TaxTMI 
TaxTMI 
2015 (6) TMI 409
X X X X Extracts X X X X
X X X X Extracts X X X X
....that the AO while completing the assessment did not examine the claim of assessee for deduction u/s. 80P(2)(a)(i) of the Act, in the light of provisions of section 80P(4) of the Act. According to the CIT, the assessee was a co-operative bank and therefore provisions of section 80P(4) will apply and income of the assessee from providing credit facilities to its members will have to be considered as akin to income from business of banking, not eligible for deduction u/s. 80P(2)(a)(i) of the Act r.w.s. 80P(4) of the Act. 3. The CIT was also of the view that certain interest income were also allowed as deduction u/s. 80P(2)(a)(i) . According to him, interest income was assessable under the head 'income from other sources' and therefo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or the reason of introduction of sub section 4 to section 80P. Section 80P(4) reads as follows:- "(4) The provisions of this section shall not apply in relation to any cooperative bank other than a primary agricultural credit society or a primary cooperative 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 agricu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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 for." 7. The Hon'ble 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 15.1.2014 had to deal with the following question of law:- "Whether the Hon'ble Tribunal is correct in allowing deduction under section 80P(2)(a)(i) to assessee's society even though same is covered under section 80P(4) rws 2(24) (viia) being income from providing credit facilities carried on by a co-operative society with its member?" The Hon'ble Court held as follows: "4. As pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... as eligible 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 deduction 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 Board of Direct Taxes, on the above given subject. 2. In this regard, I have been directed to state that sub-section(4) of section 80P provides that deduction under the said section shall not be allowable to any coITA operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. For the purpose of th....