TaxTMI 
TaxTMI 
2012 (9) TMI 1174
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....essee filed its return of income declaring total income at NIL after claiming deduction u/s.80P(2)(a)(i) of the Income Tax Act 1961. The assessee claimed that the primary object of the society is to provide finance, accommodation to members only and since there is no control or supervision of the RBI they are entitled to claim deduction u/s.80P(2)(a)(i). However, the AO was of the opinion that if a cooperative society conducts any business which comes within the ambit of the definition of banking business in section 5(b) of the Banking Regulation Act or the extended meaning of Banking business in section 6(1), clause (a) to (o), it can be safely inferred that the cooperative credit society is transacting in banking business and is a primary....
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....se viia in section 2(24) of Finance Act, 2006 w.e.f. 01-04-2007 has withdrawn the deduction allowable to the cooperative society". 4. The learned counsel for the assessee at the outset filed a copy of the decision of the Tribunal in the case of ITO Vs. Jankalyan Nagri Sahakari Pat Sanstha Ltd. reported in 24 Taxmann.com (Pune Tribunal) 127 and submitted that the issue stands covered in favour of the assessee by the decision of the Tribunal. The learned DR on the other hand fairly agreed that the issue has been decided by the tribunal in favour of the assessee and against the revenue. 5. After hearing both the sides, we find the coordinate Bench of the Tribunal in the case of ITO Vs. Jankalyan Nagri Sahakari Pat Sanstha Ltd. (Supra) wh....
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....to the A.Y. 2006-07, more particularly in view of Sub-Section (2) of Sec. 80-P.Section 80 P (2) reads as under :- "80P. (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in subsection (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section(2), in computing the total income of the assessee. (2) The sums referred to in sub-section (1) shall be the following, Namely:- (a) In the case of a co-operative society engaged in - (i) Carrying on the business of banking or providing credit facilities to its members, or (ii) a cottage industry, or ....
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.... (i) The primary object or principal business of which 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 cooperative 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 ....
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....ression is to be ascertained in the context of provisions of referred Act. As per Sub-sec. (4) of Sec. 80P of the I. T. Act, Co-operative Bank means State Co-operative Bank, a Central Co-operative Bank and a Primary Co-operative Bank. It is seen that Cooperative Bank is deprived of the benefit of the deduction u/s. 80P(2)(a)(i) of the Act. As per the interpretation given by the AO, assessee Co-Operative Credit Society partakes the character of the Primary Co-operative Bank and as the Primary Co-operative Bank is included in the definition of the Cooperative Bank and hence, is not entitled to the benefits of Sec. 80P(2)(a)(i)of I. T. Act. In our opinion, this is not the correct interpretation. It is well settled principle in the interpretati....