TaxTMI 
TaxTMI 
TaxTMI 
2017 (10) TMI 58
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....e aggregating to Rs. 21,40,550/- which was earned by the assessee on the deposits placed with Co-operative Banks. 4. Brief facts of the case are that the assessee filed return of income on 11.8.2010 declaring total income at NIL. Thereafter the case was selected for scrutiny under CASS and the statutory notices u/s 143(2) and 142(1) were issued and served upon the assessee. The AO, during the course of assessment proceedings, noticed that the assessee has earned an income from other sources comprising and interest and dividend of Rs. 21,40,605/- and miscellaneous income of Rs. 5150/-. The AO further noted that the assessee has claimed deduction u/s 80P(2)(d) of the Act in respect of interest and dividend earned from the deposits held in the Co-operative Banks which is not a co-operative society. The AO observed that the deduction in respect of the interest and dividend earned from co-operative society is exempt and not from coop banks in view of the amendment brought by the Finance Act, 2006 inserting sub-section 4 restricting the deduction for Co-operative banks on the ground that the Co-operative banks which do not enjoy any tax benefit. Accordinly to the AO section 80P(2)(d) of....
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....'ble Supreme Court, Jurisdictional High Court and Co-ordinate Benches of the Tribunal and therefore the provisions of sub-section 4 as inserted by Finance Act, 2006 under section 80P(2)(d) of the Act were not applicable to the present case. The ld. AR took us through the Circular No.14/2006, dated 28.12.2006 issued by the BCDT which is placed in the paper books of the assessee and forming part of this record, which deals with the Finance Act, 2006-Explanatory Notes on provisions relating to direct taxes. The ld. AR also took us through the relevant para 22 which deals with withdrawal of tax benefits available to certain co-operative banks. The ld. AR in defense of his arguments relied on following deisions : a) The Citizen Co-operative Society Ltd V/s ACIT -Civil appeal no. 10245 of 2017 arising out of SLP( C ) No.20044 of 2014 (SC) dated 8.8.2017; b) ACIT V/s M/s Bajaj Auto Ltd in ITA No.1047/PN/2012 (AY-2009-10) dated 26.8.2013; c) ACIT V/s M/s Janata Grahak Madhyavarti Sahakari Sangh Maryadit in ITA No.573/PN/2013 (AY-2009-10) dated 27.11.2013; d) Sindhudurg Zilla Madhyamik Adhyapak Sahakar Patpedhi Maryadit, in ITA No.1825/PN/2013 (AY-2010-11) dated 24.9.2014; e) ITO V/s M....
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....rative Vs. ITO (supra) is against the assessee as interest received on deposits with Aurangabad District Central Co-operative Bank cannot be said to be the income derived from providing credit facilities to its members. We, accordingly, answer the ground taken by the revenue. But, finally we have confirmed order of Ld. CIT(A) giving relief to the assessee u/s. 80P(2)(d). 6. In the result, the revenue's appeal is dismissed." In the case of M/s Janata Grahak Madhyavarti Sahakari Sangh Maryadit (supra) it has been held as under : "2. At the outset of hearing, learned Authorized Representative pointed out that this issue is covered in favour of assessee by the decision of ITAT, Pune B Bench in ITA No.1047/PN/2012 in the case of ACIT Vs. M/s. Bajaj Auto Ltd. Employees Co-op. Credit Society Ltd., wherein the Tribunal has decided the issue in favour of the assessee by observing as under: "4. We have heard the Ld. DR. None was present for the assessee. We have also perused the order of the authorities below. In our opinion so far as the amount of interest received on the deposit with Aurangabad District Central Co-operative Bank is concerned the Assessing Officer has not properly a....
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....and not from other sources as rightly held by CIT(A). We uphold the same. 3. In the result, appeal filed by revenue is dismissed." In the case of Sindhudurg Zilla Madhyamik Adhyapak Sahakar Patpedhi Maryadit (supra), it has been held : "7. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. The Ist dispute in the grounds of appeal is regarding the allowability of deduction u/s.80P(2)(d) in respect of interest income of Rs. 31,77,452/- and dividend income of Rs. 5,41,667/- received by the assessee cooperative society on investment made in deposits/savings accounts and shares of Sindhudurg Central Cooperative Bank. According to the Assessing Officer the deduction is allowable u/s.80P(2)(d) in case of a cooperative society for receiving any interest or dividend income from any other cooperative society. Since the same has been received from a cooperative bank which isdistinct from a cooperative society, therefore, the assessee is not entitled to the same for which he disallowed the claim of deduction....
