TaxTMI 
TaxTMI 
2022 (2) TMI 1527
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....013-14 for adjudication. The grounds raised by the Revenue in its appeal are reproduced as under: ITA No. 7752/MUM/2019 Assessment Year: 2013-14 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in granting relief by deleting the addition made by the Assessing Officer. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate the fact that the deduction allowable earlier u/s. 80P of the Act, in the case of Co-operative societies engaged in the banking has been withdrawn w.e.f. 2007-08 by section 80P(4) except in the case of primary Agricultural Credit Society or a primary Co-operative Agricultural and Rural Development Bank. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the fact that the Hon'ble Supreme Court has granted leave against High Court's order where it has been held that assessee co-operative society could not be regarded as Co-operative Bank on mere fact that an insignificant proportion of revenue was coming from non-members, and thus, was entitled for deduction under section 80P (2)....
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.... on 09/07/2021 i.e. after a delay of 477 days. The Ld. counsel submitted that initially the assessee was advised by the tax advisor for pursuing alternative remedy by way of rectification on the issue of addition of Rs. 2,23,320/-, however in view of the appeal filed by the Revenue on the issue of deduction under section 80P(2) of the Act, the assessee was advised to file separate appeal on the issue. Meanwhile due to restraints and constraint imposed under Covid pandemic, delay occurred in filing the appeal. The Ld. counsel submitted that in view of the decision of the Hon'ble Supreme Court in Miscellaneous Petition No. 665/2021 and order of the CBDT extending period of limitation for filing appeal, the substantial period of delay is covered by the order of the Hon'ble Supreme Court. He submitted that delay of the remaining period might be condoned as no prejudice would be caused to the respondent if the delay is condoned and matter is finally disposed on merit. The Ld. DR on the other hand, did not seriously object for condonation of delay. 5. We have heard rival submission of the parties on the issue of condonation of delay. It is undisputed that there is a delay i....
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....s of the present case, we find that there exists sufficient and reasonable cause for condoning the delay. 5.2 In the light of the aforesaid discussion, in exercise of powers under section 253(5) of the Act, we hereby condone the delay in filing the present appeal and the appeal is admitted for adjudication on merit. 5.3 In the grounds raised by the Revenue, the issue involved is of disallowance under section 80P(2) of the Act, which has been deleted by the Ld. CIT(A). 5.4 Brief facts qua the issue in dispute are that on the basis of paid-up capital and nature of business of banking, the AO has treated the assessee as a deemed "cooperative bank". According to the AO in view of amendment to section 80P of the Act with effect from 01/04/2007, a subsection (4) has been introduced, which has laid down that provision of section 80P will not apply to any cooperative bank other than the Primary Agricultural Credit Society or a Primary Cooperative Agricultural and Rural Development Bank. 5.5 The Ld.AO has further referred to a new clause (viia) inserted in the definition of the income under section 2(24) of the Act with effect from 01/04/2007 and according to which income includ....
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.... the assessee as on 31.03.2013, it is further seen that a reserve has been created for 'Bad and Doubtful debts' of Rs. 15.65 crores. The credit balance in that reserve was also Rs. 13.07 crores for the immediately preceding financial year. This is another feature of a business carried on by the assessee. 8.4 From the above, it is abundantly clear that what the assessee carried on, is nothing else than the banking business. To hold that it is banking business, one need not necessarily carry on a full-fledged banking business with a license from the concerned authorities. That is, it is not essential to satisfy each and every requirement of a bank engaged in banking business. 9. From the Balance Sheet of the assessee, it is seen that Authorised Share Capital is Rs. 20 cores and the Received share capital stands at Rs. 11.97 crores as on 31.03.2013. Further, the Reserve Fund of the assessee shows a credit balance of Rs. 27.23 cores as on 31.03.2013.In this background, it needs to be seen whether the assessee is a banking institution engaged in banking activity. For this, a reference may be made to the relevant provisions of the Banking Regulation Act,1949. Ac....
