TMI Blog2016 (1) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... ds has to be invested only for the highly restricted purposed as mentioned in the bye laws of the assessee society. - Decided against revenue - ITA NO.2937/Mum/2014 - - - Dated:- 27-10-2015 - Shri Joginder Singh, Judicial Member, and Shri Rajesh Kumar, Accountant Member For The Revenue : Shri Randhir Gupta For The Assessee : Shri Nishit Gandhi ORDER Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 24/02/2014 of the ld. First Appellate Authority, Mumbai. The only ground raised by the Revenue pertains to allow deduction u/s 80P of the Income Tax Act, 1961(hereinafter the Act), even thought the assessee carries on banking business/other business in the name of credit co-operative society, without considering insertion of section 80P(4) and sub-caluse (viia) to section 2(24) introduced by Finance Act, 2006 w.e.f 01/04/2007. 2. During hearing of this appeal, at the outset, the ld. counsel for the assessee, Shri Nishit Gandhi, contended that the impugned issue is covered by the decision from Hon ble Gujarat High Court in the case of CIT vs Jafari Momin Vikas Co-op Credit Society Ltd. (Tax Appeal No.442, 443 and 863 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the provisions of Section 80P(4) of the Act, which was inserted by Finance Act 2006 w.e.f. April, 1, 2007. The A.O. was of the opinion that after the insertion of subsection (4) of Section 80P exemption shall not be available in relation to any Co-Operative Bank other than primary agricultural credit society or primary co-operative agricultural and rural development bank. According to the A.O. sub clause (viia) was also inserted in clause (iv) of Section 2 to provide that the profits and gains of any business of banking (including providing credit facilities) carried by cooperative society with its members shall be included in the definition of expression income . On the basis of his combined reading of Sections of Section 2(24) (viia) and Section 80P of the Act after amendment by Finance Act, 2006, the A.O. concluded that even a cooperative society engaged in providing credit facilities to its members would be denied the exemption u/S 80P of the Act. Accordingly, the A.O. assessed the total income at ₹ 80,98,490/- and rejected assessee s claim for deduction under Section 80P of the Act. 4. The ld. CIT(A) has since disagreed with the A.O. primarily on the ground t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 admissibility of deduction under section BOP of the Income-tax Act, 1961. 1. Please refer to your letter No. DCUS/30688/2007, dated March 28, 2007, addressed to the Chairman, Central Board of Direct Taxes, on the above given subject. 2. In this regard, I have been directed to state that sub-section(4) of section 80P provides that deduction under the said section shall not be allowable to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. For the purpose of the said sub-section, cooperative 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative agricultural and rural development bank. (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 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. Therefore, the intention of the legislature is clear. If a Co-operative Bank is exclusively carrying on banking business, then the income derived from the said business cannot be deducted in computing the total income of the assessee. The said income is liable for tax. A Cooperative bank as defined under the Banking Regulation Act includes the primary agricultural credit society or a primary cooperative agricultural and rural development bank. The Legislature did not want to deny the said benefits to a primary agricultural credit society or a primary cooperative agricultural and rural development bank. They did not want to extend the said benefit to a Co-operative bank which is exclusively car ..... X X X X Extracts X X X X X X X X Extracts X X X X
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