Jyoti Co-Op Credit Society Ltd., Bagalkot V. ITO, Bagalkot

ITA 1269/BANG/2013

• Counselvise Citation: 126921114 RSA 2013
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 30-10-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 23-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR K SHANKAR PRA SAD
• Assessee Lawyers: M THIRUMALESH; DINESH P S
• Keywords: Gift; Question of law

Judgement Text

ITA NO.1269 OF 2013 JYOTI COOP SOCIETY LTD BAGALKOT PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE C BENCH, BANGALORE BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ITA NO. 1269/BANG/2013 (ASSESSMENT YEAR:2008-09) JYOTI COOPERATIVE CREDIT SOCIETY LIMITED RAMDURGAKAR BUILDING, MAIN ROAD, KAMBLE CHAWL, BAGALKOT PAN: AAATJ 4804 H VS. INCOME TAX OFFICER WARD 1 AAYAKAR BHAVAN, SECTOR 24, NAVANAGAR, BAGALKOT (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI M.THIRUMALESH & DINESH P ADVOCATES DEPARTMENT BY: DR.K.SHANKAR PRASAD , (DR) DATE OF HEARING: 30/10/2014 DATE OF PRONOUNCEMENT: 31/10/2014 O R D E R PER RAJPAL YADAV, J.M. THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF THE LEARNED CIT (A) DATED 25.06.2013 PASSED FOR ASSESSM ENT YEAR 2008-09. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE LEARNED CIT (A) HAS ERRRED IN CONFIRMING THE DENIAL OF DEDUCTION U/S 80P(2)(A)(I) OF THE INCOME TAX ACT, ON THE GROU ND THAT THE ASSESSEE IS A COOPERATIVE BANK AND AS PER SECTION 8 0P(4), IT IS NOT ENTITLED FOR THE DEDUCTION U/S 80P(2)(A)(I). 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A COOPERATIVE SOCIETY. IT HAS FILED ITS RETURN OF INC OME FOR ITA NO.1269 OF 2013 JYOTI COOP SOCIETY LTD BAGALKOT PAGE 2 OF 10 ASSESSMENT YEAR 2008-09 ON 30.09.2008 DECLARING NIL INCOME AFTER CLAIMING DEDUCTING OF ENTIRE INCOME OF RS.18, 38,548/- U/S 80P(2)(A)(I) OF THE I.T. ACT, 1961. ACCORDING TO TH E ASSESSEE, IT IS A COOPERATIVE SOCIETY CARRYING ON THE BUSINESS OF BAN KING FOR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THEREFO RE, IT CLAIMED ITS INCOME AS EXEMPT U/S 80P(2)(A)(I). HOWEVER, THE CLA IM OF THE ASSESSEE FOR DEDUCTION WAS REJECTED BY THE ASSESSIN G OFFICER, ON THE GROUND THAT THE ASSESSEE IS A COOPERATIVE BANK AND HENCE NOT ENTITLED TO CLAIM DEDUCTION. ASSESSING OFFICER RELIED UPON SECTION 80P(4). 3. APPEAL TO THE CIT (A) DID NOT BRING ANY RELIEF T O THE ASSESSEE. 4. LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUT SET SUBMITTED THAT SIMILAR ISSUE AROSE IN THE SUBSEQUEN T YEAR I.E. ASSESSMENT YEAR 2009-10 AND THE TRIBUNAL HAS ALLOWE D THE APPEAL OF THE ASSESSEE BEARING ITA NO.1115/BANG/201 3. THE ASSESSEE HAS BEEN TREATED AS A SOCIETY PROVIDING CR EDIT FACILITIES TO ITS MEMBERS AND ENTITLED FOR DEDUCTION U/S 80P(2 )(A)(I) OF THE ACT. HE PLACED ON RECORD COPY OF THE TRIBUNALS ORD ER. 