TaxTMI 
TaxTMI 
TaxTMI 
2016 (4) TMI 1123
X X X X Extracts X X X X
X X X X Extracts X X X X
....09. The return was processed u/s. 143(3) of the Act and the AO assessed the total income as returned by the assessee without making any addition. The ld. CIT, however, exercising his powers u/s. 263 of the Act observed that the assessee had claimed deduction u/s. 80P of the Act. He observed that as per the amendments introduced vide Finance Act, 2006 w.e.f. 1.4.2007, as per sub-section 4 to Sec. 80P, deduction u/s. 80P is not available to the assessee society not being an agricultural co-operative society. He show caused the assessee in this respect. In reply, the assessee submitted that the assessee society was a co-operative credit society and not a co-operative bank, and thus was entitled to deduction u/s. 80P of the Act. The assessee in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he rival contentions. The controversy in this case revolves around the provisions of Sec. 80P(4) of the Act which read as under : "80P(4) The provisions of this section shall not apply in relation to any co-operative bank other than primary agricultural credit society or a primary co-operative agricultural and rural development bank." 6. The ld. AR has further invited our attention to the objects of the society which reads as under : "1. To encourage and promote habit of thrift, self-help and co-operation among the members. 2. To accept deposit from members. 3. To provide credit facilities to its members. 4. To manage and protect properties of the Society. 7. The ld. AR has thus contended that the assessee co-operative soci....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and perused the material on record, it is pertinent to mention that the only issue arising out of both the appeals relate to the allowability of the exemption/deduction claimed by the assessee u/s 80P of the Income Tax Act. The allowability of exemption of the said income depends on whether the assessee/cooperative credit society is a co-operative bank or not for the purposes of section 80P(4) of the Act since according to the said provision, deduction under section 80P shall not be available to any co-operative bank other than primary agricultural society or primary co-operative agricultural and rural development bank. 4.1 It is the case of the Revenue that the assessee has been functioning as a cooperative bank and by virtue of section....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tained from the Reserve Bank of India and in the assessee's case, there is no such license obtained for commencing any banking business. The mere fact that the assessee has been providing credit facilities to its members and thereby earns interest and dividend cannot make the 'society' into a 'bank' for the purposes of section 80P(4) of the Act. If the intention of the legislature was not to grant deduction to cooperative societies carrying on the business of providing credit facilities to its members, then this section would have been deleted. This proposition is supported by various decisions including the decision of the Gujarat High Court in the case of CIT Vs. Jafari Momin Vikas Cooperative Credit Society Ltd and th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....advance loans only to the members. Hence the business activities are restricted to members and hence it can be termed as a mutual association/self help group. Co-operative Banks can accept deposits from public. However, unlike Co-operative credit societies they can advance loans to the members only. 4 Co-operative Credit Societies cannot accept deposits from public. Co-operative can accept deposits from public. 5 The provisions of Banking Regulation Act 1949 are not applicable to the Co-operative Credit Societies. The provisions of Banking Regulation Act 1949 are applicable to the Co-operative Bank. 6 The Co-operative Credit Societies do not required license from Reserve Bank of India to carry on its business. The Co-operat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ties have the power to consider the claim not made in return of income. The Hon'ble Bombay High Court while deciding so, has considered the judgment of the Hon'ble Apex Court in the case of Goetze India Ltd. (supra). In view of that matter, the Ld.CIT(A) giving relief to the assessee at the appellate stage on the claim of deduction not made in the return of income is justified. 4.6 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 orders of the Ld.CIT(....