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2017 (3) TMI 1037
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....claimed deduction under section 80P at Rs. 35.64 lakhs. The AO issued a notice asking the assessee as to why deduction under section 80P should not be disallowed considering the provisions of section 80P(4)inserted with effect from 01/04/2007. After considering the submission of the assessee, dated 19/10/2012, the AO held that the assessee fulfilled the condition laid down under section 56(c)(ccv) of part V of the Banking Regulation Act, 1949, that it was a primary co-operative bank, that the basic objective of the assessee was to engage in carrying on the business of banking or providing credit facilities to its members, that the assessee fell in the category of a primary cooperative bank, that the provisions of section 80P (4) were applicable. He referred to the cases of Kekri Sahakari Bhumi Vikas Bank Ltd.(54 SOT64)and Kerala State Co-Operative Agricultural Rural Development Bank Ltd. (139TTJ585). Finally, he held that the assessee was a cooperative bank other than a primary agricultural that the society or a primary co-operative agricultural and rural development bank, that deduction claimed by it for Rs. 35, 64, 509/-was to be disallowed and to be added back to its total incom....
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....ral and rural development activities, that it was also not a Primary Co- Operative Agricultural and Rural Development Bank, that the provisions of section 80P could not be applied to the assessee, that it is a corporative society, that it was not providing credit facilities to any person other than its members, that assessee was eligible for deduction under section 80P read with section 80P(2)(a)(i) of the Act, that the cases relied upon by the AO were distinguish - able on facts. 3.2. He further held that the deduction under section 80P(2)(a)(i)was to be restricted to the business income of the assessee from the business of income or providing credit facility to the members, that the interest income of the assessee from fixed deposits and bank, to the extent of fixed was of stated is funds, could not be said to be business income of the assessee from its activity of business of banking or providing credit facility to its member. He observed that reserves of the assessee for the year under appeal were of Rs. 1.24 crores. Referring to the section 65 of Maharashtra Cooperative Societies Act, he held that the reserve funds were to be utilised as per the provisions of the said Act w....
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....1, 14, 64, 254/- by holding that the assessee being Co- operative Credit Society is not a Co-operative bank and hence is entitled for deduction u/s 80P of the I.T. Act." 3. The assessee before us is a Co-operative society, which is, inter alia, engaged in the business of providing credit facilities to its members. For the assessment year under consideration i.e. assessment year 2009-10, it filed a return of income declaring total income at Nil on account of claim of exemption u/s 80P of the Act. In the revised return of income filed by the assessee, the gross total income as per the Income and Expenditure Account was declared at Rs. 1, 14, 64, 524/-, which was also claimed as exempt in terms of section 80P of the Act and accordingly, the returned income was declared at Nil. 4. In the course of assessment proceedings, the Assessing Officer show-caused the assesee as to why the claim of exemption u/s 80P of the Act be not disallowed in view of the provisions of subsection (4) of section 80P of the Act, inserted w.e.f 01.04.2007. In terms of sub-section (4) of section 80P of the Act, the provisions of section 80P of the Act were made inapplicable to a Co-operative Bank other tha....
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....80P(4) of the Act since according to the said provision, deduction under section 80P shall not be available to any cooperative 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 80P(4), the assessee is not entitled for the benefit of section 80P and also the assessee is not coming within the purview of primary agricultural society or primary co-operative agricultural and rural development bank. It is the case of the assessee that it is not a cooperative bank but only a cooperative society to which clause (4) of section 80P is not applicable. 4.2 In this connection, it is pertinent to mention that the assessee has brought on record before the lower authorities, the letter of the CBDT bearing No. F. No. 133/06/2007-TPL dated 09.05.2008 addressed to the Delhi Urban T&C Society Ltd., stating that for the purposes of subsection 4 of section 80P, 'cooperative bank' shall have the same meaning as assigned to it in part V of the Banking Regulation Act 1949, according to which 'coopera....
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.... the Hon'ble Apex Court in the case of Goetze India Ltd. [284 ITR 323 (SC) (2006)], it is pertinent to mention that the Hon'ble Bombay High Court in the case of the CIT Vs. Pruthvi Brokers and Shareholders P. Ltd. [(2012) 349 ITR 336 (Bom)] has held that the appellate authorities have the power to consider the claim not made in return of income. The Ho'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(A) dated 11.02.2011 and 29.11.2011 for the Assessment Years 2007-08 and 2008- 09 respectively are upheld. 7. Following the aforesaid precedent, which has been....
