Sri. Udayaravi Souharda Pattina Sahakari Niyamit, V. ITO,

ITA 1320/BANG/2013

• Counselvise Citation: 132021114 RSA 2013
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-09-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 06-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRATIBHA
• Assessee Lawyers: P DHIVAHAR J
• Section: 68; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A : BANGALORE BEFORE SHRI RAJPAL YADAV , JUDICIAL MEMBER A ND SHRI JASON P.BOAZ, ACCOUNTANT MEMBER ITA NO. 1320 / BANG/20 13 (ASSESSMENT YEAR: 2010 - 11 ) INCOME - TAX OFFICER, WARD - 1, TIPTUR. A PPELLANT VS. SRI UDAYARAVI SOUHARDHA PATTIANA SAHAKARI NIYAMITHA, 1 ST MAIN ROAD, 7 TH CROSS, K.R.EXTENSION, TIPTUR - 572201. PAN:AAWFS0981J RESPONDENT APPELLANT BY: SHRI P.DHIVAHAR, JCIT(DR) RESPONDENT BY: SMT.PRATIBHA, ADVOCAT E. DATE OF HEARING : 22 - 09 - 2014 . DATE OF PRONOUNCEMENT: 26 - 09 - 2014 . O R D E R PER JASON P BOAZ, AM : T H I S AP PE A L B Y T H E RE V ENU E IS A GA I N ST T H E O RDE R DA T E D 04 - 06 - 2013 O F T H E CI T ( A P P E A L S ) - II, B A NGA L O R E R E L A T I N G T O A S S E SS M EN T Y E A R 2010 - 11 . 2 . TH E A S S E SS E E IS A C O - O PE R A TI V E S O C I E T Y . IT IS E N G A GE D I N B AN KI N G B U S I N E SS A L S O . T H E A S S E SS E E H A D C L A I ME D D EDU C T I O N U /S. 8 0 P (2) ( A ) ( I) O F T H E A CT. U N DE R S E C . 8 0 P (2 )( I) O F T H E A CT ITA NO. 1320 /BANG/20 13 SRI UDAYARAVI SOUHARDHA PATTIANA SAHAKARI NIYAMITHA PAGE 2 OF 10 W H E R E TH E G R O SS T O T A L I N C O M E O F A C O - O P E R A TIVE S O C I E T Y I N C L U D E S I N C O M E F R O M C AR R Y I N G O N T H E B U SI NE SS O F BAN K I N G O R PRO V I D I N G C R ED IT F A CI L ITI E S TO ITS M E MB ER S, T H E S A M E IS A LL O W E D DE D U CTI ON . B Y T H E F I N A N C E A CT, 200 6 W . E . F . 1 - 4 - 2 0 0 7 , S UB - S E C T I O N ( 4 ) W A S I N S E R TE D I N S E C . 80 - P W H I C H P RO V I DE S A S F O LL O WS: ( 4 ) T H E P R O V I S I O N S O F T H I S S EC T I O N S H AL L N O T A PP L Y I N R E L A T I O N T O A N Y C O - OP ERA T I V E B A N K O T H ER T H A N A P R I MARY A G R I C U LT U RAL C R E D I T S O C I E T Y O R A P R I M A RY C O - O P ER A T I V E A G R IC U LT U RAL A N D R U RAL D E V E L O P M E N T B A NK . E XP L A N A T I O N : FO R T H E P U R P OS ES O F T H I S SUB - S EC T I ON, (A) ' C O - OP ERA T I V E B A N K ' A N D ' P R I M ARY A G R I C U L T U RAL CR E D I T S O C I ET Y ' S H A L L H A V E T H E M EA N I NG S R E S P EC T I V E L Y A S S I GN E D T O T H E M I N P A RT V O F T H E B A NK I N G R E GU L A T I O N A C T , 194 9 ( 1 0 O F 1949 ); ( B ) 'P R I M A RY C O - O P E R AT I V E A G R I C U L T U RAL A N D R U RAL D E V E L O P M E N T B A NK ' M E A N S A S O C I E T Y H A V I N G I T S AREA O F OP E RA TI O N C O N F I N ED T O A T A L U K A N D T H E P R I N C I P AL OB J E CT O F W H I CH I S T O P R O V I D E F O R L ONG - T E R M CRE D I T F O R A G R I C U L T U RAL A N D R U RAL D E V E L OP M E N T AC T I V ITI E S . 3 . TH E A O W A S O F T H E V I E W T HA T A F T E R A M EN DE D B Y T H E F I NA N CE A CT, 2 0 0 6 W . E .F . 1 . 4 . 