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2015 (11) TMI 796 - ITAT BANGALORE

2015 (11) TMI 796 - ITAT BANGALORE - [2015] 43 ITR (Trib) 365 (ITAT [Bang]) - Denial of deduction under section 80P(2)(a)(i) - Held that:- The issue raised by the assessee in these appeals has already been considered and decided by this Tribunal in the case of Asst. CIT v. Bangalore Commercial Transport Credit Co-operative Society Ltd. [2011 (4) TMI 1222 - ITAT BANGALORE ] wherein this Tribunal held that section 80P(4) is applicable only to co-operative banks and not to credit co-operative socie .....

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ssue was decided in favour of the assessee - Decided in favour of assessee. - I. T. A. No. 1504 /Bang/ 2014 (assessment year 2011-12). - Dated:- 8-5-2015 - N. V. VASUDEVAN (Judicial Member) and ABRAHAM P. GEORGE (Accountant Member) P. Dhivahar for the appellant. None for the respondent. ORDER The order of the Bench was delivered by 1. N. V. Vasudevan (Judicial Member).-This appeal by the Revenue is directed against the order dated September 12, 2014 of the Commissioner of Income-tax (Appeals), B .....

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by the Revenue authorities. 4. The assessee is a co-operative society registered under the Karnataka State Co-operative Societies Act, 1959. It is engaged in providing credit facility to its members. The assessee had claimed deduction under section 80P(2)(a)(i) of the Act. Under section 80P(2)(a)(i) of the Act where the gross total income of a co-operative society includes income from carrying on the business of banking or providing credit facilities to its members, the same is allowed deduction .....

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espectively 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." 5. In the course of scrutiny assessment proceedings under section 143(3), the Assessing Officer was of the view that after amendment by the Fina .....

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stered as a credit co-operative society, is that of a banking institution notwithstanding the fact that receipt of and lending of money is limited to its members. That the deduction from gross total income of certain receipts is available only to primary agricultural credit societies or primary co-operative agricultural and rural development banks ; and that the benefit of such deduction is not available to institutions like the assessee-society since it was situated in urban area and having urb .....

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-section (4) were fulfilled in the case of the assessee. 6. In the light of the abovementioned observations, the Assessing Officer held that the appellant was not entitled to exemption under section 80P(2)(a)(i) of the Act and brought the same to tax. 7. On appeal by the assessee, the Commissioner of Income-tax (Appeals) allowed the claim of the assessee for deduction under section 80P(2)(a)(i) of the Act following the judgment of the hon'ble jurisdictional High Court in CIT v. Sri Biluru Gu .....

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ction 263 of the Act cannot be invoked. 8. Aggrieved by the order of the Commissioner of Income-tax (Appeals), the Revenue has filed the present appeal before the Tribunal. 9. We have heard the learned Departmental representative and perused the material on record. The issue raised by the assessee in these appeals has already been considered and decided by this Tribunal in the case of Asst. CIT v. Bangalore Commercial Transport Credit Co-operative Society Ltd. in I. T. A. No. 1069/Bang/2010, whe .....

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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 under section 80P(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 shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-oper .....

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edit 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 Stat .....

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33/06/ 2007-TPL dated May 9, 2007. The difference between a co-operative bank and a co-operative society are as follows : Nature Co-operative society registered under the Banking Regulation Act, 1949. Co-operative society registered under the Karnataka Co-operative Societies 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 th .....

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can act as clearing agent for cheques, DDs, pay orders and other forms. 3. Society cannot 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 the Reserve Bank of India (RBI). 4. Society are bound by rules and regulations as specified by 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 r .....

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e used by a co-operative society. 9.3 If the intention of the Legislature was not to grant deduction under section 80P(2)(a)(i) to co-operative societies carrying on the business of providing credit facilities to its members, then this section would have 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 Legis lature of bringing in co-operative banks into the taxatio .....

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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 v. Jafari Momin Vikas Co-op. Credit Society Ltd. [2014] 362 ITR 331 (Guj) by judgment dated January 15, 2014 had to deal with the following question of law (page 332) : "Whether the hon'ble Tribunal is correct in allowing deduction under section 80P(2)(a)(i) to the assessee's society even though the same is covered under section 80P(4) read with section .....

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t society" shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949. 5. The Assessing Officer held that by virtue of section 80P(4), the respondent-assessee would not be entitled to benefits of deduction under section 80P. The Commissioner of Income-tax (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 sub-section (4) of section 80P wo .....

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a question would arise why then the Legislature specified primary agricultural credit societies along with primary co-operative 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 the Central Board of Direct Taxes Circular No. 133 of 2007 dated May 9, 2007. Circular provides as under : 'Subject : Clarification regarding admissib .....

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lopment 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. 3. In Part V of the Banking Regulation Act, "co-operative bank" means a State co-operative bank, a Central co-operative bank and a primary co-operative bank. 4. Thus, if the Delhi Co-op. Urban Thrift and Credit Society Ltd. does not fall within the meaning of "co-operative bank" as defined in Part V of the Banking Regula .....

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