TMI Blog2014 (2) TMI 1412X X X X Extracts X X X X X X X X Extracts X X X X ..... th, CIT Assessee by : Shri S. Kamaraj, CA O R D E R PER BENCH This appeal filed by the Revenue and cross objections by assessee for assessment year 2007-08, are directed against the order of the Commissioner of Income-tax (Appeals)-II Chennai, dated 30.8.2013, passed in Appeal No.254 324/2013-14, in proceedings under section 143(3) r.w.s 147of the Income-tax Act, 1961 (in short the Act ). 2. The grounds raised in the appeal read as follows: 2. The learned Commissioner of Income Tax (A) erred in deleting the disallowance made by the AO of deduction .claimed by the assessee u/s 80P to the tune of Rs. 46.72 crores. 2.1 The Id CIT(A) ought to have noted that as per clause (viia) of Sec. 2(24), inserted by the Finance Act 2006, w.e.f 1.4.2007 which defines income inclusively to include profits and gains of any business of banking (including providing credit facilities) carried on by cooperative societies. Hence, as per this section, providing credit facilities to the constituents is to be construed broadly as the business of banking. 2.2 The Id CIT(A) ought to have noted that with effect from 01.04.2007 Sec.80P was amended by the Finance Act and sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) ITO vs The Kasipalayam Primary Agricultural Co-operative Bank Ltd. and Ahmedabad tribunal decision dated 31.1.2014 in I.T.A.No.410/ Ahd/2013 ITO vs Meghraj Taluka Primary Teachers Co-operative Credit Society Ltd Others. In light thereof, the assessee prays for confirming the same. 5. The assessee, the Tamilnadu Co-operative Housing Federation Ltd., is a society registered under state co-operative laws. It provides credit facility to its members for construction of houses in rural as well as urban areas. On 5.2.2008, the assessee had filed its return disclosing income as Rs. NIL by raising a claim of deduction u/s 80P pertaining to total income of Rs. 46,72,73,961-. The same was summarily processed. 6. We find from the case file that on 1.3.2012, the Assessing Officer formed reasons to believe that deduction available u/s 80P does not apply in assessee s case by virtue of sub-section(4) inserted by the legislature in the Act with effect from 1.4.2007 relevant to the impugned assessment year. Per Assessing Officer, this deduction could be availed only by a co-operative society which is a primary agricultural society or a primary co-operative agricultural and rural de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1949 as under: - Sec.5(cci) 'Co-operative bank' means a state cooperative bank, a central co-operative bank and a primary co-operative bank: Perusal of the facts of the instant case, clearly shows that the assessee is not a primary co-operative society. This is evident from the facts that the assessee is at the apex level in the state of Tamil Nadu and its members are the primary co-operative housing societies. Therefore, the third limb of the above definition of Co-operative bank i.e. 'primary co-operative bank' is not applicable to the assessee's case. From the definition of Co-operative bank it is apparent that Co-operative bank means a state co-operative bank , a Central Co-operative Bank and a Primary Co- operative bank . As mentioned above, the assessee is an apex body operating at the state level and its members are primary cooperative housing societies and hence the assessee can not considered as a primary co-operative society . The Assessing Officer has not made out any case as to how the assessee becomes a 'state Co-operative bank' or a 'Central Co-operative bank'. Further, neither the assessee's name includes the wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee's primary object is to finance its member- primary co-operative housing societies in the state of Tamil Nadu. It is not permitted to accept any deposits from the public or any other person. The sources of funds in the assessee's hands are the Government grants and borrowings from other scheduled banks. The Assessing Officer's observations that the assessee is accepting the deposits from the public is not factually correct. Therefore, it is amply clear that the assessee is not engaged in the business of banking. Further, as mentioned above, in order to engage in the banking business, the co-operative society must contain the words bank or banker or banking in its name, which is not present in the present assessee's case. Thus, in nutshell, the words co-operative bank means, - a co-operative society having the words bank or banker or banking in its name, and engaged in the business of banking and coming under the purview of RBI (in the case of apex or district level co-operative banks), or a co-operative society having its paid up share capital and reserves of not less than one lakh of rupees and engaged in the business of banking ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties [Cooperative banks] - Assessment year 2007-08 to 2009-10 - Assessee had income from banking and non-banking activities - Assessing Officer took a view that assessee was not a credit co-operative society and therefore not eligible for deduction under section 80P(2){a){i) - It was undisputed that assessee was neither a State Co-operative bank nor a Central cooperative bank - Further bye-laws of assessee permitted admission of any co-operative society to be member of assessee indicating that assessee could not be regarded as a primary co-operative bank under section 5 (ccv) of Banking Regulation Act. 1949. and. thus. it would not be hit by section 80P(4)- Whether in view of above, assessee's claim for deduction under section 80P(2)(a)(i) was to be allowed - Held, yes. 2. DCIT v. Jayalakshmi Mahila Vividodeshagala Souharda Sahakari Ltd.[2012]137 ITD 163(Panaji)/ [2012]149 TTJ 356 (Panji) / [2012] 23 taxmann.com 313(Panaji): Section 80P of the Income-tax Act, 1961, read with sections 5(b), 5(cci) and 5(ccv) of the Banking Regulation Act, 1949 - Deductions - Income of cooperative societies - Assessment years 2007-08 to 2009-10 - Assessee was a society engaged in business o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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