2014 (12) TMI 380

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....eduction u/s.80P(2)(a)(i) of the Act. The Assessing Officer did not allow the deduction u/s.80P(2)(a)(i) of the Act and rejected the application filed by the assessee by passing order u/s.154 of the Act. 3. The matter was carried before first appellate authority, wherein the various contentions were raised on behalf of assessee and having considered the same, the CIT(A) on the point of rectification, had observed that the tax base software has been recently developed and usage of the same requires lot of expertise and any small clerical mistake in making data entry may result into incorrect filing of e-return. Further, as the software was recently developed, there were bound to be some technical errors in programming of the same and hence though the deduction was not allowed in the e-return prepared resulting into tax demand, in the acknowledgement of e-return generated by the software resulted into Nil demand as the deduction has been allowed. Therefore, the said mistake was found rectifiable by the CIT(A) while allowing the assessee's claim. The similar view has been taken by ITAT Mumbai Bench in the case of Shrikant Real Estates (P.) Ltd. v. ITO Mumbai (2012) 26 Taxmann.c....

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....0,000/- etc. (7) The report of Madhavarao Committee 1999 formed by RBI supports the view that primary credit co-operative societies automatically becomes a primary co-operative bank and hence it has to apply to RBI for a licence to carry on banking business but it can carry on banking business until it is granted a licence or notified that a licence cannot be granted to it. (8) The appellant is carrying on the banking activity as defined in section-5 of the Banking Regulation Act as per which "Banking means the accepting for the purpose of lending or investment of deposits of money from the public repayable on demand or otherwise and withdrawal by cheque, draft order or otherwise." However, the term transaction in banking business will include not only the business enumerated in section 5B of Banking Regulation Act, 1949 but also those activities." 3.1 In this regard, the stand of the assessee to support his claim for deduction u/s.80P(2)(a)(i) of the Act was as under: "(1) In view of amendment to sub-section-4 of section 80P inserted w.e.f. 1st April, 2007 by Finance Act, 2006 deduction u/s 80P(2) would not be allowable to a co-operative ban, however, the deduction u/s....

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....s of banking, and no co-operative society shall carry on its business of banking in India unless it uses as part of its name at least one of such words. The assessee is not using these words and hence it cannot be treated as bank. (6) After insertion of section 80P vide Finance Act, 2006, subsequently Finance Act, 2007 amended the provisions of section 36(l)(viia) also with retrospective w.e.f. 01/04/2007. CBDT Circular no.3/2008 dated 12/03/2008 amplifies the reasoning for the amendment in Para 20.2 states that the deduction earlier allowable under section 80P in the case of a co-operative society engaged in carrying on the business of banking (co-operative banks) has been withdrawn from assessment year 2007-08 barring in the case of primary agricultural credit society or a primary co-operative agricultural and rural development bank, paragraph 20.3 state that since profit of co-operative banks have become taxable after withdrawal of SOP deduction, the Finance Act, 2007 has amended sub-clause (a)(viia) of sub-section (1) of section 36 to allow deduction in respect of any provision for bad and doubtful debts to a co-operative bank other than a primary agricultural credit society....

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....) (b) ...." 3.3 In view of the above explanation, the co-operative bank shall have the meaning stated in part V of the Banking Regulation Act, 1949. According to section 56 of the Banking Regulation Act, "co-operative bank" means a State Co-operative Bank, a Central Co-operative and a Primary Co-operative Bank. In view of the above provision in part-V of the Banking Regulation Act, 1949 it is obvious that co-operative society is not regarded as "co-operative bank". It has also been laid down section 56(ccii) in part-5 of Banking Regulation Act, that "Co-operative Credit Society" means a co-operative society, the primary object of which is to provide financial accommodation to its members and includes a co-operative land mortgage bank. In view of this provision, it is obvious that the meaning of co-operative credit society is separately given and it does not include co-operative bank other than co-operative land mortgage bank. 3.4 Further, CBDT circular bearing No.3/2008 dated 12.03.2008 also makes it clear that the amendment to section 80P(4) has withdrawn the deduction u/s 80P in respect of co-operative banks. Further, the amendment to section 36(1)(viia) by Finance Act, ....