TaxTMI 
TaxTMI 
2018 (3) TMI 955
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.... bad, both in the eye of law and on facts and legally untenable. b. That the learned CIT(Appeals) holding that, the assessee is not eligible for deduction u/s.80P of the IT Act is arbitrary, erroneous and bad in law. c. That the lower authorities holding that the assessee is a "cooperative bank" and hence deduction u/s. 80P of the IT Act is not admissible is contrary to facts and the express provisions of law, arbitrary, erroneous, bad in law and legally untenable. d. That the assessee does not fall under the purview of Section 80P(4) of the LT.Act and therefore the denial of claim of deduction u/s.80P of the I.T Act by the lower authorities is arbitrary, erroneous, bad, both in the eye of law and on facts and legally untenable. e. That the CBDT Circular relied on by the learned CIT(Appeals) is contrary to the express provisions of law and cannot be applied in the assessee's case. f. Without prejudice to Ground (e) above, in any case, CBDT Circular is neither binding on the assessee nor on the appellate authority ought not be applied in the case of the assessee.. 3. Levy of Interest u/s. 234B and 234D of the Act - Rs. 2,31,3....
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.... other than Primary Agricultural Credit Society and Primary Cooperative Agricultural Development Bank. Accordingly, all cooperative banks including RRBs but excluding Primary Agricultural Credit Society and Primary Cooperative Agricultural Development Bank are not eligible for deduction u/s.80P. The assessee claims that it is only a cooperative society and not a cooperative bank and hence, cannot be denied deduction u/s.80P under sub-section 4(4) of that section. Such a claim is hyper-technical and devoid of any merit. The CBDT has withdrawn the earlier Circular No.319 (supra) and issued a new Circular No.6/2010 dated 20.9.2010 to clarify the effect of amendment of section 80P w.e.f. 1.4.2007. This Circular is reproduced below. "Section 80P of the Income- Tax Act, 1961, provides for a deduction from the income of cooperative societies referred to in that section. 2. As regional rural bank (RRB) are basically corporate entities ( and not cooperative societies ), they were considered to be not eligible e for deduction u/s 80P when the Section was originally introduced. However, as Section 22 of the Regional Rural Bank Act provides that a RRB shall be deemed to be Co....
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....ons and have gone through the orders of the authorities below and found from record that the assessee is a Regional Rural Bank engaged in the activity of banking/financing in the District of Bhopal and Vidisha. Return was filed to claim all deduction u/s 80P in respect of its income. Section 80P, inter alia, provides for a deduction from the total income of the Co-operative societies engaged in the business of banking or providing credit facilities to its members, or business of a cottage industry, or of marketing of agricultural produce of its members, or processing, without the aid of power, of the agricultural produce of its members, etc. After insertion of sub Section (4) of Section 80-P, by Finance Act, 2006, w.e.f. 1.4.2007, this deduction is available only to - 1. Primary Agricultural Credit Society (PACS) 2. Primary Co-operative Agricultural and Rural Development Bank (PCARDB) Further, a new sub-clause (viia) has been inserted in clause (24) of section 2 to provide that the profits and gains of any business of banking (including providing credit facilities) carried on by a co-operative society with its members shall be included in the definition o....
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....tion 80P on the plea that like any other bank, the Coop. Banks are also lending institution and should pay tax on their profits. Accordingly, Coop. Banks were excluded from the scope of Section 80P. xxx xxx xxx ....
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.... (1) The primary object or principal business of which is the transaction of banking business. (2) The paid up share capital and reserves of which are less than one lakh of rupees, and (3) The bye laws of which do not permit admission of any other co-operative society as a member: Provided that this sub-clause shall not apply to the admission of a co-operative bank as a member by reason of such cooperative bank subscribing to the share capital of such cooperative society out of funds provided by the State Government for the purpose: (ccvii) "Central Co-operative bank"(x x x ) primary rural credit society and State Co-operative bank, shall have the means respectively assigned to them in the National Bank for agricultural and rural development Act, 981 (61 of 1981)." Relying on the above Banking Regulation Act, ld A.R. submitted that the assessee's case does not fall under the purview of section 80P(4) of the I.T.Act as co-operative bank, therefore, the denial of claim of deduction u/s.80P of the Act is not sustainable and relied on the judicial decisions as under: i) Pandiaya Gram Bank Vs ACIT (ita No.1941/Mds/2009. ii....