ITO, Bagalkot V. M/s Minority Credit Co-Op Society Limited, Bagalkot

ITA 1129/BANG/2015

• Counselvise Citation: 112921114 RSA 2015
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 03-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL KUMAR AGARWALA JT
• Assessee Lawyers: M THIRUMALESH
• Keywords: Gift; Question of law; Benefit of exemption
• Section: 6; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ITA NO.1129/BANG/2015 ASSESSMENT YEAR : 2012-13 THE INCOME TAX OFFICER, WARD 1, BAGALKOT. VS. M/S. MINORITY CREDIT CO-OPERATIVE SOCIETY LTD., TMC BUILDING, NEW VEGETABLE MARKET ROAD, BAGALKOT. PAN: AADCM 6890L APPELLANT RESPONDENT APPELLANT BY : SHRI SUNIL KUMAR AGARWALA, JT. CIT(DR) RESPONDENT BY : SHRI M. THIRUMALESH, ADVOCATE DATE OF HEARING : 02.12.2015 DATE OF PRONOUNCEMENT : 28.12.2015 O R D E R PER ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER D ATED 13.5.2015 OF THE CIT(APPEALS), BELGAVI FOR THE ASSESSMENT YEAR 2 012-13. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS WITH R EGARD TO ALLOWABILITY OF DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT TO THE ASSES SEE. THE ASSESSEE IS A CREDIT CO-OPERATIVE SOCIETY REGISTERED UNDER THE KA RNATAKA CO-OPERATIVE ITA NO.1129/BANG/2015 PAGE 2 OF 10 SOCIETIES, ACT, 1959. IT IS ENGAGED IN PROVIDING C REDIT FACILITIES TO ITS MEMBERS. THE ASSESSEE CLAIMED A DEDUCTION OF RS.39 ,08,470 U/S. 80P(2)(A)(I) OF THE ACT, WHICH WAS DISALLOWED BY TH E AO HOLDING THE ASSESSEE TO BE A PRIMARY CO-OPERATIVE BANK WITHIN T HE MEANING OF SECTION 5(CCV) OF THE BANKING REGULATIONS ACT, 1949 TO WHIC H SECTION 80P(4) OF THE ACT WAS APPLICABLE. 3. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(APPEALS). IT WAS SUBMITTED THAT THE ASSESSEE IS A CO-OPERATIV E SOCIETY REGISTERED UNDER THE KARNATAKA CO-OPERATIVE SOCIETIES ACT, 195 9 AND IS INVOLVED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS. IT WAS FURTHER CONTENDED THAT SECTION 80P(4) INVOKED BY THE AO WAS APPLICABLE ONL Y TO CO-OPERATIVE BANKS, AND NOT TO CO-OPERATIVE SOCIETY AS IN THE CA SE OF THE ASSESSEE. PLACING RELIANCE ON THE DECISION OF THE HONBLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SRI BILURU GURUBASAVA PATTINA SAHAKARI SANG HA NIYAMITHA, BAGALKOT , 369 ITR 86 (KARN) AND OTHER DECISIONS OF THE TRIBUNAL, THE ASSESSEE CONTENDED THAT IT WAS ENTITLED TO DEDU CTION U/S. 80P(2)(A)(I) OF THE ACT. 4. THE CIT(APPEALS) OBSERVED THAT THE ASSESSEE SOCI ETY DOES NOT HAVE BANKING AS ITS OBJECTS NOR ITS ACTIVITIES COULD BE TERMED AS BANKING BUSINESS AND IT IS NOT THE CASE OF THE AO THAT THE ASSESSEE IS REGISTERED WITH RBI AS A BANK. THE CIT(A) HELD THAT THE ASSESS EE WAS NOT A CO- OPERATIVE BANK AND THE PROVISIONS OF SECTION 80P(4) SHALL NOT APPLY TO ITS ITA NO.1129/BANG/2015 PAGE 3 OF 10 CASE. THEREFORE, THE CIT(A) HELD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT AND ALLOWED THE APPEAL OF THE ASSESSEE, RELYING ON THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF CIT VS. SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA, BAGAL KOT , 369 ITR 86 (KARN) AND OTHER DECISIONS OF THE HONBLE HIGH COURT. 5. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. WE FIND THAT IDENTICAL ISSUE HAS ALREADY BEEN CONSI DERED AND DECIDED BY THIS TRIBUNAL IN THE CASE OF ACIT, CIRCLE 3(1), BANGALORE V. M/S. BANGALORE COMMERCIAL TRANSPORT CREDIT CO-OPERATIVE SOCIETY LT D. IN ITA NO.1069/BANG/2010 DT. 8.4.2011 , WHEREIN THIS TRIBUNAL HELD THAT SECTION 80P(4) IS APPLICABLE ONLY TO COOPERATIVE BANKS AND NOT TO CREDIT COOPERATIVE SOCIETIES. THE INTENTION OF THE LEGISLATURE OF BRI NGING IN COOPERATIVE BANKS INTO THE TAXATION STRUCTURE WAS MAINLY TO BRING IN PAR WITH COMMERCIAL BANKS. SINCE THE ASSESSEE IS A COOPERATIVE SOCIETY AND NOT A COOPERATIVE BANK, THE PROVISIONS OF SECTION 80P(4) WILL NOT HAV E APPLICATION IN THE ASSESSEES CASE AND THEREFORE, IT IS ENTITLED TO DE DUCTION U/S 80P(2)(A)(I) OF THE ACT. THE FOLLOWING WERE THE RELEVANT OBSERVATI ONS OF THE TRIBUNAL:- 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE WAS DENIED THE DE DUCTION U/S 80-P(2)(A)(I) OF THE ACT FOR THE REASON OF INTRODUC TION OF SUB SECTION 4 TO SECTION 80P. SECTION 80P(4) READS AS FOLLOWS:- (4) THE PROVISIONS OF THIS SECTION SHALL NOT A PPLY IN RELATION TO ANY COOPERATIVE BANK OTHER THAN A PRIMA RY ITA NO.1129/BANG/2015 PAGE 4 OF 10 AGRICULTURAL CREDIT SOCIETY OR A PRIMARY COOPERATIV E 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 RESPECTIVEL Y 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 AVAIL ABLE TO ANY COOPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR RURAL DEVELOPMENT BANK. FOR THE PURPOSE OF THE SAID SUB SECTION, COOPERATIVE BANK SHALL HAVE THE MEANING AS SIGNED TO IT IN PART V OF THE BANKING REGULATION ACT, 1949. IN PAR T V OF THE BANKING REGULATION ACT, COOPERATIVE BANK MEANS A STATE COOPERATIVE BANK, A CENTRAL COOPERATIVE BANK AND A PRIMATE COOPERATIVE BANK. 9.2 FROM THE ABOVE SECTION, IT IS CLEAR THAT THE PR OVISIONS OF SECTION 80P(4) HAS GOT ITS APPLICATION ONLY TO COOP ERATIVE BANKS. SECTION 80P(4) DOES NOT DEFINE THE WORD COOPERATIV E SOCIETY. THE EXISTING SUB-SECTION 80P(2)(A)(I) SHALL BE APPL ICABLE TO A COOPERATIVE SOCIETY CARRYING ON CREDIT FACILITY TO ITS MEMBERS. THIS VIEW IS CLARIFIED BY CENTRAL BOARD OF DIRECT T AX VIDE ITS CLARIFICATION NO.133/06/2007-TPL DATED 9 TH MAY, 2007. THE DIFFERENCE BETWEEN A COOPERATIVE BANK AND A COOPERA TIVE SOCIETY ARE AS FOLLOWS:- NATURE COOPERATIVE SOCIETY REGISTERED UNDER BANKING REGULATION ACT, 1949 COOPERATIVE SOCIETY REGISTERED UNDER KARNATAKA COOPERATIVE SOCIETY ACT, 1959. REGISTRA -TION 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 1. AS PER THE BYE LAWS OF THE COOPERATIVE SOCIETY. 2. SOCIETY CANNOT OPEN SAVINGS BANK ACCOUNT, CURRENT ACCOUNT, ISSUE LETTER OF CREDIT, ITA NO.1129/BANG/2015 PAGE 5 OF 10 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 DIRECTIONS ISSUED BY RESERVE BANK OF INDIA (RBI). DISCOUNTING BILLS OF EXCHANGE, ISSUE CHEQUES, DEMAND DRAFTS, PAY ORDERS, GIFT CHEQUES, LOCKERS, BANK GUARANTEES ETC. 3. SOCIETY CANNOT ACT AS CLEARING AGENT, FOR CHEQUES, DDS, PAY ORDERS AND OTHER FORMS. 