M/s Sri. Ramakrishna Credit Co-Op Society Ltd., Mangalore V. ITO, Mangalore

ITA 1500/BANG/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73402 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-03-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 01-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L V BHASKARA REDDY
• Assessee Lawyers: V SRINIVASAN
• Keywords: Gift; Application of stay; Question of law

Judgement Text

ITA NO.1500 AND SP 167 OF 2013 SRI RAMAKRISHNA CRED IT COOP SOC.LTD MANGALORE. PAGE 1 OF 10 THE INCOME TAX APPELLATE TRIBUNAL BANGALORE CBENCH, BANGALORE BEFORE SHRI GEORGE GEORGE K. JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.1500/BANG/2013 (ASSESSMENT YEAR: 20010-11) M/S. SRI RAMA KRISHNA CREDIT COOPERATIVE SOCIETY LTD, NO.3/W/31/2572 SRS HOME BUNTS HOSTEL CIRCLE, KODIALBAIL, MANGALORE PAN: AAAAS 3576 Q VS. INCOME TAX OFFICER WARD 1(2) MANGALORE (APPELLANT) (RESPONDENT) S.P. NO.167/BANG/2013 (ARISING OUT OF ITA NO.1500/BANG/2013) (ASSESSMENT YEAR: 20010-11) M/S. SRI RAMA KRISHNA CREDIT COOPERATIVE SOCIETY LTD, NO.3/W/31/2572 SRS HOME BUNTS HOSTEL CIRCLE, KODIALBAIL, MANGALORE PAN: AAAAS 3576 Q VS. INCOME TAX OFFICER WARD 1(2) MANGALORE (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI V. SRINIVASAN, CA DEPARTMENT BY: SHRI L.V.BHASKARA REDDY, (DR) DATE OF HEARING: 24/03/2014 DATE OF PRONOUNCEMENT: 28/03/2014 O R D E R PER GEORGE GEORGE K. J.M. THIS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DIR ECTED AGAINST THE CIT(A)S ORDER DATED 25.07.2013. THE RE LEVANT ASSESSMENT YEAR IS 2010-11. 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS FOLLO WS: ITA NO.1500 AND SP 167 OF 2013 SRI RAMAKRISHNA CRED IT COOP SOC.LTD MANGALORE. PAGE 2 OF 10 1. THE ORDER OF THE AUTHORITIES BELOW IN SO FAR AS THEY ARE AGAINST THE APPELLANT, ARE OPPOSED TO LAW, EQUI TY, WEIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT (A) IS NOT JUSTIFIED IN HOLDING THAT THE APPELLANT IS NOT ENTITLED TO THE DEDUCTION U/S 80P(2)(C) OF THE ACT ON THE GROUND THAT THE APPELLA NT IS COVERED UNDER THE DEFINITION OF A PRIMARY CO-OPERAT IVE BANK AND HENCE, THE PROVISIONS OF SECTION 80P(4) OF THE ACT STAND ATTRACTED UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANTS CASE. 3. THE LEARNED CIT (A) FAILED TO APPRECIATE THAT TH E 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 PROVISION S 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 TH E BINDING DECISIONS OF THE HON'BLE ITAT WERE NOT PER INCURRIUM AS HELD BY HIM AND THAT THE PROVISIONS O F SECTION 2(24)(VIIA) OF THE ACT DOES NOT CHANGE OR A LTER THE APPLICABILITY OF THE PROVISIONS OF SECTION 80P( 4) OF THE ACT, WHICH APPLIES ONLY TO CO-OPERATIVE BANKS A ND NOT THE CO-OPERATIVE SOCIETIES PROVIDING CREDIT FAC ILITY TO ITS MEMBERS. 