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TMI Blog2023 (5) TMI 1238X X X X Extracts X X X X X X X X Extracts X X X X ..... in confirming the action of the AO in not allowing the deduction claimed by the assessee u/s 80P of the Income Tax Act, 1961 (hereinafter "the Act") to the tune of Rs.99,59,604/-. 3. Brief facts of the case are that the assessee is a Credit Cooperative Society providing credit facilities to its members. The assessee filed its return of income on 27.09.2012 declaring total income of Rs.Nil. Later, the case of the assessee was selected for scrutiny under CASS. And the AO noted that the assessee is a Co- operative Credit Society run by the employees of the M/s. RCF Ltd. And the main activity of the assessee is to provide credit facility to its members. The AO noted that the assessee has shown gross total income of Rs.99,59,604/- and after cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee and held that the assessee's action/business falls in the definition of Co-operative Bank as provided in the Banking Regulation Act, 1949. And therefore, he held that assessee is not eligible for deduction u/s 80P of the Act; and thus disallowed the claim of deduction to the tune of Rs.99,59,604/- u/s 80P of the Act. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who was pleased to dismiss the same by holding that assessee is a Co-operative Society engaged in banking business. And therefore, according to him, as per section 80P(4) of the Act, the assessee shall not be eligible for deduction under section 80P of the Act. Further according to the Ld. CIT(A), the assessee is neither a Primary Agricultural Credit Soci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is a "credit cooperative society‟. In the assessment, AO treated the same as a "credit cooperative bank‟. During the first appellate proceedings, CIT (A) examined the facts relevant to the definition of "credit cooperative society‟ as well as the applicable citations and came to the conclusion that the assessee is not a "bank‟ and therefore, the provisions of section 80P(4) will not apply to the assessee-credit cooperative society. The contents of paras 6 and 7 of the CIT (A)‟s order are relevant in this regard. Aggrieved with the same, Revenue is in appeal before the Tribunal with the present appeal. 4. During the proceedings before us, Ld DR for the Revenue submitted that the order of the CIT (A) shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t falling under the banking activities as defined in the Banking Regulation Act. Therefore, respectfully following the aforesaid decisions of the ITAT Pune and Panaji Benches, the appellant also cannot be held as a Cooperative Bank hence the deduction claimed u/s 80P(2)(a)(i) cannot be denied to it. The AO is accordingly directed to allow the deduction claimed by the appellant." 6. Further, we have also perused the judgment of the jurisdictional High Court in the case of Quepem Urban Cooperative Credit Society Ltd vs. ACIT [2015] 377 ITR 272 (Bom), which was relied upon by the Ld Counsel for the assessee for the proposition that such lending activities do not constitute banking activities as the same are transacted between the cooperative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it Society Ltd. Vs. ACIT (2015) 377 ITR 272 (Bom) & SLP preferred by department dismissed by Hon'ble Supreme Court 235 Taxman 514 (SC). The Hon'ble Supreme Court in Annasaheb Patel (supra) has affirmed the view of the Hon'ble Bombay High Court by following the ratio laid down in the case of Mavilayi Service Co-operative Bank Limited and Others Vs. CIT, Calicut And Another (2021) 7 SCC 90 which order reversed the full bench decision of the Hon'ble Kerala High Court by holding as under: - "Feeling aggrieved and dissatisfied with the impugned order dated 14-10-2019 passed by the High Court of Judicature at Bombay in ITA No.933/2017, by which the High Court has dismissed the said appeal preferred by the Revenue, relying upon its earlier decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to give credit/loan. However, it is required to be noted that merely giving credit to its members only cannot be said to be the Co-operative Banks/Banks under the Banking Regulation Act. The banking activities under the Banking Regulation Act are altogether different activities. There is a vast difference between the credit societies giving credit to their own members only and the Banks providing banking services including the credit to the public at large also. There are concurrent findings recorded by CITA, ITAT and the High Court that the respondent/Assessee cannot be termed as Banks/Cooperative Banks and that being a credit society, they are entitled to exemption under Section 80(P)(2) of the Income Tax Act. Such finding of fact is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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