9911796707
TMI Blog2023 (4) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... s and circumstances of the case. 2. The CIT [A] erred in upholding the view of the Assessing Officer that though the appellant is a co-operative society, it is not eligible for deduction under section 80P of the Income Tax Act, 1961 by wrongly interpreting Explanation (b) to subsection( 4) of section SOP of the Act. 3. The CIT [A] erred in upholding the view of the Assessing Officer that the interest earned by the appellant from investment in District Co-operative Bank is INCOME FROM OTHER SOURCES and not INCOME FROM BUSINESS OR PROFESSION, thereby denying exemption available to your appellant under section 80P of the Act. 4. The CIT[A] erred in holding that since the profits and gains from credit facilities given to non-members canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upto 06-08-2022, which was not considered by the CIT NFAC, and dismissed the appeal on 25-07-2022. In view of this, the order of the CIT NFAC is invalid. 10. Any other grounds that may be adduced at the time of hearing may also be considered." 3. The assessee is a Co-operative Bank engaged in the business of banking activity and also providing credit facilities to its members. The assessee filed the return of income on 02.10.2018 declaring NIL income after claiming deduction u/s.80P of the Income Tax Act (the Act) for an amount of Rs.1,09,67,207. The AO held that the assessee cannot be treated as a primary agricultural cooperative society eligible for deduction u/s.80P(2)(a)(i) as per the amended provisions of section 80P(4) w.e.f.01.04. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on investment with sub- treasuries and Banks was eligible for deduction u/s 80P(2)(a)(i) of the I.T. Act. 7.1 We have heard the rival submissions and perused the material on record. The Tribunal had decided the issue in favour of the assessee in assessee's own case in in ITA No.525/Coch/2014 (order dated 20.7.2016) concerning the assessment year 2009-10. In view of the above order of the Tribunal in assessee's own case, we hold that the CIT(A) is justified in directing the Assessing Officer to grant deduction in respect of interest income earned on investment in subtreasuries and bank deposits u/s 80P(2)(a)(i) of the Act." 6. Further, Hon'ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. & Others Vs. CIT (431 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agricultural credit society or a primary cooperative agricultural and rural development bank, the deduction would still be provided. Thus, cooperative banks are now specifically excluded from the ambit of Section 80-P. 23. If one has to go by the aforesaid definition of "cooperative bank", the appellant does not get covered thereby. It is also a matter of common knowledge that in order to do the business of a cooperative bank, it is imperative to have a licence from Reserve Bank of India, which the appellant does not possess. Not only this, as noticed above, Reserve Bank of India has itself clarified that the business of the appellant does not amount to that of a cooperative bank. The appellant, therefore, would not come within the mischi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t possess a licence from the RBI to do banking business. Given the fact that the assessee in that case was not so licenced, the assessee would not fall within the mischief of section 80P(4). (para 21) Ratio decidendi of Citizen Cooperative Society Ltd. (supra), must be given effect to. Section 80P, being a benevolent provision enacted by Parliament to encourage and promote the credit of the co-operative sector in general must be read liberally and reasonably, and if there is ambiguity, in favour of the assessee. A deduction that is given without any reference to any restriction or limitation cannot be restricted or limited by implication, as is sought to be done by the Revenue in the present case by adding the word "agriculture" into Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tural credit society to non-members is not illegal, unlike the facts in Citizen Cooperative Society Ltd. (supra). Impugned Full Bench judgment is set aside. (para 47)" 7. The lower authorities have no benefit of judgement of Hon'ble Apex Court in the case of The Mavilayi Service Cooperative Bank Ltd. & Ors. vs. CIT (supra), we are of the view that in the interest of justice and equity the issue of deduction u/s 80P(2)(a)(i) of the Act needs to be examined de novo in the light of the judgement of the Hon'ble Apex Court, referred supra. Therefore, the issue raised on merits is restored to the files of the AO. The AO shall take a decision in accordance with law after affording a reasonable opportunity of hearing to the assessee. It is order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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