee is a co-oper .....

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society registered under the Karnataka Co-operative Society Act, 1959. Registration Under the Banking Regulation Act, 1949 and the Co-operative Societies Act, 1959. Co-operative Societies Act, 1959. Nature of business 1. As defined in section 6 of Banking Regulation Act. 1. As per the bye laws of cooperative society. 2. Can open savings bank account, current account, overdraft account, issue letter of credit, discounting bills of exchange, issue cheques, demand drafts (DD), pay orders, gift cheq .....

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e Reserve Bank of India. 4. Society are bound by rules as specified by in the Co-operative Societies Act. Filing of returns Co-operative banks have to submit annual return to Reserve Bank of India every year. Society has to submit the annual return to Registrar of Societies. Inspection Reserve Bank of India 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 of the Banking Regulation .....

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ee has claimed, and the Assessing Officer has not brought on record any evidence to the contrary, that it is not engaged in the activities of opening savings bank accounts, current accounts, issuing letter of credit, demand drafts, pay orders, bank guarantees, etc., which would lend it the character of a bank. (c) I have called for the assessment records and a perusal of the annual report does not reflect any activity of this kind. (d) It has been submitting its annual report to the Registrar of .....

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ieties carrying on the business of providing credit facilities to its members, then this section would have been deleted. The new provision to section 80P(4) which is brought into statute is applicable to co-operative banks and not to credit co-operative societies. The intention of the Legislature to bring 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 sec .....

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reason to interfere with the order of the learned Commissioner of Income-tax (Appeals). Obviously, the assessee is a co-operative society engaged in the business of providing credit facilities to its members. There is no dispute with reference to the transactions with the members, as the Assessing Officer has not considered that issue at all in the order. Therefore, the assessee being a co-operative society registered under the Andhra Pradesh Mutually Aided Co-operative Societies Act is eligibl .....

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ught out subsequently under section 80P(4) is applicable in the case of a co-operative bank not a co-operative society. This issue is also discussed in the co-ordinate Bench at Hyderabad decision in the case of Asst. CIT v. Advocates Mutually Aided Co-operative Society Hyderabad" pronounced on 20-02-2015, as under : "22.1. Ground No. 3 regarding deduction under section 80P(2)(d) is in respect of interest received from co-operative societies and the co- operative banks. We are unable to .....

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nd "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 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.' 22.1. As per this section, the exemption provided under sub-section .....

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received by the co-operative society from its investments with any other co-operative society. Therefore, in the case of the assessee-society, sub-section (4) is not applicable and deduction under section 80P(2)(d) is certainly eligible to the assessee. In the assessment of a co-operative bank, the incomes may not be exempt after April 1, 2007, by virtue of sub-section (4), but the assessee is not a co-operative bank. Therefore, the Revenue ground is not only illogical but also not supported by .....

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mmissioner of Income-tax (Appeals). The Revenue's appeal is dismissed." 5. In view of the above, we do not see any merit in the Revenue's grounds. Accordingly, the Revenue's appeals are dismissed. Assessment year 2010-11 6. In the assessment year, the Assessing Officer had passed little detailed order holding that the assessee has violated the Andhra Pradesh Co-operative Societies Act, 1964, therefore not eligible for deduction. The Assessing Officer however, allowed the deducti .....

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s could be seen from the facts of the case, the appellant-society is Mutually Aided Cooperative Society, governed by the Andhra Pradesh Mutually Aided Co-operative Societies Act, 1995, but not the Co-operative Societies Act. Hence, the reasons attributed by the Assessing Officer, for rejecting the deduction under section 80P(2)(a)(i) are not applicable to the appellant- society. This has been clearly held by my predecessor, in the case of the appellant's own case for earlier assessment years .....

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iso to section 80P(4) which is brought into statute, is applicable only to co-operative banks and not credit co-operative societies. Considering the finding given by the Income-tax Appellate Tribunal, Bangalore (supra), it is held that the appellant-society being a cooperative credit society is eligible for deduction under section 80P(2)(a)(i). However, it may be relevant to note that in this case, while furnishing the return of income, the appellant claimed deduction of ₹ 1,72,46,463 unde .....

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fit 3,82,77,265 x 2,32,63,447 = 1,66,13,779 Gross receipts 5,35,97,746 Accordingly, the claim of deduction under section 80P(2)(a)(i) is restricted to ₹ 1,66,13,779 and this ground of appeal is treated as partly allowed. 6. The next ground of appeal relates to restriction of claim of deduction under section 80P(2)(d). As per the appellant, the Assessing Officer has allowed the deduction under section 80P(2)(d) to ₹ 51,45,018 as against the claim of ₹ 1,72,46,463 made under sect .....

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s 1,26,84,283 2. Interest receipts from Co.op Societies 13,42,472 3. Income from other sources (Total profits - profits from business) i.e., ₹ 2,32,63,447- ₹ 1,66,13,779 66,49,668 Interest from Co.op. Societies x Income from other sources Total interest receipts 13,42,472 x 66,49,668 = 7,03,784 1,26,84,283 Based on the facts of the case, the quantification of the deduction under section 80P(2)(d) in this case is justified and upheld at ₹ 7,03,784. However, the fact remains that .....

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on 80P(2)(a)(i) and the claim for deduction under section 80P(2)(d) is restricted to the total amounts of deduction of ₹ 1,72,46,463, as claimed in the original return of income, in order to avoid the situation that the assessed income is less than the returned income. 7. The appellant made the additional claim of deduction under section 80P(2)(c) being eligible for deduction, as cooperative credit society, which was omitted to be claimed in the original return of income. Though, on facts .....

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t ₹ 60,16,984. Hence, this additional ground is treated to have been disallowed, for statistical purpose. 8. In the result, the Assessing Officer is directed to allow the deduction under section 80P(2)(a)(i), for ₹ 1,66,13,779 and the deduction under section 80P(2)(d), to the extent of ₹ 6,32,684 being the difference between the original claim under section 80P (Rs.1,72,46,463) and revised deduction under section 80P(2)(a)(i) (Rs. 1,66,13,779), without any further deduction und .....

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