2 0 0 7 B Y W H I C H S U B - S E CT I O N (4 ) W A S I N S ER T ED , T H E A S S E SS E E W H I C H W A S A C O - OPE RA TIVE S O CI E T Y C A RR Y I N G O N B A N K I N G B U S I N E SS W A S N O T E N TI T L E D TO D E D U C T I O N U /S . 8 0 P ( 2 ) ( I) O F T H E A CT. A CC OR D I N G T O T H E A O, T H E A SS E S S E E W A S A C O - O P E R A T I VE B A N K AN D T HE R E F OR E TH E DE D U C T I O N U /S. 8 0 P ( 2) ( A ) ( I) C A N N O T B E A LL O W ED . I N C O M I N G TO T H E A B O VE C O N C L U S I O N , T H E A O N O TI C E D T H A T T H E N A T U R E O F T H E A C T I V I T Y O F T H E A SS E SS E E , T HO UG H R E G IST E R E D A S A C RED IT C O - O P E R A T I V E S O CI E T Y , IS T H A T O F A B A N KI N G I N STI T U T I O N N O T W IT H ST A N D I N G T H E F A CT T H A T R E C E I P T O F A N D L E ND I N G M O N E Y IS LI M IT E D T O ITS M E M BE R S. TH E A O ITA NO. 1320 /BANG/20 13 SRI UDAYARAVI SOUHARDHA PATTIANA SAHAKARI NIYAMITHA PAGE 3 OF 10 F U R T HE R N O T I C E D T HA T CL A U S E ( VI I A ) IN S E C T I O N 2( 2 4 ) O F T H E A CT W A S I N S E R T E D B Y T H E F I NA N CE A CT 20 0 6 E FF E CTIVE F RO M 1 / 4 / 2 0 0 7 , W H I C H P R O V I DE S T H A T PRO F I T S A N D G A I N S O F A N Y BU S I N E SS ( I N C L U D I N G P R O V I D I N G C RED IT F A CI L IT I E S) C ARR I E D O N B Y A C O - OP E RA TI V E S O CI E T Y W I T H I T S M E M B E R S T H E A SS E S S E E S A C T I V I T Y W A S A L S O I N C O M E . T HA T T H E D E DU CT I O N F RO M GRO SS T O T A L I N C O M E O F C E R T A IN RE C E I P T S IS A V A I L AB L E O N L Y T O P R I M A R Y A G R I C U LT U RA L C R E D IT SO C I E T I E S O R P R I M A R Y C O - OP E RA TI V E A G R IC U L T U R A L A N D R U RA L DE V E L OP M EN T BA N KS; AN D T H A T T H E B EN E F IT O F S U CH D E DU CT I O N IS NO T A V A I L A B LE TO I N S TIT U T I O N S LI K E T H E A S S E S S E E S O C I E T Y . TH E A O A LSO R E F ER R E D TO S E CTI O N 5 (B ) O F T H E B A N K I N G R E G U L A T I O N A C T TO H O LD T H A T, I F O N E O F T H E T W O CO ND I T I ON S O F T H E A PP E L L A N T I . E . I T S PR I M A R Y O B J E CT S H O U LD B E B A N K I N G O R I T S PR I N C I PA L B U S I N E SS M U ST B E TR AN S A CT I O N IN BAN K I N G B U SI N E SS, I S S U F F I C I EN T TO BR I N G T H E A PP E L L A N T I N T O T H E C O N C E P T O F A B AN KI N G I N ST I T U TI ON . TH E A O RE F ER RE D TO T H E O B J E CTS O F T H E A S S E S S E E S O CI E T Y IN ITS B Y E L A W S T HA T T H E A C T I V I T I E S O F T H E A SS E SS E E F A LL W I T H I N T H E P R O VIS I O N S O F S E CTI O N S 5 ( B) , 6 ( 1) ( A) , 6 ( 1 ) ( G) , 6 (1 ) ( K) A N D 6 (1) ( N ) O F T H E B A N KI N G R E G U L A TI O N S A CT A N D HE L D T H A T , B RO A D L Y , T HE Y A R E I N T H E N A T U R E O F B A N K I N G A C T I V I T Y . A CC O R D I N G TO T H E A O, T H E F O LL O W I N G F E A T URE S M A K E T H E A SS E SS E E I N E L I G I B LE TO E X E M P TI O N C O N T E M P L A T E D I N S E CT I O N 80 P O F T H E A CT: I. S I N CE M E M B E R S H I P I S OP EN T O A NYO N E P A Y I N G A S U M O F R S.10 / - T O R S . 