TaxTMI 
TaxTMI 
2021 (3) TMI 662
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.... above grounds be set aside and that of the Assessing Officer be restored." 3. Since facts are similar we are referring to the order of A.Y. 2014-15. 4. Brief facts are that the Assessing Officer disallowed the deduction u/s. 80P(2d) of the I.T. Act by holding that the assessee was a Cooperative bank as per section 80P(4). He concluded as under :- (l) On perusal of the Balance Sheet as on 31.03.2014, it is seen that the major item on the liability side is a figure of Rs. 26.20 crores reflected against the head Deposits'. On the asset side, the major item is Rs. 31.42 crores shown against the head 'Loan and Advances'. From these, it is crystal clear that the assessee on the one hand accepts deposits from the members for which interest is paid to them On the other hand, it advances loans out of these deposits etc. to the needy members from whom interest is received at a higher rate. These are the silent features of a business activity and that business is nothing but 'banking business. (2) Further, perusal of the Balance Sheet as on 31.03.2014 of the assessee reveals unclaimed dividend of Rs. 1,47,919/-. The declaration of dividend is an attribute of a business ....
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....k. In the present case, first two conditions are satisfied and the assessee is to be regarded as a primary cooperative bank. Yet another aspect concerning the issue is that the decision of Hon'ble Karnataka High Court in CIT, Belgaum vs. Baflur Surubasav Pathinai Sahakari'Sangh Niyam St, Bagalkot in favour of the assessee has been challenged by the Department and an StP against that decision has been admitted by Hon'ble Apex Court on 06.07.2015 (2015)(62 Taxrnan.com 216(SC). The same is pending. Similarly, the Department has filed SLR against the decision of Hon'ble Mumbai High court in ; case of Gupem Urban C-operative Credit Society Ltd. vs. ACIT [2015] 58 taxman.com 113 (Bombay), which has been admitted vide Order No.CC NO.17&85/20I5 dated OS. 10.2015 and is pending. 5.8 Although the assessee's representative has cited some decisions of Hon'ble Courts of other states, it is not known whether those have been accepted by the Department. Hence, with due respect to those decisions, the same «re not -followed in -this order. 5.9. TO sum up, viewed against the backdrop of the foregoing discussion, and the emerging position, the explanations furnis....
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....tment, of deposits of money from the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or otherwise. 7.5 The Banking Regulation Act, 1949 defines a co-operative bank in cl. (cci) of sec. 5 (as inserted by sec. 56 of the said Act) and Co-operative Credit Society is not included but its identity is kept separate by way of independent definition in Clause (ccii) of Sec. 5 of the Banking Regulation Act which is reproduced as under: (cci) "Co-operative bank" means a state co-operative bank, a central co-operative bank and a primary co-operative bank (ccii) "co-operative credit society" means a Co-operative Society, the primary object of which is to provide financial accommodation to its members and includes a co-operative land mortgage bank; " 7.6 On plain reading of the Banking Regulation Act, 1949, nowhere it is suggested that the term "Co-operative Bank" also includes 'Co-Operative Credit Society". Further, the Primary Co-operative bank is defined in cl. (ccv) of sec. 5 of the Banking Regulation Act 1949 as under:- '(ccv) "primary co-operative bank" means a co-operative society, other than a primary agricultural credit society- i) th....
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....ion 80P(4) provides that :- (4) The provisions of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. Explanation.-For the purposes 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. 7. Honourable Supreme Court in the case of Citizen Cooperative Society Ltd. (Civil Appeal No. 10245 of 2017 vide order dated 8.8.2017) has settled the law that for being considered as a cooperative bank licence from RBI in this regard is a sine qua non. In absence of the RBI licence as such the assessee cannot be treated as cooperative bank. Hence disallowing the deduction by referring to the provisions of section 80P(4) is completely unsustainable. Moreover section 80P....