DCIT, v. M/s Sree Seetharamma Mandiram Souharda Shakari Ltd.,,

ITA 1210/BANG/2013 | 2007-2008
Pronouncement Date: 19-11-2014 | Result: Dismissed

Appeal Details

RSA Number 121021114 RSA 2013
Assessee PAN AADTS3925K
Bench Bangalore
Appeal Number ITA 1210/BANG/2013
Duration Of Justice 1 year(s) 3 month(s) 17 day(s)
Appellant DCIT,
Respondent M/s Sree Seetharamma Mandiram Souharda Shakari Ltd.,,
Appeal Type Income Tax Appeal
Pronouncement Date 19-11-2014
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 19-11-2014
Date Of Final Hearing 19-11-2014
Next Hearing Date 19-11-2014
Assessment Year 2007-2008
Appeal Filed On 01-08-2013
Judgment Text
ITA NO.1210 OF 2013 SREE SEETHARAMA MANDIRAM SOUHAR DA SAHAKARI LTD BANGALORE PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE ABENCH BANGALORE BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI JASON P. BOAZ ACCOUNTANT MEMBER ITA NO. 1210/BANG/2013 (ASSESSMENT YEAR: 2007-08) DY. COMMISSIONER OF INCOME TAX CIRCLE 7(1) BANGALORE 560034 VS. M/S. SREE SEETHARAMA MANDIRAM SOUHARDA SAHAKARI LTD NO.1077 PATTABHI RAMA SHASTRI LANE ULSOORPET BANGALORE 560002 PAN: AADTS 3925 K (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI DHIVAHAR JCIT (DR) ASSESSEE BY: SHRI ZAIN AHMED KHAN CA DATE OF HEARING: 19/11/2014 DATE OF PRONOUNCEMENT: 19/11/2014 O R D E R PER RAJPAL YADAV J.M. THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF THE LEARNED CIT (A) DATED 24.5.2013 PASSED FOR ASSESSME NT YEAR 2007-08. THE SOLITARY SUBSTANTIAL GRIEVANCE OF THE REVENUE IS THAT THE LEARNED CIT (A) HAS ERRED IN UPHOLDING THE CLAIM OF THE ASSESSEE FOR GRANT OF DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PRIMARY AGRICULTURAL SOCIETY. IT HAS FILED ITS RETU RN OF INCOME ON 31.10.2007 DECLARING TOTAL INCOME OF RS.68 590/- AF TER CLAIMING DEDUCTION OF RS.20 06 454/- U/S 80P(2)(A)(I) AND 80 P(2)(D) OF THE ITA NO.1210 OF 2013 SREE SEETHARAMA MANDIRAM SOUHAR DA SAHAKARI LTD BANGALORE PAGE 2 OF 11 ACT. ACCORDING TO THE ASSESSING OFFICER THE ASSESS EE HAS EARNED INTEREST INCOME FROM VARIOUS LOANS NAMELY GOLD LOAN OVER DRAFT ACCOUNT STAFF LOAN ETC. HE CONTENDED THAT THE ACT IVITY OF THE ASSESSEE IS OF A COOPERATIVE BANK AND THEREFORE IT IS NOT ENTITLED FOR DEDUCTION U/S 80P(2)(A)(I). ON THE OTHER HAND STAND OF THE ASSESSEE IS THAT IT IS A COOPERATIVE SOCIETY PROVID ING CREDIT FACILITIES TO ITS MEMBERS. THE ASSESSING OFFICER DI D NOT ACCEPT THIS CONTENTION OF THE ASSESSEE AND HELD THAT IT IS A COOPERATIVE BANK AND THEREFORE NOT ENTITLED FOR THE DEDUCTION. 