TMI Blog2019 (6) TMI 1293X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Shamim Yahya, AM And Shri Amarjit Singh, JM For the Assessee : Shri Narend. Sheth For the Revenue : Shri S. K. Mitra ORDER PER AMARJIT SINGH, JM: The revenue has filed the present appeal against the order dated 13.11.2017 passed by the Commissioner of Income Tax (Appeals) -33, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the A.Y.2012-13. 2. The revenue has raised the following grounds: - 1. On the facts and circumstances of the case and law, the 14. CIT(A) is justified in allowing the deduction u/s 80P(2)(a)(i) of the Income-tax Act, 1961 amounting to ₹ 69,60, 770/- without appreciating the action of the A.O in this regard? 2 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that since the assessee fulfils the conditions laid down u/s 56(c)(ccv) of the pan V of Banking Regulation Act, 1949, it is to be considered as a co-operative bank, which is not eligible for deduction u/s 80P(2)(i) of the Income-tax Act, 1961. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly perused the facts highlighted in the assessment order, the written and oral arguments made during appellate proceedings and various relevant judicial pronouncements. My observations are as under:- 11. From the assessment order, it is observed that the AO has disallowed the claim of the appellant regarding deduction u/s 80P of ₹ 69,60,766/- without bifurcating the deductions u/s 80P(2)(a)(i) and 80P(2)(d), which are separately provided in the l.T. Act. Before the AO, the appellant took the stand that he was eligible for deduction under sub-section 80P(2)(a)O) of the IT. Act, which was examined by the AO and impugned disallowance has been made. 12. Sub-section (4) of section SOP was introduced by the Finance Act, 2006 and reads as under: 'The provisions of this section shall not apply in relation to any co-operative bank other that a primary agricultural credit society or a primary co-operative agricultural and rural development bank. 13. From the plain reading of the above section, it is clear that the legislative intent behind the introduction of the above section was not to allow the benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the whole amount of profits and gains of business attributable to any one or more of such activities. b. .. C d. In respect of any income by way of interest or dividends derived by the cooperative society from its investments with any other cooperative society, the whole of such income. 18. It is clear from the bare reading of the section 80P(2)(a)(i) that by virtue of the section, in the case of a Co-operative Society carrying on the business of banking or providing credit facilities to its members, whole of the profits or gains attributable to such activities are eligible for deduction. It is important to note that deduction is available to the society in respect of the profits and gains 'attributable to' specified activities of the co-operative society. The words used in the section are, the whole amount of profits and gains of business attributable to any one or more of such activities. At the outset it is imperative to explain the term 'attributable to'. 19. As has been held by the Hon'ble Supreme Court, in the case of Cambay Electric Supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a co-operative Bank for the purposes of section 80P(4) of the Act, unless following three conditions are satisfied- (i) the principal business or primary objective should be business of banking (ii) its paid up share capital and reserves should not be less than rupee 1 lac (iii) its bye-laws do not permit admission of any other co-operative society as its member 23. On analysis of the above conditions, I find that the word banking means accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or otherwise. In the appellant's case, acceptance and lending of money are from members only. Hence,condition 1 mentioned above is not applicable to the appellant. Apart from that, the appellant has demonstrated clear distinction between Co-operative Banks registered under Banking Regulations Act, 1949 and Co-operative societies registered under Co-operative Societies Act. From that it is apparent that the appellant does not fulfill the criteria to qualify itself as Co-operative Bank governed under Banking R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o it. In view of such clarification, we cannot entertain the Revenue's contention that section 80P(4) would exclude not only the cooperative banks other than those fulfilling the description contained therein but also credit societies, which are not cooperative banks. In the present case, respondent assessee is admittedly not a credit co-operative bank but a credit co-operative society. Exclusion clause of sub-section (4) of section 80P, therefore, would not apply. 26. In view of the facts and circumstances as well as the judicial pronouncements explained above, in my considered opinion, the appellant society is a Credit Cooperative Society and not a Co-Operative Bank and thus not covered under the provisions of sub-section (4) of section 80P. Therefore, appellant society would be eligible for deduction under the provision of section 80P(2)(a)(i). The AO is directed accordingly. The grounds of appeal no.1, 2 and 3 are accordingly allowed. 5. On appraisal of the above mentioned finding and also going through the material available on record, we noticed that the assessee nowhere fall within the definition of the Co-operative Bank. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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