TaxTMI 
TaxTMI 
2019 (1) TMI 740
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....he learned Commissioner of Income-tax [Appeals] is not justified in law in denying the eligible deduction claimed by the appellant under section 80 P [2] of the Act amounting to Rs. 3,02,67,590/- under the provisions of section 80 P [2][a][i] of the Act and under the provisions of section 80 P [2] [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....
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.... 13. For the above and other grounds to be urged during the hearing of the appeal the Appellant prays that the appeal be allowed in the interest of equity and justice. 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 Ac....
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....ntended that Co-operative and Co-operative Societies are 2 different entities. If the co-operative wants to convert itself into a cooperative society, it has to be converted as per the Amending Act 13/2004 which provides conversion of co-operative under the Karnataka Souharda Act, 1997 into Co-operative Society. In the Co-operative Society Act, the Co-operative has also been defined according to which the co-operative means a co-operative registered under the Karnataka Souharda Sahakari Act, 1997 (Karnataka Act 17 of 2000) and includes union co-operative and the federal co-operatives. The learned DR further invited our attention to the Karnataka Souharda Sahakari Act also in which the co-operative word has been defined in clause 2(e) according to which co-operative means a Co-operative including a cooperative bank doing the business of banking registered or deemed to be registered under section 5 and which has the word Souharda Sahakari in its name. In Souharda Sahakari Act, the word co-operative society has also been defined in clause 2(g), according to which the co-operative society means a co-operative society registered under the Karnataka Cooperative Societies Act, 1959. If bo....
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....f to the claim of entitlement and has denied the same having observed that the assessee was engaged in transacting in banking business and thus it is a primary co-operative bank and does not form the second category of co-operative credit societies. When the matter travelled to CIT(A), the CIT(A) has also examined the claim of the assessee in the light of judgment of the Apex Court in the case of Citizen Co-operative Society Ltd., Vs. ACIT (supra), wherein it was held that where the assessee being a co-operative society advances loan to members of general public without any approval from the Registrar of Societies, the activity of the Co-operative Society is in violation of co-operative societies Act and the co-operative credit society was not entitled to deduction under section 80P(2)(i)(a) of the Act. 8. Now, during the course of hearing of the appeals, the learned DR has raised a few valid points which cannot be outrightly ignored. The learned DR has specifically raised an issue that assessee is only a co-operative registered under the Karnataka State Souharda Sahakari Act. Since the assessee is not a co-operative society, it is not entitled/eligible for deduct....
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....on given under Souharda Act. Relevant provisions of section 6 of Souharda Act is extracted hereunder for the sake of reference: "6. Certificate of registration.- (1) Where a Co-operative is registered or deemed to be registered, the certificate of registration duly signed and sealed by the Registrar shall be conclusive evidence that the Co-operative mentioned therein, is a Co-operative registered or deemed to be registered under this Act. (2) Notwithstanding anything contained in the Karnataka Co-operative Societies Act, 1959, when a certificate of registration is issued to a Cooperative after conversion of a Co-operative society into a Co-operative, the registration of such Co-operative society under the Karnataka Cooperative Societies Act, 1959, shall be cancelled by the Registrar with effect from the date of issue of certificate of registration under this Act." 11. Similarly, if the co-operatives intend to convert into co-operative societies, conversion is also possible as per Amending Act 13/2004. In the co-operative societies Act, the word co-operative societies and the Co-operatives has also been defined under section 2(c) and 2 (d)(2), according to....