5. THE LEARNED DR WAS UNABLE TO CONTROVERT THE CONT ENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. THE ORDER OF THE TRIB UNAL IN ASSESSMENT YEAR 2009-10 READ AS UNDER: ITA NO.1269 OF 2013 JYOTI COOP SOCIETY LTD BAGALKOT PAGE 3 OF 10 THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DA TED 20.03.2012 OF THE CIT(APPEALS), BELGAUM, RELATING T O ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE IS A CO-OPERATIVE SOCIETY. IT IS E NGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE ASS ESSEE HAD CLAIMED DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT. UN DER SEC.80P(2)(I) OF THE ACT WHERE THE GROSS TOTAL INCO ME OF A CO- OPERATIVE SOCIETY INCLUDES INCOME FROM CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS ME MBERS, THE SAME WAS ALLOWED AS DEDUCTION PRIOR TO ASSESSMENT YEAR 2 007-08. BY THE FINANCE ACT, 2006 W.E.F. 1-4-2007, SUB-SECTI ON (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 AGRICULT URAL 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 C REDIT SOCIETY' SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO TH EM IN PART V OF THE BANKING REGULATION ACT, 1949 (10 OF 1949); (B) 'PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DE VELOPMENT BANK' MEANS A SOCIETY HAVING ITS AREA OF OPERATION CONFINED TO A TALUK AND THE PRINCIPAL OBJECT OF WHICH IS TO PROVI DE FOR LONG- TERM CREDIT FOR AGRICULTURAL AND RURAL DEVELOPMENT ACTIVITIES. 3. THE AO WAS OF THE VIEW THAT AFTER AMENDED BY THE FINANCE ACT, 2006 W.E.F. 1.4.2007 BY WHICH SUB-SECTION (4) WAS I NSERTED, THE ASSESSEE WHICH WAS A CO-OPERATIVE SOCIETY CARRYING ON BANKING BUSINESS WAS NOT ENTITLED TO DEDUCTION U/S.80P(2)(I ) OF THE ACT. ACCORDING TO THE AO, THE ASSESSEE WAS A CO-OPERATIV E BANK AND THEREFORE THE DEDUCTION U/S. 80P(2)(A)(I) CANNOT BE ALLOWED. IN COMING TO THE ABOVE CONCLUSION, THE AO NOTICED THAT THE NATURE OF THE ACTIVITY OF THE ASSESSEE, THOUGH REGISTERED AS A CREDIT CO- OPERATIVE SOCIETY, IS THAT OF A BANKING INSTITUTION NOTWITHSTANDING THE FACT THAT RECEIPT OF AND LENDING MONEY IS LIMIT ED TO ITS MEMBERS. THE AO FURTHER NOTICED THAT CLAUSE (VIIA) IN SECTION 2(24) OF THE ACT WAS INSERTED BY THE FINANCE ACT 20 06 EFFECTIVE FROM 1/4/2007, WHICH PROVIDES THAT PROFITS AND GAIN S OF ANY BUSINESS (INCLUDING PROVIDING CREDIT FACILITIES) CA RRIED ON BY A CO- OPERATIVE SOCIETY WITH ITS MEMBERS THE ASSESSEES A CTIVITY WAS ALSO INCOME. THAT THE DEDUCTION FROM GROSS TOTAL INCOME OF ITA NO.1269 OF 2013 JYOTI COOP SOCIETY LTD BAGALKOT PAGE 4 OF 10 CERTAIN RECEIPTS IS AVAILABLE ONLY TO PRIMARY AGRIC ULTURAL CREDIT SOCIETIES OR PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANKS; AND THAT THE BENEFIT OF SUCH DED UCTION IS NOT AVAILABLE TO INSTITUTIONS LIKE THE ASSESSEE SOC IETY. THE AO ALSO REFERRED TO SECTION 