TaxTMI 
TaxTMI 
2018 (8) TMI 1063
X X X X Extracts X X X X
X X X X Extracts X X X X
....by the appellant under section 80 P [2] of the Act amounting to Rs. 2,85,81,740/- under the provisions of section 80 P [2][a][i] of the Act and under the provisions of section 80 P L2] [d] of the Act being the interest earned by the appellant on the facts and circumstances of the case. 4. The learned Commissioner of Income-tax [Appeals] failed to appreciate that the appellant is not a Co-Operative Bank within the meaning of Part - V of the Banking Regulation Act, 1949, to which the Explanation to section 80 P [4] of the Act draws reference and consequently, the provisions of section 80 P [4] of the Act are not applicable to the case of the appellant. 5. The learned Commissioner of Income-tax [Appeals] failed to appreciate that the provisions of section 80P of the Act allows "the whole of the amount of profits and gains of business attributable to any one or more of such activities" in making a claim of deduction, on the facts and circumstances of the case. 6. The learned Commissioner of Income-tax [Appeals] is not justified in holding that the activities of the appellant was not restricted to its members on mere suspicion, to hold that the appellant was not eligible to cla....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2. Though various grounds are raised but they all relate to the claim of deduction under section 80P(2) of the Income Tax Act (hereinafter called as an 'Act'). 3. The facts in brief borne out from the order of authorities below are that assessee raised a claim of deduction under section 80P(2) of the Act, but the same was disallowed by the AO on the ground that principal business of the assessee is transacting in banking business and its paid up capital is more than Rs. 1 lakh, therefore, it is a primary co-operative bank and does not fall under the second category of co-operative credit societies as envisaged in section 80P of the Act. While holding so, the AO has also relied upon the judgment of the Apex Court in the case of Totgars Co-operative Sale Society Ltd., Vs. ITO in appeal No. 1622 to 1629 of 2010 wherein it was held that interest earned by co-operative societies on surplus funds invested in short term deposits in banks and in government securities are not eligible under section 80P of the Act. 4. The assessee preferred an appeal before the CIT(A) and CIT(A) confirmed the disallowance made by the AO. While adjudicating the grounds raised by the assessee, the CIT(A) ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Acts are read jointly, it would be very clear that the co-operative and co-operative Societies are two different entities and as per the certificate filed by the assessee, the assessee is a co-operative and not a co-operative society. The benefit of deduction can only be given to the co-operative societies and not to the co-operative. Therefore, the assessee is not even eligible to claim deduction under section 80P(2) of the Act. 6. The learned Counsel for the assessee on the other hand has contended that this objection was never raised by the lower authorities and they have denied deductions on different aspects. Therefore, the learned DR cannot raise such ground in second appeal by challenging the entire claim of entitlement of deduction on different aspects. The learned Counsel for the assessee further contended that assessee has been assessed as a Udaya Souharda Co-operative Society, therefore it makes no difference whether it was registered under the Karnataka Co-operative Societies Act or Karnataka Souharda Sahakari's Act, 1997. He has been assessed as a co-operative society in last so many years therefore, the Revenue cannot question the identity of the assessee. The lear....
X X X X Extracts X X X X
X X X X Extracts X X X X
....his argument was raised first time before the Tribunal at this stage, but when it is a legal argument and goes to the root of the case, it cannot be outrightly ignored. Therefore, we have to examine the argument raised by the learned DR in this regard. Under section 80P, the deduction is to be allowed only to the co-operative societies as per sub section 1 of the Act. In the entire section 80P, the word used is only a "cooperative societies" and no where reference was made to the co-operatives. 9. Presently we are concerned with the Karnataka and the Karnataka State has notified Karnataka Co-operative Societies Act, 1959 as well as the Karnataka Souharda Sahakari Act, 1997 and even at present both the Acts are in force simultaneously. Under the Karnataka Co-operative Societies Act, the Co-operative Societies are registered and under the Karnataka Souharda Sahakari Act, only Co-operatives are registered. The object of introducing the Karnataka Souharda Sahakari Act has been given in Act 17/2000, Amending Act 21/2004, Amending Act 16/2005, Amending Act 4/2013, Amending Act 34/2014, Amending Act 24/2016 and Amending Act 8/2017. Through various amendments, the scope of Souharda Sahaka....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ties Act and the co-operative means co-operative registered under the Karnataka Souharda Sahakari Act, 1997. Therefore, from careful reading of both the sections, it is abundantly clear that the co-operative and the co-operative societies are 2 different entities though their conversion from one to other is possible as per provisions of the respective Act. 12. We have also carefully examined the certificate of registration granted to the assessee and we find that assessee was registered as a co-operative under the name Udaya Souhardha Pattina Co-operative Limited and not as a co-operative society. Though the registration certificate was granted by Joint Registrar, Co-operative Societies, Bengaluru but it makes no difference as a Joint Registrar may be same for co-operative societies and co-operatives. For the sake of reference, we extract the certificate of registration granted as under: "GOVT OF KARNATAKA CO-OPERATIVE SOCIETY SL.NO.GRB: RGN: 69:148 2003-04 DATED:13.2.2004 CERTIFICATE OF REGISTRATION I, Basavegowda, Joint.Registrar of Co....