1 00 / - F O R M E M B ER S H I P A N D N O O T H ER C OND IT I O N I S I M P O S E D . IN O T H ER W O R D S , M E M B ER S H I P A S I S A V A I L A B L E I N A N Y B A NK I N G I NS T I T U T I O N I S A V A IL A B L E I N T H E CA S E O F T H E A P P E LL A N T S O C I E T Y . II. T H E PU R PO S E O F A C CE P T I N G D E P OS I T S F R O M T H E PUB LI C I S F O R M A K I N G I NV E S T ME N T S A N D FO R L E ND I N G T O ITA NO. 1320 /BANG/20 13 SRI UDAYARAVI SOUHARDHA PATTIANA SAHAKARI NIYAMITHA PAGE 4 OF 10 M E M B ER S . C O N F I N I N G T H E L E ND I N G ON L Y T O M E M B ERS M A K ES N O D I F F E RE N CE. III. D E PO S I T S C O LL E C T ED F R O M T H E D E POS I T O RS A RE RE P A Y A B L E O N D E M A N D A N D D O NO T G O I N T O T H E C O R PU S O F T H E A PP E LL A N T . IV. T H OUG H WI T HD R A W AL O F M O N EY I S NO T DON E B Y C H E Q U E S , D RAF T S O R P A Y - O U T S L I PS , P AY O R D ERS ARE I S S U ED I N F A V O U R O F A P E R S O N O N B E H A L F O F T H E D E P O S IT O R. V. T H E A S S E S S EE SO C I E T Y CA M E WI T H I N T H E E XP L A N A TI O N T O S UB - S EC T I O N ( 4 ) O F S E C TI O N 80 P O F T H E A CT A S A B A NK I N G I N ST I T U TI ON . 4 . IN T H E L I GH T O F T H E A BO V E - M E N T I O N E D O B S E R V A T I ON S, T H E A O H E L D T H A T T H E A PP E L L A N T W A S N O T E N T I T L E D TO E X E M P T I O N U /S 8 0 P ( 2 ) ( A ) ( I) O F T H E A CT A N D B R O U G H T T H E S A M E T O T A X. 5 . ON A PP E A L B Y TH E A S S E SS E E , T H E C I T( A P P EA L S) A L L O W E D T H E CL A IM O F T H E A S S E S S E E F O R D ED U CTI O N U / S. 8 0 P ( 2 )(A) ( II) O F T H E A CT B Y F O LL O W I N G T H E D E CI S I O N O F I TA T I N T H E F O L L O W I N G C A S E S : - I. A C IT, C I RC L E - 3 ( 1 ), B A N G A L O RE V . M / S B A NG A L O RE C O M M E R C I A L TRA N SP O RT C RE D I T CO - O P E RA TI V E SO C I E T Y L T D . ITA . N O .106 9 / B A N G / 201 0 D A T ED 8 / 4 / 2 0 1 1 [IT A T, B A N G A L O R E B E N CH B , B A N G A L O RE] II. I TO , W AR D - 1 ( 4 ) V . J A N K A L Y AN N A G RI S A H A K ARI P AT S A NS T H A L T D . [( 2 012 ) 2 4 T A X M A NN. C O M 12 7 ( PUN E - TR I B ) D A T ED 2 6 / 6 / 2 012 ] III. D C IT, C E N T RAL C I RC LE , P A N A J I V . J A Y A L A K S H MI M A H I L A V I V I DOD E S H A G A L A SOU H AR D A S A H A K A RI L T D . - I T A N O S . 1 T O 3 ( P N J ) / 101 2 D A T ED 3 0 / 3 / 2 012 . 6 . A GGR I E V E D B Y T H E O R D E R O F T H E CI T ( A PP E A L S) , T H E R E V E N U E H A S F I L E D T H E P R E SE N T AP P EA L BE F O R E T H E T R I B UNA L. ITA NO. 1320 /BANG/20 13 SRI UDAYARAVI SOUHARDHA PATTIANA SAHAKARI NIYAMITHA PAGE 5 OF 10 7 . A T T H E T I M E O F HEA R I N G , IT W A S S EE N T HA T T H E IS SU E R A I S E D B Y TH E R E V E N U E HA S A L R EA D Y B EE N CO N S I D E RE D A N D D E CI D E D B Y T H IS TR I B U N A L I N T H E C A SE O F A C I T , CI R CLE 3( 1 ) , B A N G A L O R E V. M /S. B A N G A L O R E C O MM E R C I A L TR A N S POR T C R E D IT C O - O P E R A TIVE S O CI E T Y L T D . IN I T A N O . 