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....y or a primary co-operative agricultural and rural development bank w.e.f. the A.Y. 2007-08. The said provision is applicable to the Aurangabad District Central Co-operative Bank (ADCCB) in which the assessee society has kept deposit. The withdrawal of deduction by insertion of Sub-section (4) of Sec. SOP does not change "status" of Aurangabad District Central Co-operative Bank "as a co-operative society which is contemplated in Sec. 80P(1) of the Act. We, therefore, hold that the interest received on the deposit with the Aurangabad District Central Co operative Bank by the assessee on the deposits are squarely covered u/s. 80P(l)(d) and the interest received on deposit kept with the Aurangabad District Central Cooperative Bank is an allowable deduction. So far as the finding of the Ld. CIT(A) that the provisions of Sec. 80P(2)(a)(i), in our opinion the decision of the Hon'ble Supreme Court in the case of Totagars Cooperative Vs. ITO (supra) is against the assessee as interest received on deposits with Aurangabad District Central Co-operative Bank cannot be said to be the income derived from providing credit facilities to its members. We, accordingly, answer the ground taken by....
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....are of the opinion that the decision taken by the CIT (A) is fair and reasonable and it does not call for any interference. Accordingly, ground no.1 raised by the Revenue is dismissed. Rest of the grounds ie Ground no.2, 3 and 4 are argumentative in nature and therefore, they need no special adjudication. Accordingly, the same are dismissed as academic. 7. In the result, appeal of the Revenue is dismissed". In the case of Quepem Urban Co-op. credit soc.ltd it has been held : "Section 80P provides deduction in support of income of co-operative societies. Sub-section (1) allows deduction to Co-operative Society to the extent its gross income includes any income referred to in sub-section (2) in computing its total income. Sub-section (2) refers to various incomes to which the deduction under sub-section (1) is available. In this case, the court is concerned with clause (a)(i) of sub-section (2), which refers to a co-operative society engaged in carrying on banking business or providing credit facilities to its members. Thus the deduction is available on either of the two activities i.e., banking business or providing credit facilities to its members. The court is not concerned wit....
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.... consideration is whether the appellant satisfies condition no. (1) and (3) above. The impugned order after referring to the definition of 'Banking Business' as defined in section 5b of the Banking Regulation Act, held that the principal business of the appellant is Banking. Section 5b of the banking regulation Act defines banking to mean accepting of deposits for the purpose of lending or investment, of deposit of money from the public repayable on demand or otherwise. The impugned order juxtaposes the above definition with the finding of fact that the appellant did deal with non-members in a few cases by seeing deposits. This read with Bye-law 43 leads to the conclusion that it is carrying on banking business. This fact of accepting deposits from people who are not members has been so recorded by the Commissioner (Appeals) in his order dated 15-7-2014. Before the Tribunal also the appellant did not dispute the fact that in a few cases they have dealt with non-members. However so far as accepting deposits from non-members is concerned it is submitted that the Bye-law 43 only permits the society to accept deposits from its members. It is submitted that Bye laws 43 does not ....
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....s only open to society and not to 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-operative Act is co-operative society registered under the Co-operative Act. Besides the qualifying condition 3 for being considered as a primary Cooperative bank is that the bye laws must not permit admission of any other cooperative society. This is a mandatory condition i.e. the bye-laws must specifically prohibit admission of any other co-operative society to its membership. The revenue has not been able to show any such prohibition in the bye-laws of the appellant. Thus even the aforesaid qualifying condition (3) for being considered as a primary co-operative bank is not satisfied. Thus, the three conditions as provided under section 5(cvv) of the Banking Regulation Act, 1949, are to be satisfied cumulatively and except condition (2) the other two qualifying conditions are not satisfied. Ergo, appellant cannot be considered to be a co-operative bank for the purposes of section 80P(4). Thus, the appellant is entitled to the benefit of d....