2015 (8) TMI 1571

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....on u/s. 80P(2)(a)(i) of the Act of a sum of Rs.49,56,911. Under Sec.80P(2)(i) of the Act where the gross total income of a co-operative society includes income from carrying on the business of banking or providing credit facilities to its members, the same is allowed deduction. By the Finance Act, 2006 w.e.f. 1-4-2006, Sub-section (4) was inserted in Sec.80-P which provides as follows: "(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." 4. The AO was of the view that after amended by the Finance Act, 2006 w.e.f. 1.4.....

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....on demand and do not go into the corpus of the appellant. iv) The assessee society came within the Explanation to sub-section (4) of section 80P of the Act as a banking institution. 5. In the light of the above-mentioned observations, the AO held that the assessee was not entitled to exemption in respect of the amount u/s 80P(2)(a)(i) of the Act and brought the same to tax. 6. Before CIT(A), the assessee submitted that the AO erred in treating the assessee as a commercial banking institution and in denying the deduction available to it u/s 80P(2)(a)(i) of the Act in respect of income arising from the transactions only with its members. Reliance was placed on the on the decision of the Tribunal in the case of Bangalore Commercial Transport Coop. Society Ltd., ITA No.1069/Bang/2010, in support of its claim that the Assessee is not a co-operative bank. 7. The CIT(A) agreed with the submissions of the Assessee and following the decision cited supra, allowed the claim of the Assessee for deduction u/s.80(P)(2)(a)(i) of the Act. 8. Aggrieved by the order of the CIT(Appeals), the Revenue has filed the present appeal before the Tribunal. 9. At the time of hearing, i....

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....lication only to cooperative banks. Section 80P(4) does not define the word "cooperative society". The existing sub-section 80P(2)(a)(i) shall be applicable to a cooperative society carrying on credit facility to its members. This view is clarified by Central Board of Direct Tax vide its clarification No.133/06/2007-TPL dated 9th May, 2007. The difference between a cooperative bank and a cooperative society are as follows:- Nature Cooperative society registered under Banking Regulation Act, 1949 Cooperative society registered under Karnataka Cooperative Society Act, 1959. Registration Under the Banking Regulation Act, 1949 and Cooperative Societies Act, 1959. Cooperative Societies Act, 1959. Nature of business 1. As defined in section 6 of Banking Regulation Act. 2. Can open savings bank account, current account, overdraft account, cash credit account, issue letter of credit, discounting bills of exchange, issue cheques, demand drafts (DD), Pay Orders, Gift cheques, lockers, bank guarantees etc. 3. Cooperative Banks can act as clearing agent for cheques, DDs, pay orders and other forms. 4. Banks are bound to follow the rules, regulations and directi....

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....n under section 80P(2)(a)(i) to assessee's society even though same is covered under section 80P(4) rws 2(24) (viia) being income from providing credit facilities carried on by a co-operative society with its member?" The Hon'ble Court held as follows: "4. As per section 80P(4), the provisions of section 80P would not apply in relation to any co-operative bank other than primary agricultural credit society or primary co-operative agricultural and rural development bank. As per the explanation, the terms "cooperative bank" and "primary agricultural credit society" shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949. 5. Assessing Officer held that by virtue of section 80P(4), the respondent assessee would not be entitled to benefits of deduction under section 80P. CIT(Appeals) as well as the Tribunal reversed the decision of the Assessing Officer on the premise that the respondent assessee not being a bank, exclusion provided in sub-section(4) of section 80P would not apply. This, irrespective of the fact that the respondent would not fall within the expression "primary agricultural credit society". 6. Had ....