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....3, 32, 886/-. He observed that the assessee being a cooperative credit society is entitled to deduction u/s.80P(2)(a)(i) in respect of income attributable to providing credit facility to its member and interest income from other cooperative society u/s.80P(2)(d). However, from the details furnished by the assessee he noted that there is interest income from other investment in other than cooperative bank which is not deductible u/s.80P(2)(a)(i). From the details furnished by the assessee he noted that the interest income from banks shown at Rs. 83, 32, 886/- includes interest income of Rs. 36, 15, 925/-, the details of which are as under : Sl.No. Particulars Amount 1. UTI bank FDR Interest Rs.91, 303/- 2. Kotak Mahindra Rs.1, 79, 208/- 3. ICICI Bank Rs.4, 74, 926/- 4. State Bank of India Rs.19, 64, 302/- 5. Other (Misc. Bank) as per details given by the assessee without giving the bank name Rs.9, 06, 186/- TOTAL Rs.36, 15, 925/- 3.1 Relying on the decision of Hon'ble Supreme Court in the case of Totogar's cooperative sales society Vs. ITO reported in 322 ITR 283 he held that the interest from....
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.... u/s.80P(2)(a)(i) as under: Head of income Amount of income Interest at43.43% Net income not Eligible deduction u/s.80P 1) Interest from banks other than Co-op Bank 36, 15, 925 17, 70, 396 18, 45, 529 2) Interest on Mutual funds 23, 21, 994 10, 08, 442 13, 13, 552 3) Long Term Capital Gain 22, 72, 278 9, 86, 850 12, 85, 428 4) Short Term Capital Gain 22, 70, 597 9, 86, 120 12, 84, 477 Total 1, 04, 80, 794 47, 51, 808 57, 28, 986 The A.O. held that the above income is not attributable to the activity of the society namely business of providing credit facilities to its members and hence income from the said activity is not profit and gains of its business but the said income is "income from other sources" not eligible for deduction u/s. 80P(2)(a)(i) of the IT. Act. 4. Before the Ld. CIT(A) the assessee strongly argued that the decision relied on by the Assessing Officer in the case of Totogar's Co-op Society Ltd. (Supra) is distinguishable and not applicable to the facts of the present case. XXXXX 7. B....
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....i) on account of interest from banks other than cooperative banks, interest on mutual funds long term and short term capital gain on mutual funds etc. While doing so, he held that the decision in the case of Totagar's Cooperative Sale Society Ltd. (Supra) is not applicable to the facts of the present case since in that case the amount invested in short term deposits and securities was not out of interest bearing deposits collected from members but out of sale proceeds of agricultural produce of farmer members marketed by the society. Further, the Hon'ble Apex Court has considered only the latter part of section 80P(2)(a)(i), i.e. income of a cooperative society engaged in providing credit facilities to its members is eligible for deduction and has not considered the earlier part of section 80P(2)(a)(i), i.e. income of a cooperative society engaged in carrying on the business of banking is eligible for deduction. 11.1 We find the Ahmedabad Bench of the Tribunal in the case of M/s. Jafari Momin Vikas Cooperative Credit Society Ltd. (Supra) after considering the decision of Hon'ble Supreme Court in the case of Totagar's Cooperative Sale Society Ltd. (Supra) has obse....
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....re the assessing officer, it was argued by the assessee(s) that it had invested the funds on short term basis as the funds were not required immediately for business purposes and, consequently, such act of investment constituted a business activity by a prudent businessman; therefore, such interest income was liable to be taxed under section 28 and not under section 56 of the Act and, consequently, the assessee(s) was entitled to deduction under section 80P(2)(a)(i) of the Act. The argument was rejected by the assessing officer as also by the Tribunal and the High Court, hence, these civil appeals have been filed by the assessee(s)." 19.2 From the above, it emerges that - (a) that assessee (issue before the Supreme Court) had admitted before the AO that it had invested surplus funds, which were not immediately required for the purpose of its business, in short term deposits; (b) that the surplus funds arose out of the amount retained from marketing the agricultural produce of the members; (c) that assessee carried on two activities, namely, (i) acceptance of deposit and lending by way of deposits to the members; and (ii) marketing the agricultura....
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....Hon'ble jurisdictional High Court in the case of CIT v. Manekbang Co-op Housing Society Ltd reported in (2012) 22 Taxmann.com 220(Guj) has been kept in view while deciding the issue." 11.2 We find the Cochin Bench of the Tribunal in the case of Muttom Service Cooperative Aplappuzha Bank Ltd. Vs. ITO (Supra) after considering the decision of Hon'ble Supreme Court in the case of Totagar's Cooperative Sale Society Ltd. (Supra) and various other decisions has observed as under : "5. We have considered the rival submission on either side and also perused the material available on record. We have also carefully gone through the order of the lower authority. No doubt, the latest judgment in Totgar's Co-operative Sale Society Ltd vs ITO (supra), the Apex court found that the deposit of surplus funds by the co- operative society is not eligible for deduction u/s 80P(2). In the case before the Apex Court in Totgar's Co-operative Sale Society Ltd vs ITO (supra), the assessee co- operative society was to provide credit facility to its members and market the agricultural produce. The assessee is not in the business of banking. Therefore, this Tribunal is of the o....