TaxTMI 
TaxTMI 
TaxTMI 
2016 (3) TMI 322
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.... ITA No.11/PNJ/14-15, dated 24/08/2015, ITA No.388/CIT(A)PNJ-1/14-15 dated 26/08/2015, ITA Nos. 298, 299 & 13/PNJ-1/14-15 dated 26/08/2015 and ITA Nos.439 & 440/CIT(A)PNJ-1/14-515 dated 26/08/2015. 2. The sole issue involved in these appeals is that the Commissioner of Income Tax (Appeals) erred in allowing deduction to the assessee under sec. 80P(2)(a)(i) of the Income Tax Act, 1961. 3. The facts of the case, in brief, are that the assessee filed its return of income at NIL after claiming deduction under sec. 80P(2)(a)(i) of the Act. It was claimed that the society is entitled to deduction under sec. 80P(2)(a)(i) as it was a Cooperative Society carrying on the business of banking or providing credit facilities to its members. However, th....
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.... a Central Cooperative Bank and a Primary Cooperative Bank. Admittedly, the appellant is not a State Cooperative Bank, a Central Cooperative Bank Thus what has to be examined is whether the appellant is a Primary Cooperative Bank as defined in Para V of the Banking Regulation Act. Section 5(ccv) of the Banking Regulation Act defines a primary cooperative bank to mean a cooperative society which cumulatively satisfies the following three conditions: 1) Its principal business or primary object should be banking business of Banking, 2) Its paid up share capital and reserves should not be less that rupees one lakh. 3) Its bye-laws do not permit admission of any other cooperative society as its member. It is accepted position that condit....
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....s a gloss added in the impugned order as it is not found in Bye law 43. It is undisputed that the transactions with non members are insignificant/miniscule. On the above basis it cannot be concluded that the appellant's, principal business is of accepting deposits from public and therefore it is in banking business. In fact, the impugned order erroneously relies upon bye-law 43 of the society which enables the society to receive deposits to conclude that it can receive deposits from public. However, the impugned order relies upon bye-law 43 to conclude that it enables the appellant to receive deposits from any person is not correct. Thus in the present facts the findings that the appellant's principal business is of Banking is perve....
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....mitting a society to its membership and one of three cumulative conditions precedent to be a primary cooperative bank is not satisfied. However the impugned order construed the amended clause 9(d) of the appellant's bye laws to mean that it only permits a society to be admitted to the membership of the appellant and not a co-operative society. According to the impugned order, a society and a co-operative society are clearly words of different hand distinct significance and the membership is only open to society and not to a co-operative society. As rightly pointed out on behalf of the appellant the word society as referred to bye law 9(d) would include the co-operative society. This is so as the definition of a society under the Co-oper....
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....e non-members are concerned the benefit of Section 80P of the Act would not be available. In the above view of the matter, at the time when effect has been given to order of this Court, the authorities under Act would restrict the benefit of deduction under section 80P of the Act only to the extent that the same is earned by the appellant in carrying on its business of providing credit facilities to its members. Accordingly, the substantial question of law as framed is answered in the negative i.e.in favour of the appellant and against the respondent-revenue. In view of the decision of the Hon'ble High Court, the AO is directed to allow the deduction u/s.80P to the appellant. The appeal is allowed." 5. The Departmental Representative....