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2016 (4) TMI 1123 - ITAT MUMBAI

2016 (4) TMI 1123 - ITAT MUMBAI - TMI - Revision u/s 263 - non entitled to deduction u/s. 80P - Held that:- CIT has not discussed as to how the assessee society would fall under the definition of a co-operative bank. The order of the ld. CIT is a non-speaking order. He, without assigning any cogent and convincing reason, has set aside the order of the AO. Thus order of the AO cannot be said to be erroneous or prejudicial to the interest of the Revenue. The order of ld. CIT passed u/s. 263 of the .....

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61 (in short the Act ). 2. The brief facts of the case are that the assessee co-operative society filed its return of income for the year under consideration on 7.8.2009. The return was processed u/s. 143(3) of the Act and the AO assessed the total income as returned by the assessee without making any addition. The ld. CIT, however, exercising his powers u/s. 263 of the Act observed that the assessee had claimed deduction u/s. 80P of the Act. He observed that as per the amendments introduced vid .....

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e assessee also relied upon the clarification given by the RBI in this respect. The assessee also relied upon certain case laws in this respect. However, the ld. CIT rejected the contentions of the assessee and observed that the Department had not accepted the decision of the Tribunal in the case of Kulswami Co-operative Credit Society Ltd. in ITA no. 6790/Mum/2012 vide order dt. 21.8.2015 and that the Department had filed an appeal before the Hon'ble High Court against the said decision whi .....

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iding any credit facilities to non-members or public at large nor is it authorized to accept deposits from the public at large. Thus, it is different from a co-operative bank. He, therefore, has contended that the provisions of Sub-section 4 of Sec. 80P of the Act are not attracted in case of the assessee. 4. On the other hand, the ld. DR has strongly relied upon the findings of the CIT. 5. We have considered the rival contentions. The controversy in this case revolves around the provisions of S .....

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ilities to its members. 4. To manage and protect properties of the Society. 7. The ld. AR has thus contended that the assessee co-operative society is different from a co-operative bank as it cannot accept deposits from any person other than a member of the society and it cannot advance loans to any other person other than a member of the society and that the provisions of the Banking Regulations Act, 1950 are not applicable to co-operative credit societies. The ld. AR has further invited our at .....

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the Act. The relevant part of the findings of the Tribunal, for the sake of convenience, is reproduced below : 6. Before us, it was a common point between the parties that identical controversy has been considered by the Tribunal in the assesse's own case 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 Co-operative Society does not fall within the restriction placed in sub-section (4) of section .....

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ot for the purposes of section 80P(4) of the Act since according to the said provision, deduction under section 80P shall not be available to any co-operative bank other than primary agricultural society or primary co-operative agricultural and rural development 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 .....

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Ltd., stating that for the purposes of subsection 4 of section 80P, 'cooperative bank' shall have the same meaning as assigned to it in part V of the Banking Regulation Act 1949, according to which 'cooperative banks' means a State Co-operative Bank, a Central Cooperative 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' .....

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ncing any banking business. The mere fact that the assessee has been providing credit facilities to its members and thereby earns interest and dividend cannot make the 'society' into a 'bank' for the purposes of section 80P(4) of the Act. If the intention of the legislature was not to grant deduction to cooperative 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 d .....

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t 1960 as brought out by the Ld.CIT(A) on the basis of the submission of the assessee is extracted hereunder: Sl. No. Co-operative societies Co-operative Banks 1 The Co-operative Credit Societies are registered under Maharashtra State Cooperative Societies Act, 1960 and governed, regulated, administered and supervised by the Registrar of the Cooperative Societies, Government of Maharashtra Co-operative Banks are registered under Maharashtra Co-operative Societies Act, 1960 and administered by Re .....

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iety. Co-operative Banks are classified as Co-operative Bank. 3 Co-operative Credit Societies can accept deposits and advance loans only to the members. Hence the business activities are restricted to members and hence it can be termed as a mutual association/self help group. Co-operative Banks can accept deposits from public. However, unlike Co-operative credit societies they can advance loans to the members only. 4 Co-operative Credit Societies cannot accept deposits from public. Co-operative .....

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facilities, clearing facilities and they cannot issue demand drafts, pay orders etc. The Co-operative have cheque facilities, clearing facilities and they issue demand drafts, Assessment Year order, bank guarantees etc. 8 Co-operative Credit Societies cannot use word Bank/Bankers in their name Co-operative Banks are mandatorily required to use word 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 .....

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e is not admissible in view of the findings of the Hon'ble Apex Court in the case of Goetze India Ltd. [284 ITR 323 (SC) (2006)], it is pertinent to mention that the Hon'ble Bombay High Court in the case of the CIT Vs. Pruthvi Brokers and Shareholders P. Ltd. [(2012) 349 ITR 336 (Bom)] has held that the appellate authorities have the power to consider the claim not made in return of income. The Hon'ble Bombay High Court while deciding so, has considered the judgment of the Hon'bl .....

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