3. DISSATISFIED WITH THE ACTION OF THE ASSESSING OF FICER THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CI T (A). THE LEARNED FIRST APPELLATE AUTHORITY HAS GONE THROUGH THE CONTENTION OF THE ASSESSEE AND HELD THAT IT IS NOT ENGAGED IN BANKING ACTIVITIES. THE FOLLOWING OBSERVATION MADE BY THE C IT (A) IS WORTH TO READ: 7. I HAVE GONE THROUGH THE ASSESSING OFFICERS ORD ER THE APPELLANTS SUBMISSIN AND THE LANGUAGE OF THE VARIOUS PROVISIONS OF THE IT ACT AS REPRODUCED ABOV E. I FIND THAT THE PROVISION OF SECTION 80P(4) HAS GOT ITS APPLICATION ONLY TO COOPERATIVE BANKS. SECTION 80P(2)(A)(I) SHALL THEREFORE BE APPLICABLE TO A COOPERATIVE SOCIETY CARRYING ON CREDIT FACILITY TO ITS MEMBERS. THIS VIEW IS CLARIFIED BY CENTRAL BOARD OF DIRECT TAX VIDE ITS CLARIFICATION NO.133/06/2007-TP L DATED 9 TH MAY 2007. IT IS CONFIRMED THAT THE APPELLANT COOPERATIVE SOCIETY ALLOWS ITS MEMBERS TO OPEN SAVINGS ACCOUNT ONLY FOR NOMENCLATURE PURPOSES BUT CHEQUE FACILITY IS NOT PERMITTED AS FO R NORMAL BANKING OPERATIONS. THE 17 ITEMS LISTED UNDER THE AIMS AND OBJECTIVES OF THE COOPERATIVE SOCIETY DO NOT INCLUDE ANY ITEM FOR CARRYING ON THE BUSINESS OF BANKING. I AM THEREFORE CONVINCED THA T ITA NO.1210 OF 2013 SREE SEETHARAMA MANDIRAM SOUHAR DA SAHAKARI LTD BANGALORE PAGE 3 OF 11 SECTION 80P(4) CANNOT BE APPLIED TO THE APPELLANT SINCE NEITHER HAS ITS OBTAINED A LICENSE FOR BANKIN G FROM THE RBI NOR DOES IT CARRY ON ANY BANKING BUSINESS AS ENVISAGED UNDER THE BANKING REGULATION ACT 1949. THE RATIO OF THE DECISION IN CASE OF YESWANTHPUR CREDIT COOPERATIVE SOCIETY LTD IS SQUARELY APPLICABLE IN THIS CASE. RESPECTFULLY FOLLOWING THE SAME THE EXEMPTION OF PROFIT IS DIREC TED TO BE ALLOWED IN THIS CASE. 4. WITH THE ASSISTANCE OF THE LEARNED REPRESENTATIV ES WE HAVE GONE THROUGH THE RECORD CAREFULLY. THE DISPUTE IS WHETHER THE ASSESSEE IS A COOPERATIVE BANK WHICH WILL DISENTITL E FROM CLAIMING DEDUCTION U/S 80P(2)(A)(I) OR IT IS A COOPERATIVE C REDIT SOCIETY EXTENDING BENEFIT TO ITS MEMBERS ONLY?. ACCORDING T O THE ASSESSING OFFICER COOPERATIVE SOCIETY EVEN IF EXTE NDING BENEFIT OF CREDIT FACILITY TO ITS MEMBERS WOULD FALL WITHIN TH E AMBIT OF COOPERATIVE BANK AND THEY ARE NOT ENTITLED FOR DEDU CTION U/S 80P. ASSESSING OFFICER HAS NOWHERE BROUGHT ANY EVID ENCE ON THE RECORD TO INDICATE THAT THE ASSESSEE IS ENGAGED IN BANKING ACTIVITY. HE MERELY CLASSIFIED THE INTEREST INCOME EARNED BY THE ASSESSEE BUT WHETHER THIS INCOME WAS EARNED FROM N ON MEMBERS HE HAS NOWHERE SHOWN. APART FROM THE NATU RE OF INTEREST INCOME HE HAS NOT BROUGHT ANY OTHER MATER IAL. ON THE OTHER HAND THE ASSESSEE HAS POINTED OUT THAT IT HA S NOT AVAILED ANY BANK LICENSE FROM THE RBI AND IT IS NOT ISSUING CHEQUE BOOK ETC. TO NON MEMBERS. THE TRIBUNAL HAS CONSIDERED TH IS ASPECT IN THE CASE OF JYOTI COOPERATIVE