5(B) OF THE BANKING REGULA TION ACT TO HOLD THAT, IF ONE OF THE TWO CONDITIONS OF THE APPE LLANT IS FULFILLED; I.E. ITS PRIMARY OBJECT SHOULD BE BANKING OR ITS PR INCIPAL BUSINESS MUST BE TRANSACTION IN BANKING BUSINESS, IT IS SUFF ICIENT TO BRING THE ASSESSEE INTO THE CONCEPT OF A BANKING INSTITUT ION. THE AO REFERRED TO THE OBJECTS OF THE ASSESSEE SOCIETY IN ITS BYE LAWS THAT THE ACTIVITIES OF THE ASSESSEE FALL WITHIN THE PROVISIONS OF SECTIONS 5(B), 6(1)(A), 6(1)(G), 6(1)(K) AND 6(1)(N ) OF THE BANKING REGULATIONS ACT AND HELD THAT, BROADLY, THEY ARE IN THE NATURE OF BANKING ACTIVITY. ACCORDING TO THE AO, THE FOLLOWI NG FEATURES MAKE THE ASSESSEE INELIGIBLE TO EXEMPTION CONTEMPLA TED IN SECTION 80P OF THE ACT: I) SINCE MEMBERSHIP IS OPEN TO ANYONE PAYING A SUM OF RS.10/- TO RS.100/- FOR MEMBERSHIP AND NO OTHER CON DITION IS IMPOSED. IN OTHER WORDS, MEMBERSHIP AS IS AVAILA BLE IN ANY BANKING INSTITUTION IS AVAILABLE IN THE CASE OF THE APPELLANT SOCIETY. II) THE PURPOSE OF ACCEPTING DEPOSITS FROM THE PUB LIC IS FOR MAKING INVESTMENTS AND FOR LENDING TO MEMBERS. CONFINING THE LENDING ONLY TO MEMBERS MAKES NO DIFFERENCE. III) DEPOSITS COLLECTED FROM THE DEPOSITORS ARE RE PAYABLE ON DEMAND AND DO NOT GO INTO THE CORPUS OF THE APPELLA NT. IV) THOUGH WITHDRAWAL OF MONEY IS NOT DONE BY C HEQUES, DRAFTS OR PAY-OUT SLIPS, PAY ORDERS ARE ISSUED IN FAVOUR O F A PERSON ON BEHALF OF THE DEPOSITOR. V) THE ASSESSEE SOCIETY CAME WITHIN THE EXPLANATIO N TO SUB- SECTION (4) OF SECTION 80P OF THE ACT AS A BANKING INSTITUTION. 4. IN THE LIGHT OF THE ABOVE-MENTIONED OBSERVATION S, THE AO HELD THAT THE APPELLANT WAS NOT ENTITLED TO EXEMPTI ON U/S 80P(2)(A)(I) OF THE ACT AND BROUGHT THE SAME TO TAX . 5. THE CIT(A) CONFIRMED THE ORDER OF THE AO. HENC E THIS APPEAL BY THE ASSESSEE BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING, IT WAS BROUGHT TO OUR NO TICE BY THE PARTIES THAT THE ISSUE RAISED BY THE ASSESSE E HAS ALREADY ITA NO.1269 OF 2013 JYOTI COOP SOCIETY LTD BAGALKOT PAGE 5 OF 10 BEEN CONSIDERED AND DECIDED BY THIS TRIBUNAL IN THE CASE OF ACIT, CIRCLE 3(1), BANGALORE V. M/S. BANGALORE COMM ERCIAL TRANSPORT CREDIT CO-OPERATIVE SOCIETY LTD. IN ITA NO.1069/BANG/2010, WHEREIN THIS TRIBUNAL HELD THAT SECTION 80P(4) IS APPLICABLE ONLY TO COOPERATIVE BANKS AND NOT TO CREDIT COOPERATIVE SOCIETIES. THE INTENTION OF THE LEGISL ATURE OF BRINGING IN COOPERATIVE BANKS INTO THE TAXATION STR UCTURE WAS MAINLY TO BRING IN PAR WITH COMMERCIAL BANKS. SINC E THE ASSESSEE IS A COOPERATIVE SOCIETY AND NOT A COOPERA TIVE BANK, THE PROVISIONS OF SECTION 80P(4) WILL NOT HAVE APPL ICATION 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 RE LEVANT OBSERVATIONS 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 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 