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.... High Court in the case of Quepem Urban cooperative credit Society Ltd vs ACIT(supra) deleted the disallowance observing as under: "4.3.1 1 find that the appellant is a co-operative credit society registeredunder Maharashtra State Co-operative Society Act 1960. The provision of section 80P(4) debars a cooperative bank. The Byelaws of the society inter alia provide as under: The society's main objective/ purpose is to maintain depositor's welfare & to promote social and financial development among the members & achievement of the said development by principle of cooperation for himself and others with the help of each other. The objective includes accepting deposits from members and utilize it for disbursement of loan or make investment of it. To borrow/raise loans, to provide safe deposit vault and ancillary services etc. The society can raise funds by way of share capital, funds, subscriptions, deposits, loans, donations, subsidy & financial grants, refinance and any other sources with the permission of the honorable registrar. Ordinary membership is open to the person who is competent to make a contract under the Indian Contract Act 1872, the person who ....
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.... ITAT Mumbai in the following cases: i. ITO 26(3)(2), Mumbai vs. Shree Dutta Prasad SahakariPatsansatha Ltd. Mumbai (ITA No. 6857/MUM/2016 vide order dated 15.06.2018). ii. ITO 15(3) (4) vs. M/s. Mazgaon Dock Employees Credit Society Ltd., (ITANo. 5285/Mum/2013 vide order dated 12.01.2015). Further, reliance is also placed upon the judgment of the Hon'ble Gujarat High Court in the case of CIT v. JafariMominVikas Co-op. Credit Society Ltd. (362 ITR 331), the facts of which are similar. The assessee in this case was a co-operative credit society and claimed benefit of deduction u/s. 80P of the Act. The Assessing Officer, however, rejected the claim as, according to him, by virtue of S. 80P/4) of the Act the assessee was not entitled to such deduction. Since the order of the Assessing Officer was reversed in first appeal, which was concurred with in the second appeal, the revenue carried the matter to the Hon'ble High Court raising the following question: "Whether the Hon'ble Tribunal is correct in allowing the deduction under section80P(2)(a)(i) to assessee's society even though the same is covered under section 80P(4)read with sect....
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....clarified by the Central Board of Direct Taxes, the Delhi Co-op. Urban Thrift and Credit Society Ltd. was under consideration. The circular clarified that the said entity not being a co-operative bank, section 80P(4) of the Act would not apply to it. In view of such clarification, we cannot entertain the Revenue's contention that section 80P(4) would exclude not only the co-operative banks other than those fulfilling the description contained therein but also credit societies, which are not cooperative banks. In the present case, the respondent-assessee is admittedly not a credit co-operative bank but a credit co-operative society. The exclusion clause of sub-section (4) of section 80P, therefore, would not apply. in there sult, the tax appeals are dismissed." 4.3.3 The A has relied on the inclusive definition of income u/s. 2(24)(viia),inserted by Finance Act 2006, w.e.f. 01.04.2007, to hold that providing of credit facilities to members is also to be considered as profits and gains of business of banking. This interpretation of section 2(24) (via) is not found to be correct in law and in the facts of the case since the said clause defines the scope of " profits and g....
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.... in respect of income from providing credit facilities carried on by a cooperative society to its members and the cooperative society was held by the AO as in the nature of a cooperative bank, to which deduction under section 80P(2) of the Act was denied . The facts of the instant case before us are identical to the facts of the case law relied upon by the Ld. CIT(A). Thus, we find that Ld. CIT(A) has allowed relief to the assessee following a binding precedent of the Hon'ble jurisdictional High Court. Before us the Ld. counsel of the assessee furnished copy of bye-laws of society which were filed before lower authorities and submitted that by laws clause No. D1.1 of the membership does not restrict /deny the membership to any other cooperative society as a member. He also referred to new Model bye-laws clause No. 10E as per the 97th amendment of the Constitution, 2013 which specifically permits admission of cooperative societies as a member. The ld. DR appearing on behalf of the revenue could not controvert above factual finding and submitted that matter is being litigated in view of the fact that SLP filed by the revenue against above decision of the Hon'ble High Court is....