2014 (7) TMI 1057

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.... assessee during the hearing of the case and we therefore, proceed to decide the appeal of the Revenue after considering the submissions of the Ld.DR and perusing the orders of the lower authorities. 3. Briefly stated, the assessee, a co-operative credit society, during the year under consideration, had declared the total income at NIL after claiming a deduction of Rs. 30,13,699/- under section 80P(2) of the Income Tax Act. However, in the assessment framed, the AO disallowed the claim of deduction and thereby determined the total income at Rs. 30,13,700/-. The AO made the impugned disallowance by concluding that the assessee is a cooperative society engaged in carrying on the business of banking and thus it is eligible only for the dedu....

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....o it in part V of the Banking Regulation Act 1949, according to which 'cooperative banks' means a State Co-operative Bank, a Central Co-operative Bank and Primary Co-operative Bank. Though the said clarification is given by the CBDT in connection with some other assessee, the crux of the matter pertains to the clarification of 'co-operative bank' for the purpose of subsection 4 of section 80P. It is observed that the said clarification has also been relied by the Tribunal in many cases. Therefore, 'cooperative banks' mentioned in the said subsection indicates only the State, Central and Primary Co-operative Banks only. 4.3 Moreover, for commencing a banking business by the co-operative society, due license has to be obtained from the Res....

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....he Revenue that the said decision of the Ld.CIT(A) has not been accepted by the department and they are in further appeal. However, it is observed that the appeals filed by the Revenue against the said assessee have been dismissed by the Tribunal in ITA Nos 3223/Mum/2011 & 505/Mum/2012 for the AYs 2007-08 & 2008-09 thereby the Tribunal has decided the issue in favour of the assessee. 4.5 Considering the entire facts and position of law, we are of the considered opinion that the Ld.CIT(A) is justified in directing the AO to allow the deduction claimed by the assessee u/s 80P of the Act on the reason that the assessee, a cooperative credit society is not a bank for the purposes of section 80P(4) of the Act. Thus the order of the Ld.CIT(A) ....