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Pr. Commissioner of Income Tax, The Assistant Commissioner of Income Tax Versus M/s. Lokamanya Multipurpose Co-Operative Society Ltd.

2016 (9) TMI 909 - KARNATAKA HIGH COURT

Entitlement to deduction under Section 80P(2)(a)(i) - assessee is a Co-operative Bank mainly involved in lending credit facilities to its members - Held that:- As decided in THE COMMISSIONER OF INCOME TAX vs. SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA, BAGALKOT [2015 (1) TMI 821 - KARNATAKA HIGH COURT ] if a Co-operative Bank is exclusively carrying banking business, then the income derived from the said business cannot be deducted in computing the total income of the assessee. The .....

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urport of the amendment. If the assessee is not a Co-operative bank carrying on exclusively banking business and if it does not possess a license from the Reserve Bank of India to carry on business, then it is not a Co-operative bank. It is a Co-operative society which also carries on the business of lending money to its members which is covered under Section 80P(2)(a)(i) i.e., carrying on the business of banking for providing credit facilitates to its members. The object of the aforesaid amendm .....

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ssee - society is entitled to deduction under section 80P(2)(a)(i) of the Income Tax Act even when assessee is a Co-operative Bank mainly involved in lending credit facilities to its members in nature of bank transaction, treated on par with the new clause introduced in the definition of income in section 2(24)(viia) of the Act and comes under the purview of section 80P(4) w.e.f 1/4/2007?: 2. When the matter is taken up for hearing, the learned Counsel for the appellants-Revenue fairly conceded .....

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credit co-operative societies. 2. The substantial question of law which is raised in the appeal is as under: Whether on the facts and in the circumstances of the case, the tribunal was justified in law in holding that the assessee - society is entitled to deduction under Section 80P(2)(a)(i) of the Income Tax Act? 3. The Tribunal in its order has set out the difference between the co-operative bank and society as under: Nature Co-operative society registered under Banking Regulation Act, 1949 C .....

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antees etc. 3. Co-operative Banks can 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 Reserve Bank of India (RBI) 1. As per the bye laws of the co-operative society. 2. Society cannot open savings bank account, current account, issue letter of credit, discounting bills of exchange, issue cheque, demand drafts, pay orders, gift cheques, lockers, bank guarantees etc. 3. Society cannot act clearing agen .....

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ation Act is applicable to co-operative banks Part V of the Banking Regulation Act is not applicable to co-operative banks. Use of words The word bank banker , banking can be used by a co-operative bank The word bank banker , banking . cannot be used ay a co- operative society 4. This Court had an occasion to consider the said question in ITA No.5006/2013 dated 05.02.2014 in the case of THE COMMISSIONER OF INCOME TAX vs. SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA, BAGALKOT, where, a .....

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