3. BRIEF FACTS OF THE CASE ARE AS FOLLOWS. THE ASSESSEE IS A CO-OPERATIVE SOCIETY. IT IS ENGAG ED IN THE BUSINESS OF PROVIDING CREDIT FACILITY TO ITS MEMBER S. FOR THE RELEVANT ASSESSMENT YEAR, RETURN OF INCOME WAS FILE D ON 28.09.2010 DECLARING A NIL INCOME AFTER CLAIMING DEDUCTION U/S 80P(2) OF THE ACT AMOUNTING TO RS.1,01,47,751/-. TH E ASSESSMENT WAS TAKEN UP FOR SCRUTINY BY ISSUANCE OF NOTICE U/S 143(2) OF THE ACT ON 23.08.2011. THE SCRUTINY ASSES SMENT WAS COMPLETED VIDE ORDER DATED 20.12.2012 WHEREIN THE A SSESSEE COOPERATIVE SOCIETY WAS DENIED THE BENEFIT OF DEDUC TION U/S ITA NO.1500 AND SP 167 OF 2013 SRI RAMAKRISHNA CRED IT COOP SOC.LTD MANGALORE. PAGE 3 OF 10 80P(2) OF THE ACT. THE REASONING OF THE ASSESSING O FFICER FOR DENYING THE BENEFIT OF SECTION 80P(2) IS AS FOLLOWS : 3.0 ..THE CONTENTIONS OF THE ASSESSEE APPEAR TO BE CONTRARY TO THE PROVISIONS OF LAW CONSEQUENT UPO N INSERTION OF SECTION 2(24)(VIIA) READ WITH EXPLANAT ION BELOW SECTION 80P(4) INTRODUCED BY THE FINANCE ACT, 2006 W.E.F. 1.4.2007. AS PER NEWLY INSERTED SECTION 2(24)(VIIA), THE SCOPE OF DEFINITION OF INCOME HA S BEEN ENLARGED TO SPECIFICALLY INCLUDE THE PROFITS A ND GAINS OF ANY BUSINESS OF BANKING (INCLUDING PROVIDING CREDIT FACILITIES) CARRIED ON BY A CO- OPERATIVE SOCIETY WITH ITS MEMBERS AS EXTRACTED BELOW: 2(24): INXCOME INCLUDES- (VIIA) THE PROFITS AND GAINS OF ANY BUSINESS OF BAN KING (INCLUDNG PROVIDING CREDIT FACILITIES) CARRIED ON B Y A CO- OPERATIVE SOCIETY WITH ITS MEMBERS 3.1 THE DEDUCTION U/S 80P(2)(A)(I) WAS EARLIER ALLOWABLE TO THE WHOLE OF THE PROFITS AND GAINS OF SUCH BUSINESS OF BANKING OR PROVIDING CREDIT FACILI TIES TO ITS MEMBERS CARRIED ON BY THE CO-OPERATIVE SOCIETY. HOWEVER, W.E.F. 01.04.2007 SUCH DEDUCTION SHALL NOT APPLY IN RELATION TO ANY CO-OPERATIVE SOC IETY OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. IN OTHER WORDS, INCOME OF A CO- OPERATIVE SOCIETY WHICH INCLUDE PROFITS AND GAINS O F BANKING AND PROVIDING CREDIT FACILITIES TO THE MEMBERS BY SUCH CO-OPERATIVE SOCIETY IS NOT EXEMPT FROM TAX BY WAY OF DEDUCTION U/S 80P, IF THEY ARE A CO-OPERATIVE BANK WITHIN THE MEANING OF PART V OF T HE BANKING REGULATION ACT, 1949. 4. ON FURTHER APPEAL, THE CIT (A) CONFIRMED THE VIE W TAKEN BY THE ASSESSING OFFICER. 5. THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFORE US. THE LEARNED AR SUBMITTED THAT THE ISSUE IN QUESTION IS SQUARELY COVERED BY THE JURISDICTIONAL HIGH COURT (DHARWAD B ENCH) IN THE ITA NO.1500 AND SP 167 OF 2013 SRI RAMAKRISHNA CRED IT COOP SOC.LTD MANGALORE. PAGE 4 OF 10 CASE OF CIT VS. SRI BILURU GURUBASAVA PATTINA SAHAK ARI SANGHA NIYAMITHA, BAGALKOT IN INCOME TAX APPEAL NO.5006/20 13 DATED 5 TH FEBRUARY, 2014, THE JUDGMENTS OF THE HON'BLE GUJAR AT HIGH COURT IN THE CASE OF CIT VS. JAFARI MOMIN VIKAS CO- OP CREDIT SOCIETY LTD IN INCOME TAX APPEAL NO.442 OF 2013 WIT H TAX APPEAL NO.443 OF 2013, WITH TAX APPEAL NO.863 OF 20 13 AND VARIOUS ORDERS OF THE BANGALORE BENCH OF THE TRIBUN AL. 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 COUR T AFTER REPRODUCING SUB SECTION 4 OF SECTION 80P OF THE ACT HELD THAT THE SAID PROVISIONS IS NOT APPLICABLE TO CO-OPERATIVE S OCIETIES AND IS RESTRICTED ONLY TO COOPERATIVE BANK, WHICH HAS GOT LICENSE TO DO BANKING BUSINESS FROM THE RBI. THE RELEVANT FINDING S OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA, BAGAL KOT (SUPRA) READS AS FOLLOWS: THEREFORE, THE INSERTION OF THE LEGISLATURE IS CLE AR. 