TaxTMI 
TaxTMI 
2022 (6) TMI 561
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....as available on record and the same is not liable to be maintained. 2. Because the honorable C.I.T. (Appeals) has erroneously upheld disallowance of Rs. 37,28,310/- made by the Assessing Officer u/s 80P of the Income Tax Act, 1961. 3. Because in preceding year assessment of the appellant has been completed u/s 143(3) of Income Tax Act, 1961 and deduction claimed u/s 80P of the Income Tax Act, 1961 has been allowed. 4. Because deduction claimed u/s 80P is liable to be allowed in the case of the appellant society. 5. Because the main object of Co-operative Credit Societies is to encourage habit of thrift among members rather than provide loans to them at reasonable rate of interest. To facilitate the organization, administration and functionary of Cooperative societies with the objects not confined to one state serving the interest of members of such societies from more than one state, the multi unit Co-operative societies act was enacted. No tax is payable on the profits and gains of business carried by Railwaymen's Co-operative credit Societies/Banks as they engaged in providing credit facilities to their members. 6. Because the assessme....
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....ssee reiterated that it is primary cooperative bank for the benefit / interest of its member who are railway employees and therefore, sub section 4 of section 80P is not applicable in the case of the assessee. The AO did not accept the contention of the assessee and held that the assessee is a Cooperative Bank as per Banking Regulation Act, 1949. The assessee was granted banking license by the Reserve Bank of India vide license dated 20.11.2007 therefore, deduction under section 80P is not available to the assessee as per the provisions of section 80P(4) of the Act. The AO accordingly disallowed the claim of deduction under section 80P to the assessee. The assessee challenged the action of the AO before the CIT(A) but could not succeeded as the CIT(A) has upheld the order of the AO denying the claim of deduction under section 80P. 3. Before the Tribunal, the learned AR of the assessee has submitted that the assessee is a Cooperative Credit Society carrying on Finance / banking business i.e. financing only their members who are employees of Indian Railway and collecting deposits. The assessee filed its return of income under section 139 of the Act declaring nil income after claim....
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....herefore, the provisions of section 80P(4) are not attracted. It is mandatory for a cooperative society to seek license from Reserve Bank of India to form and operate as cooperative bank. The assessee being a cooperative society was neither authorized nor had undertaken any of the banking business as are carried out by the primary cooperative bank but had only provided financial societies / credits to its members. He has thus contended that all cooperative societies other than thus coming under the control of Reserve Bank of India are eligible for deduction under section 80P. The cooperative society conducting banking activity is not a cooperative bank licensed by the Reserve Bank of India and therefore eligible for deduction under section 80P(2) of the Income Tax Act. In support of his contention, he has relied upon the decision of Delhi Benches of the Tribunal in the case of M/s The Veer Co-operative Group Housing Society Ltd. vs. Income Tax Officer in ITA.Nos.2787 & 2788/Del/2018. He has also relied upon the decision of Hon'ble Allahabad High Court in the case of CIT v. M/s Muzaffar Nagar Kshetriya Gramin Bank Ltd., in ITA No. 86 of 2007. The issue involved in the present appeal....
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....the Bank will be to promote the interest of all the members to attain their social and economic betterment through self-help and mutual aid in accordance with Co-operative principles. B. OBJECTS: (1) To prevent members from falling into permanent indebtness and to assist them in the time of difficulty. (2) To raise funds by means of issue of shares, borrowing money, accepting money on deposits at interest or otherwise. (3) To lend money to its members at interest with or without security. (4) To invest the money or funds of the Bank upon such securities and in such manners as may be from time to time determined by the Board in accordance with the Act, Rules and Bye-laws of the Bank. (5) To encourage thrift and self-help and Co-operation among the shareholders. (6) To raise the moral and economic standard of the shareholders. (7) Generally to do all or such other things as are incidental and conducive to the attainment of the above objects." 7. The assessee filed its return of income for the assessment year 2009-10 on 30th September, 2009 declaring total income at nil after claiming deduction /exemption under....
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....he Act shall not apply in relation to any cooperative bank other than a primary agricultural credit society or a primary cooperative agricultural and rural development bank. The definition of cooperative bank and primary agricultural credit society is as per the meaning assigned to them in part V of the banking regulation Act 1949. Whereas the primary cooperative agricultural and rural development bank has defined as a society whose areas of operation is confined to a taluk and the principal object is to provide long term credit for agricultural and rural development activity. The appellant society is neither a primary agricultural credit society nor a primary cooperative agricultural and rural development bank. The appellant society is listed as non-scheduled urban cooperative bank in the list as per the Reserve Bank of India website. Further as clarified in the CBDT circular no. 6/2010 dated 20.09.2010 section 80P does not apply to any cooperative bank other than those specifically mentioned in the sub section of the section 80P. In view of the above, I find that the appellant is not eligible for exemption for u/s 80P(2)(a)(i) of the Act. Accordingly, addition made by th....
