TaxTMI 
TaxTMI 
2017 (9) TMI 564
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....s of appeal filed by the assessee read as under: - 1. The Ld. CIT(A) erred in law and facts in confirming the disallowance of claim of deduction of interest on deposits with co-operative banks (co-operative society) of Rs. 1,23,30,631/- u/s 80P(2)(d) of the Act. The reasons given by him for doing so are wrong, contrary to the facts of the case and provisions of law. 2. The Ld. CIT(A) erred in confirming the disallowance of claim u/s 80P(2)(d) of interest received by the assessee (co-op. society) from another co-op. society (co-op. bank) on the basis of irrelevant case laws and decisions in the case of SBI employees co-op. credit society Ltd. and Saidatta co-op. credit society Ltd (Remanded). 3. The Ld. CIT(A)/ AO erred in law and f....
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.... Co-operative Societies Act 1960 and therefore, it should be treated as a co-operative society for the purpose of allowing deduction u/s 80P(2)(d) in the hands of the assessee." However, the AO was not convinced with the above explanation of the assessee because vide Finance Act, 2006, deduction from income of co-operative bank as per provisions of section 80P of the Act has been withdrawn by way of insertion of section 80P(4) w.e.f. 01.04.2007 by way of differentiating a co-operative bank from a co-operative society. The AO also has observed that the very basis of functioning of any co-operative society would be the principle of mutuality, which is not satisfied in the case of interest earned by the assessee from the co-operative bank. The....
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....) 57 taxmann.com 367 and Shri Saidatta Co-operative Credit Society Ltd. vs. ITO in ITA No. 2379/Mum/2015 for AY 2010-11 dated 15.01.2016 and confirmed the disallowance of Rs. 1,23,30,631/- made by the AO u/s 80P (2)(d) of the Act. 5. Before us, the Ld. Counsel of the assessee submits that the co-operative society is defined u/s 2(19) of the Act and the same reads as under: "2(19) - "Co-op. Society means a co-operative society registered under the Co-op. Societies Act, 1912 (2 of 1912) or under any other law for the time being in force in any state for the registration of co-operative societies". He states that the co-operative banks in Maharashtra are registered as co-operative societies under Bombay/ Maharashtra Co-operative Act, ....
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....'co-operative society' referred in section 80P(2)(d) of the Act. 7.1 We are of the considered view that the primary objects of any society are prescribed in the bye laws. In order to become a bank, the principal business of the co-operative society should be transaction of banking business. A perusal of the audited accounts would indicate the same. The first and foremost requirement in India to do business of banking is to obtain a licence from the Reserve Bank of India (RBI). Without a valid licence from RBI, nobody can do business of banking. Also Urban Co-operative Bank is known as Primary Co-operative Bank. It is a bigger entity and fall under the 'Banking Regulation Act'. It is also regulated by State Government and RBI. Primary Co-....