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ITO, Wd-22 (3) -4, Mumbai Versus M/s Kulswami Co-operative Society, and Vica-Versa

2015 (12) TMI 1411 - ITAT MUMBAI

Entitlement for deduction u/s 80P - CIT(A) deleted the addition holding that the assessee being Cooperative Credit Society is not a Co-operative bank hence is entitled for deduction - Held that:- CIT(A) is justified in directing the AO to allow the deduction claimed by the assessee u/s 80P of the Act on the reason that the assessee, a cooperative credit society is not a bank for the purposes of section 80P(4) of the Act. - Decided against revenue. - ITA NO 6790/Mum/2012 - Dated:- 21-8-2015 - SHR .....

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ertaining to the assessment year 2009-10 2. The Revenue has raised following Ground of appeal:- On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of ₹ 1,14,64,254/- by holding that the assessee being Cooperative Credit Society is not a Co-operative bank and hence is entitled for deduction u/s 80P of the I.T. Act. 3. The assessee before us is a Co-operative society, which is, inter alia, engaged in the business of providing credit facilitie .....

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urse of assessment proceedings, the Assessing Officer show-caused the assesee as to why the claim of exemption u/s 80P of the Act be not disallowed in view of the provisions of sub-section (4) of section 80P of the Act, inserted w.e.f 01.04.2007. In terms of sub-section (4) of section 80P of the Act, the provisions of section 80P of the Act were made inapplicable to a Co-operative Bank other than primary agricultural credit society or primary co-operative agricultural and rural development banks .....

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peal before the CIT(A), the pertinent plea of the assessee was that a Cooperative Society engaged in the activity of providing credit facilities to its members is quite different from a Co-operative Bank, which falls under the restriction placed in sub-section (4) of section 80P of the Act. Therefore, as per the assessee, the provisions of sub-section (4) of section 80P of the Act did not disentitle the assessee from claim of exemption u/s 80P of the Act. The CIT(A) found that similar issue came .....

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for assessment years 2007-08, and 2008-09 vide ITA Nos. 3223/Mum/2011 & 505/Mum/2012 dated 28.03.2014, whereby it has been held that assessee Cooperative Society does not fall within the restriction placed in sub-section (4) of section 80P of the Act. The following discussion in the order of the Tribunal dated 28.03.2014 (supra) is relevant:- 4. Having heard both the sides and perused the material on record, it is pertinent to mention that the only issue arising out of both the appeals relat .....

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t bank. 4.1 It is the case of the Revenue that the assessee has been functioning as a cooperative bank and by virtue of section 80P(4), the assessee is not entitled for the benefit of section 80P and also the assessee is not coming within the purview of primary agricultural society or primary co-operative agricultural and rural development bank. It is the case of the assessee that it is not a cooperative bank but only a cooperative society to which clause (4) of section 80P is not applicable. 4. .....

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erative Bank and Primary Co-operative Bank. Though the said clarification is given by the CBDT in connection with some other assessee, the crux of the matter pertains to the clarification of co-operative bank for the purpose of subsection 4 of section 80P. It is observed that the said clarification has also been relied by the Tribunal in many cases. Therefore, cooperative banks mentioned in the said subsection indicates only the State, Central and Primary Co-operative Banks only. 4.3 Moreover, f .....

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erative societies carrying on the business of providing credit facilities to its members, then this section would have been deleted. This proposition is supported by various decisions including the decision of the Gujarat High Court in the case of CIT Vs. Jafari Momin Vikas Cooperative Credit Society Ltd and the decision of the Tribunal in the case of DCIT Vs. Jayalakshmi Mahila Vividodeshagala Souharda Sahakari Ltd. [2012] 137 ITD 163. 4.4 In addition to the aforementioned discussion, the disti .....

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e Registrar of the Cooperative Societies, Government Of Maharashtra. Co-operative Banks are registered under Maharashtra Co-operative Societies Act, 1960 and administered by Registrar of Co-operative Societies, Govt. Of Maharashtra. Cooperative Banks are regulated and supervised by the Reserve Bank of India. Provisions of Banking Regulation Act, 1949 with modifications specified in section 56 of the Banking Regulation Act, 1949 are applicable to Co-operative Banks. Schedule 1 to Schedule V are a .....

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c. However, unlike Co-operative credit societies they can advance loans to the members only. 4 C5o-operative Credit Societies can6not accept deposits from public. Co-operative can accept deposits from public. 5 The7 provisions of Banking Regulation Act 1949 are not applicable to the Cooperative Credit Societies. The provisions of Banking Regulation Act 1949 are applicable to the Co-operative Bank. 6 The provisions of Banking Regulation Act 1949 are applicable to the Co-operative Bank. The Co-ope .....

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rld Bank/Bankers in their name. 9 Reserve Bank of India has no statutory power of control and supervision of Cooperative Societies. Reserve Bank of India has vested with statutory powers of control and supervision of Cooperative Banks. The above distinction makes it very clear that the assessee is not a co-operative bank for the purposes of section 80P(4) of the Act. 4.5 As regards the claim of the revenue that for the Assessment Year 2007-08, the assessee has not claimed the deduction of the se .....

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