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 PROVID ES THAT DEDUCTION UNDER THE SAID SECTION SHALL NOT BE AVAILABLE TO AN Y COOPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR RURAL DEVELOPMENT BANK. FOR THE PURPOSE OF THE SAID SUB SECTION, COO PERATIVE BANK SHALL HAVE THE MEANING ASSIGNED TO IT IN PART V OF THE BA NKING REGULATION ACT, 1949. IN PART V OF THE BANKING REGULATION ACT , COOPERATIVE ITA NO.1269 OF 2013 JYOTI COOP SOCIETY LTD BAGALKOT PAGE 6 OF 10 BANK MEANS A STATE COOPERATIVE BANK, A CENTRAL COO PERATIVE 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 COOPERATIVE BANKS. SECTION 80P(4) DOES NOT DEFINE THE WORD COOPERATIVE SOCIET Y. THE EXISTING SUB-SECTION 80P(2)(A)(I) SHALL BE APPLICABLE TO A C OOPERATIVE 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 9 TH MAY, 2007. THE DIFFERENCE BETWEEN A COOPERATIVE B ANK 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. 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 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). 1. AS PER THE BYE LAWS OF THE COOPERATIVE SOCIETY. 2. SOCIETY CANNOT OPEN SAVINGS BANK ACCOUNT, CURRENT ACCOUNT, ISSUE LETTER OF CREDIT, 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. INSPECTION RBI HAS THE POWER TO REGISTRAR HAS THE ITA NO.1269 OF 2013 JYOTI COOP SOCIETY LTD BAGALKOT PAGE 7 OF 10 INSPECT ACCOUNTS AND OVERALL FUNCTIONING OF THE BANK. 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 TO SECTIO N 80P(4) WHICH IS BROUGHT INTO STATUTE IS APPLICABLE ONLY TO COOPERAT IVE BANKS AND NOT TO CREDIT COOPERATIVE SOCIETIES. THE INTENTION OF THE LEGISLATURE OF BRINGING IN COOPERATIVE BANKS INTO THE TAXATION STR UCTURE WAS MAINLY TO BRING IN PAR WITH COMMERCIAL BANKS. SINCE THE ASSE SSEE IS A COOPERATIVE SOCIETY AND NOT A COOPERATIVE BANK, THE PROVISIONS OF SECTION 80P(4) WILL NOT HAVE APPLICATION IN THE ASS ESSEES CASE AND THEREFORE, IT IS ENTITLED TO DEDUCTION U/S 80P(2)(A )(I) OF THE ACT. HENCE, WE ARE OF THE VIEW THAT THE ORDER OF THE CIT(A) IS CORRECT AND IN ACCORDANCE WITH LAW AND NO INTERFERENCE IS CALLED F OR. 7.THE HONBLE GUJARAT HIGH COURT IN THE CASE OF TAX 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 1 5.1.2014 HAD TO DEAL WITH THE FOLLOWING QUESTION OF LAW: WHETHER THE HONBLE TRIBUNAL IS CORRECT IN ALLOWIN G DEDUCTION UNDER SECTION 80P(2)(A)(I) TO ASSESSEES SOCIETY EV EN THOUGH SAME IS COVERED UNDER SECTION 80P(4) RWS 2(24) (VII A) BEING 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 SECTI ON 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 ITA NO.1269 OF 2013 JYOTI COOP SOCIETY LTD BAGALKOT PAGE 8 OF 10 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 SECTIO N 80P(4), THE RESPONDENT ASSESSEE WOULD NOT BE ENTITLED TO BENEFI TS OF DEDUCTION UNDER SECTION 