SOCIETY LTD BAGALKOT IN ITA NO.1269/BANG/2013 DATED 31.10.2014 AS UNDER: 6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AND GONE THROUGH THE RECORD CAREFULLY. THE ORDER OF ITA NO.1210 OF 2013 SREE SEETHARAMA MANDIRAM SOUHAR DA SAHAKARI LTD BANGALORE PAGE 4 OF 11 THE TRIBUNAL IN ASSESSMENT YEAR 2009-10 READ AS UNDER : THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DA TED 20.03.2012 OF THE CIT(APPEALS) BELGAUM RELATING T O ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE IS A CO-OPERATIVE SOCIETY. IT IS E NGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE ASS ESSEE HAD CLAIMED DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT. UN DER SEC.80P(2)(I) OF THE ACT WHERE THE GROSS TOTAL INCO ME OF A CO- OPERATIVE SOCIETY INCLUDES INCOME FROM CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS ME MBERS THE SAME WAS ALLOWED AS DEDUCTION PRIOR TO ASSESSMENT YEAR 2 007-08. BY THE FINANCE ACT 2006 W.E.F. 1-4-2007 SUB-SECTI ON (4) WAS INSERTED IN SEC.80-P WHICH PROVIDES AS FOLLOWS: (4) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY IN RELATION TO ANY CO-OPERATIVE BANK OTHER THAN A PRIMARY AGRICULT URAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. EXPLANATION : FOR THE PURPOSES OF THIS SUB-SECTION (A) 'CO-OPERATIVE BANK' AND 'PRIMARY AGRICULTURAL C REDIT SOCIETY' SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO TH EM IN PART V OF THE BANKING REGULATION ACT 1949 (10 OF 1949); (B) 'PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DE VELOPMENT BANK' MEANS A SOCIETY HAVING ITS AREA OF OPERATION CONFINED TO A TALUK AND THE PRINCIPAL OBJECT OF WHICH IS TO PROVI DE FOR LONG- TERM CREDIT FOR AGRICULTURAL AND RURAL DEVELOPMENT ACTIVITIES. 3. THE AO WAS OF THE VIEW THAT AFTER AMENDED BY THE FINANCE ACT 2006 W.E.F. 1.4.2007 BY WHICH SUB-SECTION (4) WAS I NSERTED THE ASSESSEE WHICH WAS A CO-OPERATIVE SOCIETY CARRYING ON BANKING BUSINESS WAS NOT ENTITLED TO DEDUCTION U/S.80P(2)(I ) OF THE ACT. ACCORDING TO THE AO THE ASSESSEE WAS A CO-OPERATIV E BANK AND THEREFORE THE DEDUCTION U/S. 80P(2)(A)(I) CANNOT BE ALLOWED. IN COMING TO THE ABOVE CONCLUSION THE AO NOTICED THAT THE NATURE OF THE ACTIVITY OF THE ASSESSEE THOUGH REGISTERED AS A CREDIT CO- OPERATIVE SOCIETY IS THAT OF A BANKING INSTITUTION NOTWITHSTANDING THE FACT THAT RECEIPT OF AND LENDING MONEY IS LIMIT ED TO ITS MEMBERS. THE AO FURTHER NOTICED THAT CLAUSE (VIIA) IN SECTION 2(24) OF THE ACT WAS INSERTED BY THE FINANCE ACT 20 06 EFFECTIVE ITA NO.1210 OF 2013 SREE SEETHARAMA MANDIRAM SOUHAR DA SAHAKARI LTD BANGALORE PAGE 5 OF 11 FROM 1/4/2007 WHICH PROVIDES THAT PROFITS AND GAIN S OF ANY BUSINESS (INCLUDING PROVIDING CREDIT