TaxTMI 
TaxTMI 
2014 (3) TMI 1242
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.... hence, the provisions of section 80P(4) of the Act stand attracted under the facts and in the circumstances of the appellant's case. 3. The learned CIT (A) failed to appreciate that the appellant is not a primary co-operative bank within the meaning of Part V of the Banking Regulation Act, 1949, to which the Explanation to section 80P(4) of the Act draws reference and consequently, the provisions of section 80P(4) of the Act are not applicable to the case of the appellant. 4. The learned CIT (A) failed to appreciate that the binding decisions of the Hon'ble ITAT were not "per incurrium" as held by him and that the provisions of section 2(24)(viia) of the Act does not change or alter the applicability of the provisions of section 80P(4) of the Act, which applies only to co-operative banks and not the co-operative societies providing credit facility to its members". 3. Brief facts of the case are as follows. The assessee is a co-operative society. It is engaged in the business of providing credit facility to its members. For the relevant assessment year, return of income was filed on 28.09.2010 declaring a 'nil' income after claiming deduction u/s 80P(2) ....
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....Co-op Credit Society Ltd in Income Tax Appeal No. 442 of 2013 with Tax appeal No. 443 of 2013, with Tax Appeal No. 863 of 2013 and various orders of the Bangalore Bench of the Tribunal. 6. The learned DR was present was duly heard. 7. We have heard the rival submissions and perused the material on record. The Hon'ble Karnataka High Court after reproducing sub section 4 of section 80P of the Act held that the said provisions is not applicable to co-operative societies and is restricted only to cooperative bank, which has got license to do banking business from the RBI. The relevant findings of the Hon'ble jurisdictional High Court in the case of CIT vs. Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha, Bagalkot (Supra) reads as follows: "Therefore, the insertion of the legislature is clear. If a Co-operative bank is exclusively carrying on banking business, then the income derived from the said business cannot be deducted in computing the total income of the assessee. The said income is liable for tax. A Co-operative bank as defined under the Banking Regulation Act includes the primary agricultural credit society or a primary co-operative....
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....ry agricultural credit society". 6. Had this been the plain statutory provisions under consideration in isolation, in our opinion, the question of law could be stated to have arisen. When, as contended by the assessee, by virtue of sub-section (4) only cooperative banks other than those mentioned therein were meant to be excluded for the purpose of deduction u/s 80P, a question would arise why then Legislature specified primary agricultural credit societies along with primary cooperative agricultural and rural development banks for exclusion from such exclusion and in other words, continued to hold such entity as eligible for deduction. However, the issue has been considerably simplified by virtue of CBDT Circular No. 133 of 2007 dated 9.5.2007. Circular provides as under:- "Subject: Clarification regarding admissibility of deduction u/s 80P of the Income Tax Act, 1961. 1. Please refer to your letter No. DCIS/30688/2007, dated 28.03.2007 addressed to Chairman, Central Board of Direct Taxes, on the above given subject. 2. In this regard I have been directed to state that sub-section 4 of section 80P provides that deduction under the said....
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.... "9 We have heard the rival submissions and perused the material on record. The assessee was denied the deduction u/s 80-P(2)(a)(i) of the Act for the reason of introduction of sub section 4 of section 80P. Section 80P(4) reads as follows: "(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 cooperative 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 cooperative 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". 9.1 The above sub section 4 of section 80P provides that deduction under the said section shall not be available to any cooperative bank other than a primary agricultural credit society or rural development bank. For the p....