1 069 / B ANG / 2 0 10 , W H E R E I N T H IS T R I BUN A L H E LD T HA T S E C T I O N 8 0 P ( 4 ) IS APP L I C AB L E ON L Y T O C O O P E RA TI V E BAN KS AN D N O T T O C R ED IT C O O P E R A T I V E S O C I E TI E S. T H E I N TE N TI O N O F T H E L E G I S L A T U R E O F BR I NG I N G IN C O OPE R A TI V E B A N KS I N TO T H E T A X A T I O N S T RU CT U R E W A S M A I N LY T O BR I N G I N P A R WI T H C O MM ER C I A L B A N K S. S I N C E T H E A S S E S S E E IS A C O O P E RA TI V E S O C I E T Y A N D N O T A C O O PE R A T I V E B A N K, T H E P R O V I S I O N S O F S E CTI O N 8 0 P ( 4 ) W ILL N O T HA VE A P P L IC A T I O N IN T H E A S S E S S E E S C A SE A N D T H E R E F O R E , I T I S E N TI T L E D TO D E DU CT I O N U / S 80 P ( 2) ( A ) ( I ) O F T H E A C T. TH E F O LL O W I N G W E R E T H E R E L E V A N T O B S E R V A T I ON S O F T H E T R I B U N A L : - 9 . W E H A V E H EA R D T H E R I V AL S U B M I S S I ON S A N D P ER U S ED T H E M A T ER I AL O N REC O R D . T H E A S S E S S E E W AS D E N IE D T H E D E D U C TI O N U / S 80 - P ( 2 )(A)( I ) O F T H E A CT F O R T H E RE A SO N O F I N T R ODU C T I O N O F SU B S EC TI O N 4 T O S EC T I O N 8 0 P . S EC T I O N 80 P ( 4 ) REA D S AS F O LL O W S: - ( 4 ) T H E P R O V I S I ON S O F T H I S S E C T I O N S H A L L NO T APP L Y I N R E L A T I O N T O A NY C O O P E R A T I V E B A N K O T H E R T H A N A P R I M A R Y A G R I C U L T U R A L C R E D I T S O C I E T Y O R A P R I M A R Y C O O P E R A T I V E A G R I C U L T U R A L A N D R U R A L D E V E L O P M E N T B A N K . E X P L A N A T I ON : F O R T H E P U R PO S E S O F T H I S S U B - S E C T I ON , ( A) C O - O P E R A T I V E B A N K A N D P R I M A R Y A G R I C U L T U R A L C R E D I T S O C I E T Y S H A L L H A V E T H E M E A N I N G S R E S P E C T I V E L Y A SS I G N E D T O T H E M I N P A R T V O F T H E B A N K IN G R E G U L A T I O N A C T , 1 94 9 (1 0 O F 1 9 4 9 ) ; ITA NO. 1320 /BANG/20 13 SRI UDAYARAVI SOUHARDHA PATTIANA SAHAKARI NIYAMITHA PAGE 6 OF 10 ( B ) P R I M A R Y C O O P E R A T I V E A G R I C U L T U R A L A N D R U R A L D E V E L O P M E N T B A N K M E A N S A S O C I E T Y H A V IN G I T S A R E A O F O P E R A T I O N C O N F I N E D T O A T A L U K A N D T H E P R I N C I P A L O B J E C T O F W HI C H I S T O P R O V I D E F O R L ON G T E R M C R E D I T F O R A G R I C U L T U R A L A N D R U R A L D E V E L O P M E N T A C T I V I T I E S . 9 . 1 T H E A BO V E S UB - S E C T I ON 4 O F S EC T ION 80P P R O V I D E S TH A T D E D U C T I O N UND E R T H E S A I D S EC T ION S H A L L N O T B E A V A I L A BLE TO A NY C OOP E R A T I V E B A NK OT H E R TH A N A P R I M A R Y A G R I C UL T U R A L C R E D I T S O C I E TY OR R U R A L D E V E L OPM E NT B A N K. F OR T HE PU R P O S E OF THE SA ID S UB SEC T I ON, C OOP E R A T I V E B A NK S H A L L H A VE THE M E A NING A SS I G N E D TO I T IN P A R T V OF THE BA NK I NG R E G U L A T I ON A C T , 1949. I N P A R T V OF THE B A N K ING RE G U L A TION A C T, C OO P E R A T I V E B A N K M EA NS A S T A TE C O OP E R A T I V E B A NK, A CE N T R A L C OOP E R A T I V E B A NK A ND A PR I M A T E C OO P E R A TIVE B A NK. 9 . 