4. SOCIETY ARE BOUND BY RULES AND REGULATIONS AS SPECIFIED BY IN THE COOPERATIVE SOCIETIES ACT. FILING OF RETURNS COOPERATIVE BANKS HAVE TO SUBMIT ANNUAL RETURN TO RBI EVERY YEAR. SOCIETY HAS TO SUBMIT THE ANNUAL RETURN TO REGISTRAR OF SOCIETIES. INSPEC- TION RBI HAS THE POWER TO INSPECT ACCOUNTS AND OVERALL FUNCTIONING OF THE BANK. REGISTRAR HAS THE POWER TO INSPECT ACCOUNTS AND OVERALL FUNCTIONING OF THE BANK. PART V PART V OF THE BANKING REGULATION ACT IS APPLICABLE TO COOPERATIVE BANKS. PART V OF THE BANKING REGULATION ACT IS NOT APPLICABLE TO COOPERATIVE BANKS. USE OF WORDS THE WORD BANK, BANKER, BANKING CAN BE USED BY A COOPERATIVE BANK. THE WORD BANK, BANKER, BANKING CANNOT BE USED BY A COOPERATIVE SOCIETY. 9.3 IF THE INTENTION OF THE LEGISLATURE WAS NOT TO GRANT DEDUCTION U/S 80P(2)(A)(I) TO COOPERATIVE SOCIETIES CARRYING ON THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMB ERS, THEN THIS SECTION WOULD HAVE BEEN DELETED. THE NEW PROVISO T O SECTION 80P(4) WHICH IS BROUGHT INTO STATUTE IS APPLICABLE ONLY TO COOPERATIVE BANKS AND NOT TO CREDIT COOPERATIVE SOC IETIES. THE INTENTION OF THE LEGISLATURE OF BRINGING IN COOPERA TIVE BANKS INTO THE TAXATION STRUCTURE WAS MAINLY TO BRING IN PAR W ITH COMMERCIAL BANKS. SINCE THE ASSESSEE IS A COOPERATIVE SOCIETY AND NOT A COOPERATIVE BANK, THE PROVISIONS OF SECTION 80P(4) WILL NOT HAVE APPLICATION IN THE ASSESSEES CASE AND THEREFORE, I T IS ENTITLED TO DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. HENCE, WE A RE OF THE VIEW THAT THE ORDER OF THE CIT(A) IS CORRECT AND IN ACCO RDANCE WITH LAW AND NO INTERFERENCE IS CALLED FOR. ITA NO.1129/BANG/2015 PAGE 6 OF 10 7. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF TA X APPEAL NO.442 OF 2013 WITH TAX APPEAL NO.443 OF 2013 WITH TAX APPEAL NO.863 OF 2013 IN THE CASE OF CIT VS. JAFARI MOMIN VIKAS CO-OP CREDIT SOCIETY LTD. BY JUDGMENT DATED 15.1.2014 ON HAD TO DEAL WITH THE FO LLOWING QUESTION OF LAW: WHETHER THE HONBLE TRIBUNAL IS CORRECT IN ALLOWI NG DEDUCTION UNDER SECTION 80P(2)(A)(I) TO ASSESSEES SOCIETY EV EN THOUGH SAME IS COVERED UNDER SECTION 80P(4) RWS 2(24) (VIIA) BE ING INCOME FROM PROVIDING CREDIT FACILITIES CARRIED ON BY A CO -OPERATIVE SOCIETY WITH ITS MEMBER? THE HONBLE 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 OTHE R THAN PRIMARY AGRICULTURAL CREDIT SOCIETY OR PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. AS PER THE EXPLANATION, THE TERMS CO-OPERATIVE BANK AND PRIMARY AGRICULTURAL CREDI T SOCIETY SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO TH EM 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 BENEFI TS OF DEDUCTION UNDER SECTION 80P. CIT(APPEALS) AS WELL AS THE TRIB UNAL REVERSED THE DECISION OF THE ASSESSING OFFICER ON THE PREMIS E THAT THE RESPONDENT ASSESSEE NOT BEING A BANK, EXCLUSION PRO VIDED IN SUB- SECTION(4) OF SECTION 80P WOULD NOT APPLY. THIS, IR RESPECTIVE OF THE FACT THAT THE RESPONDENT WOULD NOT FALL WITHIN THE EXPRESSION PRIMARY AGRICULTURAL CREDIT SOCIETY. 