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....(vii) fishing or allied activities, that is to say, the catching, curing, processing, preserving, storing or marketing of fish or the purchase of materials and equipment in connection therewith for the purpose of supplying them to its members,] the whole of the amount of profits and gains of business attributable to any one or more of such activities: Provided that in the case of a co-operative society falling under sub-clause (vi), or sub-clause (vii), the rules and bye-laws of the society restrict the voting rights to the following classes of its members, namely:- (1) the individuals74 who contribute their labour or, as the case may be, carry on the fishing or allied activities; (2) the co-operative credit societies which provide financial assistance to the society; (3) the State Government;] (b) in the case of a co-operative society, being a primary society engaged in supplying milk, oilseeds, fruits or vegetables raised or grown by its members to- (i) a federal co-operative society, being a society engaged in the business of supplying milk, oilseeds, fruits, or vegetables, as the case may be; or (ii) the Government ....
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....on under sub-section (1) of this section, in relation to the sums specified in clause (a) or clause (b) or clause (c) of subsection (2), shall be allowed with reference to the income, if any, as referred to in those clauses included in the gross total income as reduced by the deductions under [***] [section 80HH,] [section 80HHA,] [section 80HHB,] [section 80HHC,] [section 80HHD,] [section 80-I,] [section 80-IA,] [section 80J and section 80JJ]].] (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.]" 10. A Cooperative So....
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....e construed as references to commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965 (23 of 1965); (b) in section 2, the words and figures "the Companies Act, 1956 (1 of 1956), and" shall be omitted; (c) in section 5,- (i) after clause (cc), the following clauses shall be inserted namely:- (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 cooperative land mortgage bank; (cciia) "co-operative society" means a society registered or deemed to have been registered under any Central Act for the time being in force relating to the multi- State co-operative societies, or any other Central or State law relating to cooperative societies for the time being in force; (cciii) "director", in relation to a co-operative society, includes a member of any committee or body for the time being vested with the management of the affairs of that society; (cciiia) "multi-State ....
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....o-operative society out of funds provided by the State Government for the purpose. Explanation.-If any dispute arises as to the primary object or principal business of any co- operative society referred to in clauses (cciv), (ccv) and (ccvi), a determination thereof by the Reserve Bank shall be final; (ccvii) "central co-operative bank", "primary rural credit society" and "state cooperative bank" shall have the meanings respectively assigned to them in the National Bank for Agriculture and Rural Development Act, 1981 (61 of 1981);" 11. A Cooperative Bank means a State Cooperative bank, a Central Cooperative Bank and a primary Cooperative Bank. The Cooperative Banks are now excluded from the scope of exemption under section 80P by considering them as a lending institutions and they are treated distinctly from primary Agriculture Credit Societies and primary Agriculture and Rural Development Banks. Therefore, the Legislature intended to tax their profits. The CBDT Circular dated 28.12.2006 containing explanatory note on the insertion of sub section 4 vide Finance Act, 2006 reads as under:- "Withdrawal of tax benefits available to certain co-operative ban....
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....9 is taken into consideration then the assessee being a Multi-State Primary Cooperative Bank and not a primary agricultural credit society or a primary co-operative agricultural and rural development bank will fall within the mischief of sub section 4 of section 80P. 13. As it is clear from the byelaws and particularly primary objects and principle business of the assessee that the assessee is not doing any activity falling in the purview of primary agricultural credit society or a primary cooperative agricultural and rural development bank. The assessee is neither providing any agriculture credit facility nor providing any service of rural development bank. The other conditions as provided under Banking Regulation Act, 1949 for the primary Cooperative Bank are also satisfied in case of the assessee and hence, once the assessee falls in the definition of Cooperative Bank, the benefit of deduction under section 80P is not available to the assessee. The decisions relied upon by the assessee are not on the point of Cooperative Bank not eligible for deduction under section 80P but the issue and dispute in those cases were either regarding exemption of interest income under section 8....
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....रीय कारà¥à¤¯à¤¾à¤²à¤¯, लखनऊ RESERVE BANK OF INDIA URBAN BANKS DEPARTMENT REGIONAL XXXX OFFICE. LUCKNOW लाइसेंस सं. यूबीडी. उतà¥à¤¤à¤° पà¥à¤°à¤¦à¥‡à¤¶ 0012 LICENCE No. UBD. U. P. 0012 दिनांक 20 नवमà¥à¤¬à¤° 2007 Dated: 20 November. 2007 à¤à¤¾à¤°à¤¤à¥€à¤¯ रिज़रà¥à¤µ बैंक को बैंककारी विनियमन अधिनियम, 1949 की धारा 56 (ण) के साथ पढ़ी जानेवाली धारा 22 (1) दà¥à¤µà¤¾à¤°à¤¾ पà¥à¤°à¤¦à¤¤à¥à¤¤ शकà¥à¤¤à¤¿à¤¯à¥‹à¤‚ का पà¥à¤°à¤¯à¥‹à¤— करते à¤....