2 F R OM T HE A BO V E S E C TION, I T I S C L E A R TH A T T H E P R O V I S I ONS OF S EC T I O N 80 P( 4) H A S GOT I T S A PP L I CA TION ONLY T O C OO P E R A T I V E B A NK S . S E C T I ON 80 P( 4) DO E S NOT D E F INE T HE W O R D C OOP E R A T I V E S O C I E T Y . T H E E XI S T I NG S UB - SEC TION 80 P( 2 )( A ) (I ) S H A L L BE A PP L I C A B L E TO A C OOP E R A T I V E S O C I E TY C A RR Y I N G ON C R E D I T F A C I L IT Y T O ITS M E MB E R S . T HIS V I E W IS C L A R I FI E D BY CE N T R A L B O A R D O F DI R EC T T A X V I D E I T S C L A R I F I C A T I ON NO . 133/ 0 6/2007 - T P L D A T E D 9 T H MA Y, 2007. T H E D I F F E R E N C E B E T W E E N A C OOP E R A T I V E B A NK A ND A C O O P E R A T I V E S O C I E T Y A R E A S FO LLOW S : - N A T U R E C O O P E R A T I V E S O C I E T Y R E G I S T E R E D U N D E R B A N K I N G R E G U L A T I ON A C T , 1 9 49 C O O P E R A T I V E S O C I E T Y REGISTERED U N DE R K A R N A T A K A C OO P E R A T I V E S O C I E T Y A C T , 1 95 9 . R E G I S T R A T I ON U N D E R T H E B A N K I NG R E G U L A T I ON A C T , 1 949 AND C OO P E R A T I V E S O C I E T I E S A C T , 1 959 . C O O P E R A T I V E S O C I E T I E S ACT, 1 9 59 . N A T U R E O F B U S I N E S S 1. A S D E F I N E D I N S E C T I ON 6 OF B A N K I N G R E G U L A T I ON AC T . 2. C AN O P E N S A V I N G S B A N K A CC O U N T , C U RR E N T A C C O U N T , O V E R D R A F T A C C O U N T , C A S H C R E D I T A CC O U N T , I SS U E L E TT E R O F C R E D I T , D I S C O U N T I N G B I L L S OF E X C H A N G E , I SS U E C H E QUE S , D E M AND D R A F T S ( D D ) , P AY O R DE R S , G I F T C H E QU E S , L O C K E R S , BA N K G U A R A N T E E S E T C . 1 . A S P E R T H E B Y E L A W S OF T H E C O O P E R A T I V E S O C I E T Y . 2 . S O C I E T Y C A N N O T O P E N S A V I N G S B A N K A C C O U N T , C U R R E N T A C C O U N T , I SS U E L E TT E R OF C R E D I T , D I S C O U N T I N G B I L L S OF E X C H A N G E , I SS U E C HE Q U E S , DEM A ND D R A F T S , P AY O R D E R S , G I F T C H E Q U E S , L O CK E R S , B A NK G U A R A N T E E S E T C . 3 . S O C I E T Y C A NNO T A C T ITA NO. 1320 /BANG/20 13 SRI UDAYARAVI SOUHARDHA PATTIANA SAHAKARI NIYAMITHA PAGE 7 OF 10 3. C O O P E R A T I V E B A N K S C AN A C T A S C L E A R I N G A G E N T F O R C H E QUE S , DD S , P A Y O R D E RS A ND O T H E R F O R M S . 4. B A N K S ARE B O U ND T O F O LL O W T H E R U L E S , R E G U L A T I O N S A N D D I R E C T I ON S I SS U E D BY R E S E R V E B ANK O F I N D I A ( R B I ) . A S C L E A R I N G A G E N T , F O R C H E QU E S , DD S , P AY O R D E RS AND O T H E R F O R M S . 4 . S O C I E T Y ARE B O U ND BY R U L E S AND R E G U L A T I O N S AS S P E C I F I E D B Y I N T H E C OO P E R A T I V E S O C I E T I E S A C T . F I L I NG O F R E T U R N S C O O P E R A T I V E BANKS H A V E T O S U B M I T A NN U A L R E T U R N T O R B I E V E RY Y E A R . S O C I E T Y H AS T O S U B M I T T H E ANN U A L R E T U R N T O R E G I S T R A R O F S O C I E T I E S . I N S P E C T I ON R B I H AS T H E P O W E R T O I N S P E C T A C C O U N T S AND O V E R A L L F U N C T I O N I N G O F T H E B A N K . R E G I S T R A R H AS T H E P O W E R T O I N S P E C T A CC O U N T S AND O V E R A L L F U