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 UNDE R THE BANKING REGULATION ACT INCLUDES THE PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATI VE AGRICULTURAL AND RURAL DEVELOPMENT BANK. THE LEGISLATURE DID NOT WANT TO DENY THE SAID BENEFITS TO A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO- OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. THEY DID NOT WANT TO EXTEND THE SAID BENEFIT TO A C O- OPERATIVE BANK WHICH IS EXCLUSIVELY CARRYING ON BANKING BUSINESS I.E. THE PURPORT OF THIS AMENDMENT . THEREFORE, AS THE ASSESSEE IS NOT A CO-OPERATIVE ITA NO.1500 AND SP 167 OF 2013 SRI RAMAKRISHNA CRED IT COOP SOC.LTD MANGALORE. PAGE 5 OF 10 BANK CARRYING ON EXCLUSIVELY BANKING BUSINESS AND AS IT DOES NOT POSSESS A LICENSE FROM RESERVE BANK OF INDIA TO CARRY ON BUSINESS, IT IS NOT A CO-OPERA TIVE BANK. IT IS A CO-OPERATIVE SOCIETY WHICH ALSO CARRI ES ON THE BUSINESS OF LENDING MONEY TO ITS MEMBERS WHICH IS COVERED U/S 80P(2)(A)(I) I.E. CARRYING ON THE BUSINESS OF BANKING FOR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE OBJECT OF THE AFORESAID AMENDMENT IS NOT TO EXCLUDE THE BENEFIT EXTENDED U/S 80P(1) T O SUCH SOCIETY. 7.1 THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF TAX A PPEAL 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 HAD TO DEAL WITH THE FOLLOWING QUESTION OF LAW: WHETHER THE HON'BLE TRIBUNAL IS CORRECT IN ALLOWIN G DEDUCTION U/S 80P(2)(A)(I) TO ASSESSEES SOCIETY EV EN THOUGH SAME IS COVERED U/S 80P(4) RWS 2(24)(VIIA) B EING INCOME FROM PROVIDING CREDIT FACILITIES CARRIED ON BY A CO- OPERATIVE SOCIETY WITH ITS MEMBER?. THE HON'BLE COURT HELD AS FOLLOWS: 4. AS PER SECTION 80P(4) THE PROVISIONS OF SECTION 80P WOULD NOT APPLY IN RELATION TO ANY CO-OPERATIVE BAN K OTHER THAN PRIMARY AGRICULTURAL CREDIT SOCIETY OR P RIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BAN K. AS PER THE EXPLANATION, THE TERMS CO-OPERATIVE BAN K AND PRIMARY AGRICULTURAL CREDIT SOCIETY SHALL HAV E THE MEANINGS RESPECTIVELY ASSIGNED TO THEM 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 ENTITL ED TO BENEFITS OF DEDUCTION U/S 80P. CIT (APPEALS) AS WELL AS THE TRIBUNAL REVERSED THE DECISION OF THE ASSESS ING OFFICER ON THE PREMISE THAT THE RESPONDENT ASSESSEE NOT ITA NO.1500 AND SP 167 OF 2013 SRI RAMAKRISHNA CRED IT COOP SOC.LTD MANGALORE. PAGE 6 OF 10 BEING A BANK, 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 UND ER CONSIDERATION IN ISOLATION, IN OUR OPINION, THE QUE STION OF LAW COULD BE STATED TO HAVE ARISEN. WHEN, AS CONTEN DED BY THE ASSESSEE, BY VIRTUE OF SUB-SECTION (4) ONLY CO- OPERATIVE BANKS OTHER THAN THOSE MENTIONED THEREIN WERE MEANT TO BE EXCLUDED FOR THE PURPOSE OF DEDUCT ION U/S 80P, A QUESTION WOULD ARISE WHY THEN LEGISLATUR E SPECIFIED PRIMARY AGRICULTURAL CREDIT SOCIETIES ALO NG WITH PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPM ENT BANKS FOR EXCLUSION FROM SUCH EXCLUSION AND IN OTHE R WORDS, CONTINUED TO HOLD SUCH ENTITY AS ELIGIBLE FO R DEDUCTION. HOWEVER, THE ISSUE HAS BEEN CONSIDERABLY SIMPLIFIED BY VIRTUE OF CBDT CIRCULAR NO.133 OF 200 7 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, DAT ED 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 S UB-SECTION 4 OF SECTION 80P PROVIDES THAT DEDUCTION UNDER THE SAID SECTION SHALL NOT BE ALLOWABLE TO ANY CO-OPERATIVE BANK OTH ER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO -OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. FOR THE PU RPOSE 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-OPERAT IVE BANK MEANS A STATE CO-OPERATIVE BANK, A CENTRAL CO-OPERA TIVE BANK AND A PRIMARY CO-OPERATIVE BANK. 4. THUS, IF THE DELHI CO OP URBAN T & C SOCIETY LTD DO ES NOT FALL WITHIN THE MEANING OF CO-OPERATIVE BANK AS DEFINE D IN PART V OF THE BANKING REGULATION ACT, 1949, SUB-SECTION (4) OF SECTION 80P WILL NOT APPLY IN THIS CASE. 5. THE ISSUES WITH THE APPROVAL OF CHAIRMAN, CENTRAL B OARD OF DIRECT TAXES. 7. FROM THE ABOVE CLARIFICATION IT CAN BE GATHERED THAT SUB-SECTION (4) OF SECTION 80P WILL NOT APPLY TO AN ITA NO.1500 AND SP 167 OF 2013 SRI RAMAKRISHNA CRED IT COOP SOC.LTD MANGALORE. PAGE 7 OF 10 ASSESSEE WHICH IS NOT A CO-OPERATIVE BANK. IN THE C ASE CLARIFIED BY CBDT, DELHI COOP URBAN THRIFT & CREDIT SOCIETY LTD WAS UNDER CONSIDERATION. CIRCULAR CLARI FIED THAT THE SAID ENTITY NOT BEING A COOPERATIVE 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 ON LY THE COOPERATIVE BANKS OTHER THAN THOSE FULFILLING T HE DESCRIPTION CONTAINED THEREIN BUT ALSO CREDIT SOCIE TIES, WHICH ARE NOT COOPERATIVE BANKS. IN THE PRESENT CAS E, 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 APPE ALS ARE DISMISSED. 7.2. THE BANGALORE BENCH OF THE TRIBUNAL IN THE CAS E OF ACIT CIRCLE 3(1) BANGALORE V. M/S. BANGALORE COMMERCIAL TRANSPORT CREDIT CO-OPERATIVE SOCIETY LTD IN ITA NO.1069/BANG /2010 HELD THAT SECTION 80P(4) IS APPLICABLE ONLY TO COOPERATI VE BANKS AND NOT TO CREDIT COOPERATIVE SOCIETIES. THE INTENTION OF THE LEGISLATURE TO INTRODUCE 80P(4) WAS TO BRING TO TAX COOPERATIVE BANKS WHICH IS 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 HAVE APPLICAT ION 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 REL EVANT FINDINGS OF THE TRIBUNAL: 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 REAS ON OF INTRODUCTION OF SUB SECTION 4 OF SECTION 80P. SECTI ON 80P(4) READS AS FOLLOWS: (4). THE PROVISIONS OF THIS SECTION SHALL NOT APPL Y IN RELATION TO ANY COOPERATIVE BANK OTHER THAN A PRIMARY AGRICULTU RAL CREDIT SOCIETY OR A PRIMARY COOPERATIVE AGRICULTURAL AND R URAL DEVELOPMENT BANK. EXPLANATION: FOR THE PURPOSES OF THIS SUB-SECTION, ITA NO.1500 AND SP 167 OF 2013 SRI RAMAKRISHNA CRED IT COOP SOC.LTD MANGALORE. PAGE 8 OF 10 (A) CO-OPERATIVE BANK AND PRIMARY AGRICULTURAL CREDI T SOCIETY SHALL HAVE THE MEANINGS RESPECTIVELY ASSIG NED TO THEM IN PART V OF THE BANKING REGULATION ACT, 1949 (10 OF 1949). (B) PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOP MENT 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 DEVELOP MENT 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 BA NK. FOR THE PURPOSE OF THE SAID SUB-SECTION, COOPERATIV E BANK SHALL HAVE THE MEANING ASSIGNED TO IT IN PART V OF THE BANKING REGULATION ACT, 1949. IN PART 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 PROVISIONS OF SECTION 80P(4) HAS GOT ITS APPLICATIO N ONLY TO COOPERATIVE BANKS. SECTION 80P(4) DOES NOT DEFIN E THE WORD COOPERATIVE SOCIETY. THE EXISTING SUB-SECTIO N 80P(2)(A)(I) SHALL BE APPLICABLE TO A COOPERATIVE S OCIETY CARRYING ON