FACILITIES) CA RRIED ON BY A CO- OPERATIVE SOCIETY WITH ITS MEMBERS THE ASSESSEES A CTIVITY WAS ALSO INCOME. THAT THE DEDUCTION FROM GROSS TOTAL INCOME OF CERTAIN RECEIPTS IS AVAILABLE ONLY TO PRIMARY AGRIC ULTURAL CREDIT SOCIETIES OR PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANKS; AND THAT THE BENEFIT OF SUCH DED UCTION IS NOT AVAILABLE TO INSTITUTIONS LIKE THE ASSESSEE SOC IETY. THE AO ALSO REFERRED TO SECTION 5(B) OF THE BANKING REGULA TION ACT TO HOLD THAT IF ONE OF THE TWO CONDITIONS OF THE APPE LLANT IS FULFILLED; I.E. ITS PRIMARY OBJECT SHOULD BE BANKING OR ITS PR INCIPAL BUSINESS MUST BE TRANSACTION IN BANKING BUSINESS IT IS SUFF ICIENT TO BRING THE ASSESSEE INTO THE CONCEPT OF A BANKING INSTITUT ION. THE AO REFERRED TO THE OBJECTS OF THE ASSESSEE SOCIETY IN ITS BYE LAWS THAT THE ACTIVITIES OF THE ASSESSEE FALL WITHIN THE PROVISIONS OF SECTIONS 5(B) 6(1)(A) 6(1)(G) 6(1)(K) AND 6(1)(N ) OF THE BANKING REGULATIONS ACT AND HELD THAT BROADLY THEY ARE IN THE NATURE OF BANKING ACTIVITY. ACCORDING TO THE AO THE FOLLOWI NG FEATURES MAKE THE ASSESSEE INELIGIBLE TO EXEMPTION CONTEMPLA TED IN SECTION 80P OF THE ACT: I) SINCE MEMBERSHIP IS OPEN TO ANYONE PAYING A SUM OF RS.10/- TO RS.100/- FOR MEMBERSHIP AND NO OTHER CON DITION IS IMPOSED. IN OTHER WORDS MEMBERSHIP AS IS AVAILA BLE IN ANY BANKING INSTITUTION IS AVAILABLE IN THE CASE OF THE APPELLANT SOCIETY. II) THE PURPOSE OF ACCEPTING DEPOSITS FROM THE PUB LIC IS FOR MAKING INVESTMENTS AND FOR LENDING TO MEMBERS. CONFINING THE LENDING ONLY TO MEMBERS MAKES NO DIFFERENCE. III) DEPOSITS COLLECTED FROM THE DEPOSITORS ARE RE PAYABLE ON DEMAND AND DO NOT GO INTO THE CORPUS OF THE APPELLA NT. IV) THOUGH WITHDRAWAL OF MONEY IS NOT DONE BY C HEQUES DRAFTS OR PAY-OUT SLIPS PAY ORDERS ARE ISSUED IN FAVOUR O F A PERSON ON BEHALF OF THE DEPOSITOR. V) THE ASSESSEE SOCIETY CAME WITHIN THE EXPLANATIO N TO SUB- SECTION (4) OF SECTION 80P OF THE ACT AS A BANKING INSTITUTION. 4. IN THE LIGHT OF THE ABOVE-MENTIONED OBSERVATION S THE AO HELD THAT THE APPELLANT WAS NOT ENTITLED TO EXEMPTI ON U/S 80P(2)(A)(I) OF THE ACT AND BROUGHT THE SAME TO TAX . ITA NO.1210 OF 2013 SREE SEETHARAMA MANDIRAM SOUHAR DA SAHAKARI LTD BANGALORE PAGE 6 OF 11 5. THE CIT(A) CONFIRMED THE ORDER OF THE AO. HENC E THIS APPEAL BY THE ASSESSEE BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING IT WAS BROUGHT TO OUR NO TICE BY THE PARTIES THAT THE ISSUE RAISED BY THE ASSESSE E HAS ALREADY BEEN CONSIDERED AND DECIDED BY THIS TRIBUNAL IN THE CASE OF ACIT CIRCLE 3(1) BANGALORE V. M/S. BANGALORE COMM ERCIAL TRANSPORT CREDIT CO-OPERATIVE SOCIETY LTD. IN ITA NO.1069/BANG/2010 WHEREIN THIS TRIBUNAL HELD THAT