N C T I ON I N G OF T H E B A N K . P A R T V P A R T V OF T H E B A N K I NG R E G U L A T I O N A C T I S A P P L I C AB L E T O C O O P E R A T I V E B A N K S . P A R T V OF T H E B A N K I N G R E G U L A T I ON A C T I S NO T A P P L I C A B L E T O C OO P E R A T I V E B A N K S . U S E O F W O R D S T H E W O R D B A N K , B A N K E R , B A N K I N G C A N BE U S E D B Y A C O O P E R A T I V E B A N K . T H E W O R D B A N K , B A N K E R , B A N K I N G C A NNO T BE U S E D BY A C O O P E R A T I V E S O C I E T Y . 9 . 3 I F THE I N T E N T ION O F T H E L E G I S L A TU R E W A S N O T TO G R A NT D E D U C T I ON U/S 80 P( 2 )( A ) ( I) TO C OO P E R A TIVE S O C I E T I E S C A RR Y I N G ON T HE BU S IN E S S OF P R O V I D ING C R E D I T F A C I L ITI E S T O I T S M E MB E R S , T H E N T H I S S E C T ION WOULD H A V E B E E N D E L E T E D . T HE N E W P R OVI S O TO S E C T ION 8 0 P ( 4) WHI C H IS B R OU G H T I N TO S T A TUTE IS A P PL I C A B L E O N LY T O C OOP E R A TI V E B A NKS A ND NOT TO C R E DIT C OOP E R A TI V E S O C I E TI ES . T H E I N T E NTION OF T H E L E G I S L A TU R E O F B R I N G I N G IN C OO P E R A T I V E B A NKS I N TO T H E T A X A T I ON S T R U C TU R E W A S M A I NLY TO B R I NG IN P A R WITH C OM M E R C I A L B A N K S . S IN C E THE AS S ESS E E I S A C O O P E R A TI V E S O C I E TY A ND N O T A C O O P E R A T I V E B A N K, THE P R O V I S IONS OF SEC TION 80 P( 4) WI L L NOT H A V E A PP L I C A TION IN T H E AS S ES S EE S CA S E A ND TH E R E F O R E , IT IS E N T I TL E D T O D E D U C T ION U / S 80 P( 2 )( A ) ( I) OF T H E A C T. H E N CE , WE A R E O F T H E V I E W TH A T T HE O R D E R OF THE C IT( A) I S C O RR E C T A ND I N ACC O R D A N C E W I T H L A W A ND NO I NT E RF E R E NC E IS C A L L E D F O R. 8 . TH E H O N B LE G U J A R A T HI G H C O UR T IN T H E C A S E O F TA X A P PEA L N O . 4 4 2 O F 2 0 1 3 W ITH TA X A P P E A L N O . 4 4 3 O F 20 1 3 WI T H T A X AP P E A L N O . 86 3 O F 2 0 1 3 I N T H E C A SE O F C I T V S. J A F AR I M O M I N V I K A S ITA NO. 1320 /BANG/20 13 SRI UDAYARAVI SOUHARDHA PATTIANA SAHAKARI NIYAMITHA PAGE 8 OF 10 C O - O P C R ED IT S O C I E T Y L T D . B Y J U D G M EN T DA T E D 1 5 . 1 . 20 1 4 HA D TO D E A L W I T H T H E F O L L O W I N G QUE ST I O N O F L A W : W H E T H E R T H E H O N B L E TR I BUN AL I S C O R R E CT I N A LL O WI N G D E DU C TI O N UND ER S EC TI O N 80 P ( 2 )( A )( I ) T O A S S E S S E E S S O C I ET Y E V EN T H O UG H S A ME I S C OV ERED U N D ER S EC TI O N 80P ( 4 ) R W S 2 ( 24 ) ( V II A) B E I N G I N C O M E F R O M P R OV I D I N G CRE D I T F AC I L ITI ES C ARR I ED O N B Y A C O - O P ER AT I V E S O C I E T Y W IT H IT S M E M B E R ? TH E H ON B L E C O U R T HE L D A S F O LL O WS: 4 . A S P ER S E C TI O N 80P ( 4 ) , T H E P R OV I S I ON S O F S EC TI O N 8 0 P W O U L D N O T A PP L Y I N RE L A T I O N T O A N Y C O - OP ERA TI V E B A N K O T H ER T H AN P R I M A R Y A G R I C U L T U RAL CRE D I T S O C IE T Y O R P R I M A RY C O - OP E RA T I V E A G R I C U L T U R A L A N D R U RAL D E V E L O P ME N T B A NK . A S P ER T H E E XP L A N A T I ON , T H E T E RMS C O - OP ERA T I V E B A NK A N D P R I MARY A G R I C U L T U R AL C R E D I T S O C I E T Y SH A L L H A V E T H E ME A N I NG S RE S P EC T I V E L Y A S S I GN ED T O T H E M I N P ART V O F T H E B A NK I N G R E GU L A T I O N A C T , 1949 . 