80P. CIT(APPEALS) AS WELL A S THE TRIBUNAL REVERSED THE DECISION OF THE ASSESSING OFF ICER ON THE PREMISE THAT THE RESPONDENT ASSESSEE NOT BEING A BA NK, 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 THIS BEEN THE PLAIN STATUTORY PROVISIONS UN DER 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 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 DED UCTION 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 T HAT SUB-SECTION(4) OF SECTION 80P PROVIDES THAT DEDUCTI ON UNDER THE SAID SECTION SHALL NOT BE ALLOWABLE TO AN Y 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- OPERATIVE BANK MEANS A STATE CO-OPERATIVE BANK, A ITA NO.1269 OF 2013 JYOTI COOP SOCIETY LTD BAGALKOT PAGE 9 OF 10 CENTRAL CO-OPERATIVE BANK AND A PRIMARY CO-OPERATIV E BANK. 4. THUS, IF THE DELHI CO OP URBAN T & C SOCIETY LT D. DOES NOT FALL WITHIN THE MEANING OF CO-OPERATIVE B ANK 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 GATHER ED THAT SUB-SECTION(4) OF SECTION 80P WILL NOT APPLY TO AN ASSESSEE WHICH IS NOT A CO-OPERATIVE BANK. IN THE CASE CLARI FIED BY CBDT, DELHI COOP URBAN THRIFT & CREDIT SOCIETY LTD. WAS UNDER CONSIDERATION. CIRCULAR CLARIFIED THAT THE SA ID ENTITY NOT BEING A COOPERATIVE BANK, SECTION 80P(4) OF THE ACT WOULD NOT APPLY TO IT. IN VIEW OF SUCH CLARIFICATIO N, WE CANNOT ENTERTAIN THE REVENUES CONTENTION THAT SECT ION 80P(4) WOULD EXCLUDE NOT ONLY THE CO-OPERATIVE BANK S OTHER THAN THOSE FULFILLING THE DESCRIPTION CONTAINED THE REIN BUT ALSO CREDIT SOCIETIES, WHICH ARE NOT COOPERATIVE BA NKS. IN THE PRESENT CASE, RESPONDENT ASSESSEE IS ADMITTEDLY NOT A CREDIT CO-OPERATIVE BANK BUT A CREDIT CO-OPERATIVE SOCIETY. EXCLUSION CLAUSE OF SUB-SECTION(4) OF SECTION 80P, THEREFORE, WOULD NOT APPLY. IN THE RESULT, TAX APPEALS ARE DIS MISSED. 8. IN VIEW OF THE AFORESAID DECISIONS OF THE HON'BL E GUJARAT HIGH COURT IN THE CASE OF JAFARI MOMIN VIKAS CO-OP CREDI T SOCIETY LTD. (SUPRA) AND OF THE CO=ORDINATE BENCH OF THIS T RIBUNAL IN BANGALORE TRANSPORT CREDIT CO-OPERATIVE SOCIETY LTD . (SUPRA), WE ARE OF THE VIEW THAT THERE IS MERIT IN THIS APPE AL BY THE ASSESSEE. CONSEQUENTLY, THE SAME IS ALLOWED. 9. IN THE RESULT, THE ASSESSEE'S APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 21ST DAY OF FE BRUARY, 2014. 7. THERE IS NO DISPARITY ON FACTS. RESPECTFULLY FOL LOWING THE ORDER OF THE TRIBUNAL, WE ALLOW THE APPEAL OF THE A SSESSEE AND ITA NO.1269 OF 2013 JYOTI COOP SOCIETY LTD BAGALKOT PAGE 10 OF 10 DIRECT THE ASSESSING OFFICER TO GRANT DEDUCTION U/S 80P(2)(A)(I) OF THE INCOME TAX ACT. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2014. SD/- SD/- (ABRAHAM P. GEORGE) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DATED 31 ST OCTOBER, 2014. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCHES, BANGALORE