SECTION 80P(4) IS APPLICABLE ONLY TO COOPERATIVE BANKS AND NOT TO CREDIT COOPERATIVE SOCIETIES. THE INTENTION OF THE LEGISL ATURE OF BRINGING IN COOPERATIVE BANKS INTO THE TAXATION STR UCTURE WAS MAINLY TO BRING IN PAR WITH COMMERCIAL BANKS. SINC E THE ASSESSEE IS A COOPERATIVE SOCIETY AND NOT A COOPERA TIVE BANK THE PROVISIONS OF SECTION 80P(4) WILL NOT HAVE APPL ICATION IN THE ASSESSEES CASE AND THEREFORE IT IS ENTITLED TO DE DUCTION U/S 80P(2)(A)(I) OF THE ACT. THE FOLLOWING WERE THE RE LEVANT OBSERVATIONS OF THE TRIBUNAL:- 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE WAS DENIED THE DE DUCTION U/S 80-P(2)(A)(I) OF THE ACT FOR THE REASON OF INTRODUC TION OF SUB SECTION 4 TO SECTION 80P. SECTION 80P(4) READS AS FOLLOWS:- (4) THE PROVISIONS OF THIS SECTION SHALL NOT A PPLY IN RELATION TO ANY COOPERATIVE BANK OTHER THAN A PRIMA RY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY COOPERATIV E AGRICULTURAL AND RURAL DEVELOPMENT BANK. EXPLANATION: FOR THE PURPOSES OF THIS SUB-SECTION (A) CO-OPERATIVE BANK AND PRIMARY AGRICULTURAL CREDIT SOCIETY SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO THEM IN PART V OF THE BANKING REGULATION ACT 1949 (10 OF 1949); (B) PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK MEANS A SOCIETY HAVING ITS AREA OF OPERATION CONFINED TO A TALUK AND THE PRINCIPAL OBJECT OF WHICH IS TO PROVIDE FOR LONG TERM CREDIT FOR AGRICULTURAL AND RURAL DEVELOPMENT ACTIVITIES. ITA NO.1210 OF 2013 SREE SEETHARAMA MANDIRAM SOUHAR DA SAHAKARI LTD BANGALORE PAGE 7 OF 11 9.1 THE ABOVE SUB-SECTION 4 OF SECTION 80P PROVID ES THAT DEDUCTION UNDER THE SAID SECTION SHALL NOT BE AVAILABLE TO AN Y COOPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR RURAL DEVELOPMENT BANK. FOR THE PURPOSE OF THE SAID SUB SECTION COO PERATIVE BANK SHALL HAVE THE MEANING ASSIGNED TO IT IN PART V OF THE BA NKING REGULATION ACT 1949. IN PART V OF THE BANKING REGULATION ACT COOPERATIVE BANK MEANS A STATE COOPERATIVE BANK A CENTRAL COO PERATIVE BANK AND A PRIMATE COOPERATIVE BANK. 9.2 FROM THE ABOVE SECTION IT IS CLEAR THAT THE PR OVISIONS OF SECTION 80P(4) HAS GOT ITS APPLICATION ONLY TO COOPERATIVE BANKS. SECTION 80P(4) DOES NOT DEFINE THE WORD COOPERATIVE SOCIET Y. THE EXISTING SUB-SECTION 80P(2)(A)(I) SHALL BE APPLICABLE TO A C OOPERATIVE SOCIETY CARRYING ON CREDIT FACILITY TO ITS MEMBERS. THIS VIEW IS CLARIFIED BY CENTRAL BOARD OF DIRECT TAX VIDE ITS CLARIFICATION NO.133/06/2007-TPL DATED 9 TH MAY 2007. THE DIFFERENCE BETWEEN A COOPERATIVE B ANK AND A COOPERATIVE SOCIETY ARE AS FOLLOWS:- NATURE COOPERATIVE SOCIETY REGISTERED UNDER BANKING REGULATION ACT 1949 COOPERATIVE SOCIETY REGISTERED UNDER KARNATAKA