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TMI Blog2015 (4) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... wing grounds of appeal:- "1. On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in allowing assessee's appeal and allowing relief u/s 8OP of the Act in the case of the assessee credit co-operative Society. 2. On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in holding that the credit co-operative society is different from the credit co-operative bank. 3. On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in holding that the amended provision of section 80P(4) of the Act is not applicable to the credit co-operative society. 4. The appellant prays that the order of the CIT(A) on the above grounds be reversed and that of the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 co-operative 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 Rs. 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 that the assesse-society was not carrying out any banking facilities and that its activities were limited to its members only. The ld.CIT(A) also held that the activities of the assessee do not fall for consideration as banking activities as defined in Banking Regulation Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not apply. This, irrespective of the fact that the respondent would not fall within the expression "primary agricultural credit society". Had this been the plain statutory provisions under consideration in isolation, in our opinion, the question of law could be stated to have arisen. When, as contended by the assessee, by virtue of sub-section (4) only co-operative banks other than those mentioned therein were meant to be excluded for the purpose of deduction under section 80P, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply to an assessee which is not a co-operative bank. In the case clarified by the Central Board of Direct Taxes, the Delhi Co-op. Urban Thrift and Credit Society Ltd. was under consideration. The circular clarified that the said entity not being a co-operative bank, section 80P(4) of the Act would not apply to it. In view of such clarification, we cannot entertain the Revenue's contention that section 80P(4) would exclude not only the co-operative banks other than those fulfilling the description contained therein but also credit societies, which are not co-operative banks. In the present case, the respondent-assessee is admittedly not a credit co-operative bank but a credit co-operative society. The exclusion clause of sub-section(4) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 Co-operative 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 dev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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