TMI Blog2022 (4) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Finance Act, 2006 w.e.f 01.04.2007. In fact, as observed by us hereinabove, it is absolutely mandatory for a co-operative society to seek a licence from the Reserve Bank of India to form and operate as a co-operative bank. A perusal of Circular No. 312 of the Reserve Bank of India reveals the process involved for conversion of a co-operative credit society into a primary co-operative bank. Admittedly, in the case before us, as the assessee being a co-operative credit society is neither authorized nor had undertaken any of the banking business activities as are carried out by a co-operative bank, but had only provided financial assistance/credit to its members, therefore, it can safely be concluded that it cannot be held to be a co- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king business and as it does not possess license from Reserve Bank of India to carry on banking business so 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 facilities to its members. (ii) CIT Vs. Jafari Momin Vikas Co-op credit society ltd. No.442, 443 863 dated 15.01.2014, Gujrat High Court. 2. The appellant prays to add, alter or submit any additional ground or written submissions etc. 2. Briefly stated, the assessee which is a co-operative society registered under the Karnataka Co-operative Credit society Act and is engaged in the business of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and the material available on record, as well as considered the judicial pronouncements relied upon by them. As observed by us hereinabove, the A.O held a conviction that as the assessee was hit by the provisions of Sec. 80P(4) of the Act, therefore, it was not eligible for claim of deduction under Sec. 80P(2)(a)(i). The claim of the assessee that it was a co-operative credit society providing banking/credit facilities only to its members and was not a co-operative bank providing banking/credit facility to the public at large did not find favour with the A.O. As is discernible from the records, the A.O was of the view that deduction under Sec. 80P(2)(a)(i) in the case of a co-operative credit society engaged in the business of banking (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluded, that the assessee being a primary co-operative bank would not be eligible for claim of deduction under Sec. 80P(2)(a)(i). It was on the basis of his aforesaid observations that the assesses claim for deduction of ₹ 5,83,710/- under Sec.80P of the Act was declined by the A.O. 6. We have deliberated at length on the issue under consideration and are unable to persuade ourselves to accept the view taken by the A.O. As per sub-section (4) of Sec. 80P that was inserted by the Finance Act, 2006 w.e.f 01.04.2007, the provisions of the said section were not to apply in relation to any co-operative bank other than a primary agricultural credit society or a primary agricultural and rural development bank . As is discernible from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot from the public, therefore, it can safely be concluded that the principal business or primary objective of the said co-operative credit society is not the business of banking. As such, the first condition mentioned hereinabove can safely be held to have not been satisfied by the assessee before us. Apart from that, there is a clear distinction between co-operative banks registered under the Banking Regulations Act, 1949 and co-operative societies registered under the Co-operative Societies Act. In our considered view, the assessee which is a cooperative credit society cannot be categorised as a co-operative bank which is governed under the Banking Regulations Act, 1949. Our aforesaid view is fortified by the judgment of the Hon'ble H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit society is neither authorized nor had undertaken any of the banking business activities as are carried out by a co-operative bank, but had only provided financial assistance/credit to its members, therefore, it can safely be concluded that it cannot be held to be a co-operative bank. Accordingly, in the totality of the facts involved in the case before us, we are unable to concur with the view taken by the A.O which thereafter had been sustained by the CIT (Appeals). We, thus, not finding favor with the view taken by the lower authorities set-aside the order of the CIT(A) and vacate the disallowance of ₹ 5,83,710/- made by the A.O. 8. In the result, appeal of the assessee is allowed in terms of our aforesaid observations. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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