COOPERATIVE SOCIETY ACT 1959. REGISTRATION UNDER THE BANKING REGULATION ACT 1949 AND COOPERATIVE SOCIETIES ACT 1959. COOPERATIVE SOCIETIES ACT 1959. NATURE OF BUSINESS 1. AS DEFINED IN SECTION 6 OF BANKING REGULATION ACT. 2. CAN OPEN SAVINGS BANK ACCOUNT CURRENT ACCOUNT OVERDRAFT ACCOUNT CASH CREDIT ACCOUNT ISSUE LETTER OF CREDIT DISCOUNTING BILLS OF EXCHANGE ISSUE CHEQUES DEMAND DRAFTS (DD) PAY ORDERS GIFT CHEQUES LOCKERS BANK GUARANTEES ETC. 3. COOPERATIVE BANKS CAN ACT AS CLEARING AGENT FOR CHEQUES DDS PAY ORDERS AND OTHER FORMS. 4. BANKS ARE BOUND TO FOLLOW THE RULES REGULATIONS AND DIRECTIONS ISSUED BY RESERVE BANK OF INDIA (RBI). 1. AS PER THE BYE LAWS OF THE COOPERATIVE SOCIETY. 2. SOCIETY CANNOT OPEN SAVINGS BANK ACCOUNT CURRENT ACCOUNT ISSUE LETTER OF CREDIT DISCOUNTING BILLS OF EXCHANGE ISSUE CHEQUES DEMAND DRAFTS PAY ORDERS GIFT CHEQUES LOCKERS BANK GUARANTEES ETC. 3. SOCIETY CANNOT ACT AS CLEARING AGENT FOR CHEQUES DDS PAY ORDERS AND OTHER FORMS. 4. SOCIETY ARE BOUND BY RULES AND REGULATIONS AS ITA NO.1210 OF 2013 SREE SEETHARAMA MANDIRAM SOUHAR DA SAHAKARI LTD BANGALORE PAGE 8 OF 11 SPECIFIED BY IN THE COOPERATIVE SOCIETIES ACT. FILING OF RETURNS COOPERATIVE BANKS HAVE TO SUBMIT ANNUAL RETURN TO RBI EVERY YEAR. SOCIETY HAS TO SUBMIT THE ANNUAL RETURN TO REGISTRAR OF SOCIETIES. INSPECTION RBI HAS THE POWER TO INSPECT ACCOUNTS AND OVERALL FUNCTIONING OF THE BANK. REGISTRAR HAS THE POWER TO INSPECT ACCOUNTS AND OVERALL FUNCTIONING OF THE BANK. PART V PART V OF THE BANKING REGULATION ACT IS APPLICABLE TO COOPERATIVE BANKS. PART V OF THE BANKING REGULATION ACT IS NOT APPLICABLE TO COOPERATIVE BANKS. USE OF WORDS THE WORD BANK BANKER BANKING CAN BE USED BY A COOPERATIVE BANK. THE WORD BANK BANKER BANKING CANNOT BE USED BY A COOPERATIVE SOCIETY. 9.3 IF THE INTENTION OF THE LEGISLATURE WAS NOT TO GRANT DEDUCTION U/S 80P(2)(A)(I) TO COOPERATIVE SOCIETIES CARRYING ON THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMB ERS THEN THIS SECTION WOULD HAVE BEEN DELETED. THE NEW PROVISO TO SECTIO N 80P(4) WHICH IS BROUGHT INTO STATUTE IS APPLICABLE ONLY TO COOPERAT IVE BANKS AND NOT TO CREDIT COOPERATIVE SOCIETIES. THE INTENTION OF THE LEGISLATURE OF BRINGING IN COOPERATIVE BANKS INTO THE TAXATION STR UCTURE WAS MAINLY TO BRING IN PAR WITH COMMERCIAL BANKS. SINCE THE ASSE SSEE IS A COOPERATIVE SOCIETY AND NOT A COOPERATIVE BANK THE PROVISIONS OF SECTION 80P(4) WILL NOT HAVE APPLICATION IN THE ASS ESSEES CASE AND THEREFORE IT IS ENTITLED TO DEDUCTION U/S 80P(2)(A )(I) OF THE ACT. HENCE WE ARE OF THE VIEW THAT THE ORDER OF THE CIT(A) IS CORRECT AND IN ACCORDANCE WITH LAW AND NO INTERFERENCE IS CALLED F OR. 7.THE