6. HAD THIS BEEN THE PLAIN STATUTORY PROVISIONS UND ER CONSIDERATION IN ISOLATION, IN OUR OPINION, THE QUE STION OF LAW COULD BE STATED TO HAVE ARISEN. WHEN, AS CONTENDED BY THE ASSESSEE, BY VIRTUE OF SUBSECTION(4) ONLY CO-OPERAT IVE BANKS OTHER THAN THOSE MENTIONED THEREIN WERE MEANT TO BE EXCLU DED FOR THE PURPOSE OF DEDUCTION UNDER SECTION 80P, A QUESTION WOULD ARISE WHY THEN LEGISLATURE SPECIFIED PRIMARY AGRICULTURAL CREDIT SOCIETIES ALONG WITH PRIMARY COOPERATIVE AGRICULTUR AL AND RURAL ITA NO.1129/BANG/2015 PAGE 7 OF 10 DEVELOPMENT BANKS FOR EXCLUSION FROM SUCH EXCLUSION AND IN OTHER WORDS, CONTINUED TO HOLD SUCH ENTITY AS ELIGI BLE 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 ADMISSIBLY OF DEDUCTION UNDER SECTION 80P OF THE INCOME-TAX ACT, 1961. 1. PLEASE REFER TO YOUR LETTER NO.DCUS/30688/2007, DATED 28.03.2007 ADDRESSED TO CHAIRMAN, CENTRAL BOA RD OF DIRECT TAXES, ON THE ABOVE GIVEN SUBJECT. 2. IN THIS REGARD, I HAVE BEEN DIRECTED TO STATE TH AT SUB- SECTION(4) OF SECTION 80P PROVIDES THAT DEDUCTION U NDER THE SAID SECTION SHALL NOT BE ALLOWABLE TO ANY CO- OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CR EDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. FOR THE PURPOSE OF THE SAID SUB- SECTION, CO-OPERATIVE BANK SHALL HAVE THE MEANING ASSIGNED TO IT IN PART V OF THE BANKING REGULATION ACT, 1949. 3. IN PART V OF THE BANKING REGULATION ACT,CO-OPER ATIVE BANK MEANS A STATE CO-OPERATIVE BANK, A CENTRAL CO - OPERATIVE BANK AND A PRIMARY CO-OPERATIVE BANK. 4. THUS, IF THE DELHI CO OP URBAN T & C SOCIETY LTD . DOES NOT FALL WITHIN THE MEANING OF CO-OPERATIVE BANK AS DEFINED IN PART V OF THE BANKING REGULATION ACT, 19 49, SUBSECTION(4) OF SECTION 80P WILL NOT APPLY IN THIS CASE. 5. THE ISSUES WITH THE APPROVAL OF CHAIRMAN,CENTRAL BOARD OF DIRECT TAXES. 7. FROM THE ABOVE CLARIFICATION, IT CAN BE GATHERED THAT SUB- SECTION(4) OF SECTION 80P WILL NOT APPLY TO AN ASSE SSEE WHICH IS NOT A CO-OPERATIVE BANK. IN THE CASE CLARIFIED BY C BDT, DELHI COOP URBAN THRIFT & CREDIT SOCIETY LTD. WAS UNDER CONSIDERATION. CIRCULAR CLARIFIED THAT THE SAID ENT ITY NOT BEING A COOPERATIVE BANK, SECTION 80P(4) OF THE ACT WOULD N OT APPLY TO IT. IN VIEW OF SUCH CLARIFICATION, WE CANNOT ENTERTAIN THE REVENUES CONTENTION THAT SECTION 80P(4) WOULD EXCLUDE NOT ON LY THE CO- ITA NO.1129/BANG/2015 PAGE 8 OF 10 OPERATIVE BANKS OTHER THAN THOSE FULFILLING THE DES CRIPTION CONTAINED THEREIN BUT ALSO CREDIT SOCIETIES, WHICH ARE NOT COOPERATIVE BANKS. IN THE PRESENT CASE, RESPONDENT ASSESSEE IS ADMITTEDLY NOT A CREDIT CO-OPERATIVE BANK BUT A CRE DIT CO- OPERATIVE SOCIETY. EXCLUSION CLAUSE OF SUB-SECTION (4) OF SECTION 80P, THEREFORE, WOULD NOT APPLY. IN THE RESULT, TAX APPEALS ARE DISMISSED. 8. THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA , BAGALKOT , 369 ITR 86 (KARN) CONSIDERED THE FOLLOWING SUBSTANTIAL QUESTION OF LA W:- IN THE FACTS AND CIRCUMSTANCES OF THIS CASE, WH ETHER THE REVISIONAL AUTHORITY WAS JUSTIFIED IN INVOKING HIS POWER UNDER SECTION 263 OF THE ACT WITHOUT THE FOUNDATIONAL FAC T OF ASSESSEE BEING CO-OPERATIVE BANK WAS NOT THERE? 9. ON THE ABOVE SUBSTANTIAL QUESTION OF LAW, THE HO NBLE JURISDICTIONAL HIGH COURT HELD AT PARA 9 OF ITS AS UNDER:- 9. THIS COURT HAD AN OCCASION TO CONSIDER SECTION 263 OF THE ACT IN THE CASE OF - COMMISSIONER OF INCOME-TAX AND ANOTHER V. DIGITAL GLOBAL SOFT LTD. [2013] 354 ITR 489 (KARN) WHERE PARAGRAPH-18, IT HAS HELD AS UNDER : AS IS CLEAR FROM THE WORDING IN SECTION 263, THE COMMISSIONER GETS THE JURISDICTION TO REVISE ANY PROCEEDINGS UNDER THIS ACT IF HE CONSIDERS THAT AN Y ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOU S IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE RE VENUE. THEREFORE, IT IS CLEAR THAT HE CANNOT EXERCISE THE POWER OF REVISION SOLELY ON THE GROUND THAT THE ORDER PASSED IS ERRONEOUS. HE GETS JURISDICTION ONLY IF SUCH ERRONE OUS ORDER IS PREJUDICIAL TO THE INTEREST OF THE REVENUE . PREJUDICIAL TO THE REVENUE MEANS, LAWFUL REVENUE DUE TO THE STATE HAS NOT BEEN REALIZED OR CANNOT BE REALIZ ED. IN ITA NO.1129/BANG/2015 PAGE 9 OF 10 OTHER WORDS, BY THE ORDER OF THE ASSESSING AUTHORIT Y IF THE LAWFUL REVENUE TO THE STATE HAS NOT BEEN REALIZED O R CANNOT BE REALIZED, AS THE SAID ORDER IS PREJUDICIA L TO THE INTERESTS OF THE REVENUE AND ALSO ERRONEOUS, HE GET S JURISDICTION TO INTERFERE WITH THE SAID ORDER UNDER SECTION 263. THEREFORE, FOR ATTRACTING SECTION 263, THE CON DITION PRECEDENT IS (A) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS, AND (B) IT IS PREJUDICI AL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT, I.E., IF THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS BU T IS NOT PREJUDICIAL TO THE REVENUE, RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. THE SATISFACTION OF BOTH THE CONDITIONS STIPULATED IN THE SECTION IS THE SINE QU A NON FOR THE COMMISSIONER TO EXERCISE HIS JURISDICTION UNDER SECTION 263. IN THE INSTANT CASE, WHEN THE STATUS OF THE ASSESS EE IS A CO- OPERATIVE SOCIETY AND IS NOT A CO-OPERATIVE BANK, T HE ORDER PASSED BY THE ASSESSING AUTHORITY EXTENDING THE BENEFIT OF EXEMPTION FROM PAYMENT OF TAX UNDER SECTION 80P(2)(A)(I) OF T HE ACT IS CORRECT. THERE IS NO ERROR. WHEN THERE IS NO ERROR, THE QUESTION OF ORDER BEING PREJUDICIAL WOULD NOT ARISE . THE TRIBU NAL HAS RIGHTLY ENTERTAINED THE APPEAL AND SET-ASIDE THE ORDER. THE REFORE, THE SAID ORDER IS IN ACCORDANCE WITH LAW AND CANNOT BE FOUND FAULT WITH. THE SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN FAVO UR OF THE ASSESSEE AND AGAINST THE REVENUE. 10. IN VIEW OF THE ABOVE DECISIONS OF THE HIGH COUR TS AND FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF BANGALORE V. M/S. BANGALORE COMMERCIAL TRANSPORT CREDIT CO-OPERA TIVE SOCIETY LTD. (SUPRA) , WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE CIT(APPEALS) IN HOLDING THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT. ACCORDINGLY, WE DISMISS THE GROUNDS OF APPEA L RAISED BY THE REVENUE ON THIS ISSUE. ITA NO.1129/BANG/2015 PAGE 10 OF 10 11. IN THE RESULT, THE APPEAL BY THE REVENUE IS DIS MISSED. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF DECEMBER, 2015. SD/- SD/- ( ABRAHAM P. GEORGE ) (ASHA VIJAYARAGHAVAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 28 TH DECEMBER, 2015. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.