5 . A S S E S S I N G O F F I CER H E L D T H AT B Y V I R T U E O F S EC TI O N 80P ( 4 ), T H E RE SP O ND E N T A S S E S S E E W OU L D NO T B E E N TI TL ED T O B E N E F I T S O F D E DU C T I O N UND ER S E C TI O N 80P . C I T ( A PP EA L S ) AS W E L L AS T H E TR I BUN AL RE V ER S ED T H E D EC I SI O N O F T H E A S S E SS I N G O F F I CER O N T H E P R E M I S E T H AT T H E RE S PO N D E N T A S S E S S EE NO T B EI N G A B A NK , E X C L U S I O N P R OV I D ED I N S UB - S E C T I ON ( 4 ) O F S EC TI O N 8 0 P W O U L D NO T A PP L Y . T H I S , I RRE S P E C T I V E O F T H E F A CT T H A T T H E RE SP O ND E N T W OU L D NO T FA L L W I T H I N T H E E XP RE S S I O N P R I MA R Y A G R I C U LT U RAL CRE D I T S O C I E T Y . 6 . H AD T H I S B EEN T H E P L A I N S T A T U T O RY P R OV I S I ON S UND E R C ON S I D ERA TI O N I N I S O L A T I ON , I N OU R O P I N I O N , T H E Q U E ST I O N O F L AW C OU L D B E S T A T ED T O H A V E AR I S E N . W H E N , A S C ON T E ND ED B Y T H E A S S E S S E E , B Y V I R T U E O F S U B S E C TI O N ( 4 ) O N L Y C O - OP ERA T I V E B A N K S O T H E R T H AN T HO S E M E N TI ON ED T H ERE I N W ERE M E A N T T O B E E X C L UD E D F O R T H E PU R PO S E O F D E D U C T I O N U N D E R S EC TI O N 8 0 P , A QU E S TI O N W O U L D AR I S E W H Y T H EN L E G IS L A T U RE SP E CI F IE D P R I M ARY A G R I C U L T U RAL C R E D I T S O C I E T I ES A L O N G W IT H P R I MARY C OOP ER A T I V E A G R I C U L T U RAL A N D R U R A L D E V E L O P M E N T B A N K S F O R E X C L US I O N F R O M SU C H E X C L U S I O N A N D I N O T H ER W O R DS , C O N T I NU ED T O H O L D S U CH E N T IT Y A S E LI G I B L E F O R D E DU C TI O N . H O W E V ER, T H E IS SU E H AS B EE N C ON S I D ER A B L Y S I M P L I F I ED B Y V I R T U E O F C B D T C I RC U L A R N O.13 3 O F 200 7 D A T ED 9.5.2007 . C I RC U L A R P R O V I D ES AS UN D E R : - S U B JE C T : C L A RI FIC AT IO N R E G AR D IN G A D MISSIB LY O F D E D U C T I O N U N D E R S E C T IO N 8 0 P O F TH E INCOM E - T A X A C T , 1 9 6 1 . ITA NO. 1320 /BANG/20 13 SRI UDAYARAVI SOUHARDHA PATTIANA SAHAKARI NIYAMITHA PAGE 9 OF 10 1 . P L EA S E RE FE R T O Y O UR L E TTE R N O . D C U S / 3 0 6 8 8 / 2 0 0 7 , D A T E D 2 8 . 0 3 . 20 0 7 A DD R ESSE D T O C H A IRM A N , C ENT R A L B O A R D O F D I R EC T T A X E S , O N T H E A B OV EG IV E N S U B J E C T . 2 . I N T H I S R E G AR D, I H A V E B EE N D IR E C TE D T O S TA T E T H A T S U B - S E C T IO N( 4) O F S E C T IO N 8 0 P P R OVI D E S T H A T D E DU C T I O N U N D E R T H E S A I D S E C T I O N SH A LL N O T B E A LL O W A B LE T O A NY C O - O P E RAT I V E B A N K OTH E R TH A N A P RIM A R Y A G R I C U L T U R A L C R E D I T SOCI ET Y O R A PRIM A R Y CO - O P E R AT IV E A G R I C U L T U R A L A N D R U R A L D E V E L OPM E N T B A N K . F O R T H E P U R P O S E O F T H E S A I D S U B - S E C T I O N , CO - O P E RAT I V E B A N K S H A L L H A V E T H E ME A NIN G A S S I G N E D TO I T I N P AR T V O F T H E B A NK IN G R E G U L A T IO N A C T , 1 9 4 9 . 