HONBLE GUJARAT HIGH COURT IN THE CASE OF TAX APPEAL NO.442 OF 2013 WITH TAX APPEAL NO.443 OF 2013 WITH TAX APPEAL NO.863 OF 2013 IN THE CASE OF CIT VS. JAFARI MOMIN VIKAS CO-OP CREDIT SOCIETY LTD. BY JUDGMENT DATED 1 5.1.2014 HAD TO DEAL WITH THE FOLLOWING QUESTION OF LAW: WHETHER THE HONBLE TRIBUNAL IS CORRECT IN ALLOWIN G DEDUCTION UNDER SECTION 80P(2)(A)(I) TO ASSESSEES SOCIETY EV EN THOUGH SAME IS COVERED UNDER SECTION 80P(4) RWS 2(24) (VII A) BEING INCOME FROM PROVIDING CREDIT FACILITIES CARRIED ON BY A CO- OPERATIVE SOCIETY WITH ITS MEMBER? ITA NO.1210 OF 2013 SREE SEETHARAMA MANDIRAM SOUHAR DA SAHAKARI LTD BANGALORE PAGE 9 OF 11 THE HONBLE COURT HELD AS FOLLOWS: 4. AS PER SECTION 80P(4) THE PROVISIONS OF SECTI ON 80P WOULD NOT APPLY IN RELATION TO ANY CO-OPERATIVE BANK OTHE R THAN PRIMARY AGRICULTURAL CREDIT SOCIETY OR PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. AS PER THE EXPLANATION THE TERMS CO-OPERATIVE BANK AND PRIMARY AGRICULTURAL CREDI T SOCIETY SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO TH EM IN PART V OF THE BANKING REGULATION ACT 1949. 5. ASSESSING OFFICER HELD THAT BY VIRTUE OF SECTIO N 80P(4) THE RESPONDENT ASSESSEE WOULD NOT BE ENTITLED TO BENEFI TS OF DEDUCTION UNDER SECTION 80P. CIT(APPEALS) AS WELL A S THE TRIBUNAL REVERSED THE DECISION OF THE ASSESSING OFF ICER ON THE PREMISE THAT THE RESPONDENT ASSESSEE NOT BEING A BA NK EXCLUSION PROVIDED IN SUB-SECTION(4) OF SECTION 80P WOULD NOT APPLY. THIS IRRESPECTIVE OF THE FACT THAT THE RESPONDENT WOULD NOT FALL WITHIN THE EXPRESSION PRIMARY AGRICULTURAL CREDIT SOCIETY . 6. HAD THIS BEEN THE PLAIN STATUTORY PROVISIONS UN DER CONSIDERATION IN ISOLATION IN OUR OPINION THE QUE STION OF LAW COULD BE STATED TO HAVE ARISEN. WHEN AS CONTENDED BY THE ASSESSEE BY VIRTUE OF SUBSECTION(4) ONLY CO-OPERAT IVE BANKS OTHER THAN THOSE MENTIONED THEREIN WERE MEANT TO BE EXCLU DED FOR THE PURPOSE OF DEDUCTION UNDER SECTION 80P A QUESTION WOULD ARISE WHY THEN LEGISLATURE SPECIFIED PRIMARY AGRICULTURAL CREDIT SOCIETIES ALONG WITH PRIMARY COOPERATIVE AGRICULTUR AL AND RURAL DEVELOPMENT BANKS FOR EXCLUSION FROM SUCH EXCLUSION AND IN OTHER WORDS CONTINUED TO HOLD SUCH ENTITY AS ELIGI BLE FOR DEDUCTION. HOWEVER THE ISSUE HAS BEEN CONSIDERABLY SIMPLIFIED BY VIRTUE OF CBDT CIRCULAR NO.133 OF 2007 DATED 9.5 .2007. CIRCULAR PROVIDES AS UNDER:- SUBJECT: CLARIFICATION REGARDING ADMISSIBLY OF DED UCTION UNDER SECTION 80P OF THE INCOME-TAX ACT 1961. 1. PLEASE REFER TO YOUR LETTER NO.DCUS/30688/2007 DATED 28.03.2007 ADDRESSED TO CHAIRMAN CENTRAL BOA RD OF DIRECT TAXES ON THE ABOVE GIVEN SUBJECT. 