CREDIT FACILITY TO ITS MEMBERS. THIS VI EW IS CLARIFIED BY CENTRAL BOARD OF DIRECT TAX VIDE ITS C IRCULAR NO.133/06/2007-TPL DATED 9 TH MAY, 2007. THE DIFFERENCE BETWEEN A COOPERATIVE BANK 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 REGISTRATION UNDER THE BANKING REGULATION ACT, 1949 AND CO-OPERATIVE SOCIETIES ACT, 1959 CO-OPERATIVE 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 ORDER, GIFT CHEQUES, LOCKERS, BANK GUARANTEES ETC. 3. CO-OPERATIVE BANKS CAN ACT AS CLEARING AGENT FOR CHEQUES, DDS, PAY ORDERS AND OTHER FORMS. 1. AS PER THE BYE-LAWS OF THE CO-OPERATIVE 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. ITA NO.1500 AND SP 167 OF 2013 SRI RAMAKRISHNA CRED IT COOP SOC.LTD MANGALORE. PAGE 9 OF 10 4. BANKS ARE BOUND TO FOLLOW THE RULES, REGULATIONS AND DIRECTIONS ISSUED BY RESERVE BANK OF INDIA(RBI) 4. SOCIETY ARE BOUND BY RULES AND REGULATIONS AS SPECIFIED BY IN THE CO-OPERATIVE SOCIETIES ACT. FILING OF RETURNS CO-OPERATIVE 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 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 CO-OPERATIVE BANKS PART V OF THE BANKING REGULATION ACT IS NOT APPLICABLE TO CO-OPERATIVE BANKS. USE OF WORDS THE WORD BANK, BANKER, BANKING CAN BE USED BY A CO-OPERATIVE BANK. THE WORD BANK, BANKER, BANKING CANNOT BE USED BY A CO-OPERATIVE SOCIETY 9.3 IF THE INTENTION OF THE LEGISLATURE WAS NOT TO GRANT DEDUCTION U/5 80P (2)(A)(I) TO CO-OPERATIVE SOCIETIES CARRYING ON THE BUSINESS OF PROVIDING CRE DIT FACILITIES TO ITS MEMBERS, THEN THIS SECTION WOULD HAVE BEEN DELETED. THE NEW PROVISO TO SECTION 80P(4) WHI CH IS BROUGHT INTO STATUTE IS APPLICABLE ONLY TO CO- OPERATIVE BANKS AND NOT TO CREDIT CO-OPERATIVE SOCIETIES. THE INTENTION OF THE LEGISLATURE OF BRIN ING IN CO-OPERATIVE BANKS INTO THE TAXATION STRUCTURE WAS MAINLY TO BRING IN PAR WITH COMMERCIAL BANKS. SINCE THE ASSESSEE IS A CO-OPERATIVE SOCIETY AND NOT A CO - OPERATIVE BANK, THE PROVISIONS OF SECTION 80P(4) WI LL NOT HAVE APPLICATION IN THE ASSESSEES 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 O F THE CIT(A) IS CORRECT AND IN ACCORDANCE WITH LAW AND NO INTERFERENCE IS CALLED FOR. 7.3. IN VIEW OF THE AFORESAID JUDGMENTS OF THE HON' BLE HIGH COURTS AND THE ORDER OF THE TRIBUNAL, WE HOLD THAT THE AUTHORITIES BELOW IS NOT JUSTIFIED IN DENYING THE B ENEFIT OF DEDUCTION U/S 80P(2) OF THE ACT TO THE ASSESSEE SOC IETY. THEREFORE, ASSESSING OFFICER IS DIRECTED TO GRANT T HE RELIEF SOUGHT BY THE ASSESSEE SOCIETY. IT IS ORDERED ACCORDINGLY. ITA NO.1500 AND SP 167 OF 2013 SRI RAMAKRISHNA CRED IT COOP SOC.LTD MANGALORE. PAGE 10 OF 10 8. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS AL LOWED. S.P. NO.167/BANG/2013 9. SINCE WE HAVE ALREADY DISPOSED OFF THE APPEAL, T HE STAY APPLICATION FILED BY THE ASSESSEE SOCIETY HAS BECOM E REDUNDANT AND SUPERFLUOUS HENCE THE SAME IS DISMISSED AS INFR UCTUOUS. IT IS ORDERED ACCORDINGLY. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH MARCH, 2014. SD/- SD/- (JASON P. BOAZ) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DATED 28 TH MARCH, 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 SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCHES, BANGALORE