TaxTMI 
TaxTMI 
2012 (11) TMI 1282
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....rs only. It was argued that the provisions of Banking Regulation Act 1949 are not applicable to the assessee, there is no control or supervision of the RBI and there is no cheque clearing facility available to the assessee. Therefore, it is not a Co-op Bank but a Co-op Society engaged in providing credit facilities to its members and, therefore, is entitled to claim deduction u/s.80(P)(2)(a)(i). 3. However, the Assessing Officer was not convinced with the explanation given by the assessee and held that the assessee credit co-op society is not entitled to deduction u/s.80P(2)(a)(i) for the following reasons (which has been summarised by the CIT(A) at pages 2 and 3 of his order): (i) The appellant credit co-operative is a primary co-operative bank as per explanation below sub-section 4 of section 80P and hence not eligible to claim deduction u/s.80P(2)(a)(i) of the I.T.Act. (ii) The clause (viia) inserted in section 2(24) by the Finance Act, 2006 to provide that the profits and gains of business of banking includes income of credit co-operative societies from providing credit facilities to its members. (iii) The amendment to section 80P(4) by Finan....
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....by the assessee. While doing so, he considered the amendment to section 80P(4) by the Finance Act, 2006 w.e.f. 01.04.2007, the Banking Regulation Act, 1949, the CBDT Circular bearing No.2 of 2008 dated 12.03.2008 and the CBDT Clarification bearing F.No.133/06/07-TPL vide letter dated 09.05.2008. 4.1. Aggrieved with such order of the CIT(A), the Revenue is in appeal before us with the following grounds: (i) The learned CIT(A) has erred in deleting the addition made by the AO at Rs. 19,21,180/- on account of disallowance of deduction u/s.80P(2)(a)(i) of the I.T. Act, 1961. (ii) The learned CIT(A) has erred in not considering the fact that as per insertion of clause (viia) to sec.2(24) w.e.f. 01.04.2007, the profits and gains of any banking business (including providing of credit facilities) carried on by a cooperative society with its members is included in the definition of income. (iii) The learned CIT(A) has not appreciated the fact that as per the provisions of sub-section 4 of section 80P deduction shall not be available to any cooperative bank other than a cooperative agricultural credit society or a primary cooperative agricultural and rural devel....
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....ts on record, the assessee is a Cooperative Credit Society. Section 80P has undergone an amendment w.e.f.1.4.2007 by insertion of Sub-sec. (4) which reads as under : "(4) The provisions of this section shall not apply in relation to any cooperative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. Explanation - For the purpose of this sub-section,- (a) "co-operative bank" and "primary agricultural credit society" shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949); (b) "primary co-operative agricultural and rural development bank" means a society having its area of operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities." 5. It is to be mention here that up to A.Y. 2006-07, any Cooperative Society which was engaged in the business of carrying on banking was eligible for deduction in respect of the whole of the amount of profit attributable to its banking activities. For the benefit of deciding the p....
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.... is the transactions of banking business; (ii) The paid-up share capital and reserves of which are not less than one lack of rupees; and (iii) The by-laws of which do not permit admission of any other cooperative society as a member: Provided that this sub-clause shall not apply to the admission of co-operative bank as a member by reason of such co-operative bank subscribing to share capital of such co-operative society out of funds provided by State Government for the purpose." On careful perusal of above definition it is seen that basic mandate any cooperative society to cover in definition of ' Primary Co-Operative Bank' is that it's primary object or principal business should be transactions of banking business. The term 'banking' is defined in B. R. Act and as per said definition there is no restriction that depositor should be member of said society but it is public at large with whom business transactions can be carried out. Other two conditions as mentioned in cls.(ii) &(iii) are on fulfilling first condition given in cl.(i). In present case nothing is on record to suggest that all three conditions are fulfilled to hold that assessee whic....