2. IN THIS REGARD I HAVE BEEN DIRECTED TO STATE T HAT SUB-SECTION(4) OF SECTION 80P PROVIDES THAT DEDUCTI ON UNDER THE SAID SECTION SHALL NOT BE ALLOWABLE TO AN Y CO- OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CR EDIT ITA NO.1210 OF 2013 SREE SEETHARAMA MANDIRAM SOUHAR DA SAHAKARI LTD BANGALORE PAGE 10 OF 11 SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. FOR THE PURPOSE OF THE SAID SUB- SECTION CO-OPERATIVE BANK SHALL HAVE THE MEANING ASSIGNED TO IT IN PART V OF THE BANKING REGULATION ACT 1949. 3. IN PART V OF THE BANKING REGULATION ACT CO- OPERATIVE BANK MEANS A STATE CO-OPERATIVE BANK A CENTRAL CO-OPERATIVE BANK AND A PRIMARY CO-OPERATIV E BANK. 4. THUS IF THE DELHI CO OP URBAN T & C SOCIETY LT D. DOES NOT FALL WITHIN THE MEANING OF CO-OPERATIVE B ANK AS DEFINED IN PART V OF THE BANKING REGULATION ACT 19 49 SUBSECTION(4) OF SECTION 80P WILL NOT APPLY IN THIS CASE. 5. THE ISSUES WITH THE APPROVAL OF CHAIRMAN CENTRAL BOARD OF DIRECT TAXES. 7. FROM THE ABOVE CLARIFICATION IT CAN BE GATHER ED THAT SUB-SECTION(4) OF SECTION 80P WILL NOT APPLY TO AN ASSESSEE WHICH IS NOT A CO-OPERATIVE BANK. IN THE CASE CLARI FIED BY CBDT DELHI COOP URBAN THRIFT & CREDIT SOCIETY LTD. WAS UNDER CONSIDERATION. CIRCULAR CLARIFIED THAT THE SA ID ENTITY NOT BEING A COOPERATIVE BANK SECTION 80P(4) OF THE ACT WOULD NOT APPLY TO IT. IN VIEW OF SUCH CLARIFICATIO N WE CANNOT ENTERTAIN THE REVENUES CONTENTION THAT SECT ION 80P(4) WOULD EXCLUDE NOT ONLY THE CO-OPERATIVE BANK S OTHER THAN THOSE FULFILLING THE DESCRIPTION CONTAINED THE REIN BUT ALSO CREDIT SOCIETIES WHICH ARE NOT COOPERATIVE BA NKS. 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. IN THE RESULT TAX APPEALS ARE DIS MISSED. 8. IN VIEW OF THE AFORESAID DECISIONS OF THE HON'BL E GUJARAT HIGH COURT IN THE CASE OF JAFARI MOMIN VIKAS CO-OP CREDI T SOCIETY LTD. (SUPRA) AND OF THE CO=ORDINATE BENCH OF THIS T RIBUNAL IN BANGALORE TRANSPORT CREDIT CO-OPERATIVE SOCIETY LTD . (SUPRA) WE ARE OF THE VIEW THAT THERE IS MERIT IN THIS APPE AL BY THE ASSESSEE. CONSEQUENTLY THE SAME IS ALLOWED. 9. IN THE RESULT THE ASSESSEE'S APPEAL IS ALLOWED. ITA NO.1210 OF 2013 SREE SEETHARAMA MANDIRAM SOUHAR DA SAHAKARI LTD BANGALORE PAGE 11 OF 11 PRONOUNCED IN THE OPEN COURT ON THIS 21ST DAY OF FE BRUARY 2014. IN VIEW OF THE ABOVE DISCUSSION WE DO NOT FIND ANY MERIT IN THE APPEAL. THE LEARNED CIT (A) HAS APPRECIATED THE CON TROVERSY IN RIGHT PERSPECTIVE. HENCE THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH NOVEMBER 2014. SD/- SD/- (JASON P. BOAZ) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DATED 19 TH NOVEMBER 2014. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR ITAT BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES BANGALORE