3. IN P A R T V O F T H E B A NK I N G R E GUL A T IO N A C T, C O - O P E RAT I V E BA N K M E A N S A S TAT E C O - O P ER A T IV E B A N K , A CE N T R A L C O - OP E R AT IV E BA N K A N D A PRIM AR Y C O - O P E R A T I V E B A N K . 4. T H U S , I F T H E DE L H I C O O P U R B A N T & C S O C I E T Y L T D . D O E S NO T F A LL W I T HI N T H E M EA NI N G O F C O - OP ERAT IV E B A N K A S D E FIN E D I N P A R T V O F T H E BA N K I N G R E G UL AT I O N A C T , 1 9 4 9 , S U BS E C TI O N( 4) O F SEC T I O N 8 0 P W I L L NO T A P P LY I N T HI S C A S E . 5 . T H E I S S U E S W I T H T H E A P P ROV A L O F C H A IR M A N , C E N T R A L B O A R D O F D IR E C T T A X E S . 7 . F R O M T H E A BO V E C L AR I F I C A TI ON , I T CAN B E G A T H ERED T H A T S U B - S EC TI ON ( 4 ) O F S EC T I O N 8 0 P W IL L NO T A PP L Y T O A N A S S E S S EE W H I CH I S NO T A C O - O P E RA TI V E B A NK . IN T H E CA S E C L AR I F I E D B Y CB D T, DE L H I COO P U R B A N T H R I F T & C R E D I T SO C I E T Y L T D . W AS UND ER C ON S I D ERA TI O N . C I RC U L AR C L AR I F I ED T H A T T H E S A I D E N T I T Y NO T B E I N G A C OOP ERA T I V E B A NK , S EC T I O N 8 0 P ( 4 ) O F T H E A CT W OU L D NO T A P P L Y T O I T . IN V I EW O F S U CH C L A R I F I CA T I O N , W E CA NNO T E N T ER T A I N T H E R E V E N U E S C ON T E N T I O N T H AT S EC T I O N 8 0 P ( 4 ) W OU L D E X C L UD E N O T O N L Y T H E C O - OP ERA T I V E B A NK S O T H E R T H AN T HO S E F U L F IL LI N G T H E D E S CR I P T I O N C ON T A I N E D T H ERE I N B U T A L S O CRE D I T S O C I E TI E S , W H I CH A RE NO T C OOP ERA T I V E B A N K S . IN T H E P R E S E N T CA S E, RE S PO N D E N T A S S E S S EE I S A D M I T T E D L Y NO T A CR E D I T C O - O P ERA T I V E B A N K BU T A CRE D I T C O - OP ERA T I V E S O CI E T Y . E X C L US I O N C L A U S E O F S UB - S E C T I ON ( 4 ) O F S EC T I O N 80P , T H ERE F O RE, W O U L D NO T A P P L Y . IN T H E RE SU LT , T A X A PP EA L S ARE D I S M I S S E D . ITA NO. 1320 /BANG/20 13 SRI UDAYARAVI SOUHARDHA PATTIANA SAHAKARI NIYAMITHA PAGE 10 OF 10 9 . THE LEARNED AR ALSO PLACED RELIANCE ON THE DECISION OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA IN ITA NO.5006/2013 DATED 5 - 2 - 2014 WHEREIN IT WAS HELD THAT WHERE THE STATUS OF THE ASSESSEE IS A CO - OPERATIVE SOCIETY, ALSO CARRYING ON THE BUSINESS OF LENDING MONEY FOR PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND NOT A CO - OPERATIVE B ANK, THE ASSESSEE IS ENTITLED TO THE GRANT OF EXEMPTION U/S 80P(2)(A)(I) OF THE ACT . 10. IN V I E W O F T H E A F OR E S A I D D E C I S I O N S, W E A R E O F T H E V I E W T H A T T HE R E IS N O M E R IT IN T H IS A P PEA L B Y T H E R E V EN U E . C O N S EQ U EN T L Y , T H E S A M E IS D IS M I S S E D . PRONOUNCED IN THE OPEN COURT ON 26 TH SEPTEMBER , 2014. SD/ - SD/ - ( RAJPAL YADAV ) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER EKSRINIVASULU COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE .