The ITO,Patan Ward-3, Mehsana V. The Sardar Patel Co.Op.Credit Society Ltd., Mehsana

ITA 2941/AHD/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9695 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-12-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 11-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 142(1); 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI R.P. TOLANI, JM & SHRI MANISH BORAD, AM. ITA NO. 2941/AHD/2013 ASST. YEAR: 2010-11 ITO, PATAN WARD-3, MEHSANA. VS. THE SARDAR PATAL CO-OP. CREDIT SOCIETY, PLOT NO.19, JUNA GANJ BAZAR, VIJAPUR. DIST.MEHSANA. APPELLANT RESPONDENT PAN AAAT 4741N APPELLANT BY SHRI K. MADHUSUDAN, SR. DR RESPONDENT BY NONE DATE OF HEARING: 9/12/2016 DATE OF PRONOUNCEMENT: 23/12/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL BY THE REVENUE FOR ASST. YEAR 2010-11 IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), GANDHINAGAR, AHMED ABAD, DATED 20.09.2013 VIDE APPEAL NO.CIT(A)/GNR/150/2012-13 AR ISING OUT OF THE ORDER U/S 143(3) OF THE IT ACT, 1961 (IN SHORT THE ACT) FRAMED ON 30/11/2012 BY ITO, PATAN WARD-3, MEHSANA. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE AND THE CASE WAS HEARD WITH THE ASSISTANCE OF LD. DR AND DOCUMENTS P LACED ON RECORD. GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDE R :- ITA NO. 2941/AHD/2013 ASST. YEAR 2010-11 2 1. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ASSESSEE IS ENTITLED TO THE BENEFIT U/S.80P(2)(A)(I ) OF THE ACT PROVISIONS OF SECTION 80P(4) IS NOT APPLICABLE TO THE ASSESSEE'S CASE, CONSEQUENTLY DELETING THE DISALLOWANCE OF RS.65,07,757/- MADE BY THE AO. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LEARNE D CIT(APPEALS) MAY BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTEN T. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS A CREDIT CO-OP. SOCIETY ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITY TO ITS MEMBERS. E-RETURN WAS FILED ON 31.08.2010 SHOWI NG TOTAL INCOME AT RS.NIL. CASE WAS SELECTED FOR SCRUTINY ASSESSMEN T AND NOTICE U/S 143(2) OF THE ACT WAS ISSUED FOLLOWED BY NOTICE U/S 142(1) OF THE ACT ALONG WITH DETAILED QUESTIONNAIRE WHICH WERE DULY S ERVED ON THE ASSESSEE ON 9.7.2012. NECESSARY INFORMATION WERE CA LLED FOR AS PER THE QUESTIONNAIRE AND THE SAME WERE DULY SUBMITTED BY THE ASSESSEE. LD. ASSESSING OFFICER OBSERVED THAT ASSES SEE HAS CLAIMED DEDUCTION U/S 80P(2)(A)(I) OF THE ACT AT RS.65,09,7 57/-. LD. ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE IS ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND DOING BANKING BUSINES S AND PROVISIONS OF SUB-SEC.(4) OF SECTION 80P OF THE ACT INSERTED B Y FINANCE ACT, 2006 FROM ASST. YEAR 2007-08 APPLIES TO THE ASSESSEE AND NO DEDUCTION CAN BE CLAIMED U/S 80P(20(A)(I) OF THE ACT. ACCORDI NGLY DEDUCTION U/S 80P(2)(A)(I) OF THE ACT WAS DENIED AND INCOME ASSES SED AT RS.65,09,760/-. 4. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE LD. CI T(A) AND SUCCEEDED. ITA NO. 2941/AHD/2013 ASST. YEAR 2010-11 3 5. AGGRIEVED, REVENUE IS NOW IN APPEAL BEFORE THE T RIBUNAL. 6. LD. DR VEHEMENTLY ARGUED AND SUPPORTING THE ORDE R OF ASSESSING OFFICER AND RELIED ON THE JUDGMENT OF HON . JURISDICTIONAL HIGH COURT IN THE CASE OF STATE BANK OF INDIA (SBI) VS. CIT (2016) 72 TAXMANN.COM 64 (GUJARAT). 7. WE HAVE HEARD LD. DR AND GONE THROUGH THE MATERI AL PLACED ON RECORD. SOLITARY GRIEVANCE OF THE REVENUE IS AGAINS T THE ORDER OF LD. CIT(A) ALLOWING DEDUCTION U/S 80P(2)(A)(I) OF THE A CT AT RS.65,07.757. WE OBSERVE THAT DURING THE COURSE OF ASSESSMENT PRO CEEDINGS ASSESSEE IN REPLY TO THE SHOW CAUSE NOTICE ISSUED B Y THE ASSESSING OFFICER RAISING QUESTION ON THE CLAIM OF DEDUCTION U/S 80P(2)(A)(I) OF THE ACT SUBMITTED A DETAILED WHICH READS AS FOLLOWS :- 1. 'WE HAVE CLAIMED DEDUCTION U/S. 80-P(2)(A)(I) OF I. T. ACT OF RS. 65,09,757/- AS THAT SECT/ON PROVIDE THAT 100% OF PROFIT FROM ACTIV ITY OF PROVIDING CREDIT FACILITIES TO MEMBERS BY CO OP SOCIETIES IS DEDUCTIBLE U/S. 80-P OF I. T. ACT ON FOLLOWING MERITS. 1.1 THE PROVISIONS OF SEC 80P(4) EXCLUDES ONLY CO OP BANKS FROM THE ELIGIBILITY OF DEDUCTION U/S. 80P(2)(A)(I) GIVEN TO CO OP BANKS. T HIS HAS BEEN MADE CLEAR IN INSTRUCTION F.NO.133/6/2007/TPL OF CBDT DT.09-05-20 07 WHICH STATES THAT IF CO OP SOCIETY DOES NOT FALL WITHIN MEANING OFCO OP. BA NK DEFINED IN PART V OF BANKING REGULATION ACT 1949, SUB SECTION (4) OF SECTION 80- P WILL NOT APPLY IN ITS CASE. 1.2 WE DO NOT FALL IN DEFINITION OF CO OP BAN K AS PER PART V OF BANKING REGULATION ACT AS PER REASONING MENTIONED HERE UNDER. A. IN PART V OF THE BANKING REGULATION ACT 1949 I N CLAUSE (CCI) OF SECTION 56C IT IS STATED THAT CO OPERA TIVE BANK MEANS A STATE CO OP. BANK, A CEN TRAL CO OPERATIVE BANK AND A PRIMARY CO OPERATIVE BANK. ITA NO. 2941/AHD/2013 ASST. YEAR 2010-11 4 B. CO OP. CREDIT SOCIETY IS NEITHER A STATE CO OP B ANK NOR A CENTRAL CO OP. BANK AS PER PART V OF BANKING REGULATION ACT 1949. THE D ETAILED REASONING IS ENCLOSED. C AS PER DEFINITION OF PRIMARY CO OPERATIVE BANK AS P ER CLAUSE (CCV)(I) OF SECTION 56 (C) WHICH PROVIDE THAT THERE SHOULD BE 'PRIMARY OBJECT OR PRINCIPAL BUSINESS OF WHICH IS THE TRANSACTION OF BANKING BUSINESS' HOWEVER, AS THE OBJECTS AS PER BY LAWS OF THE SOCIE TIES ARE TO GIVE FINANCIAL ACCOMMODATION TO MEMBERS ONLY BY ACCEPTING DEPOSITS ONLY FROM MEMBERS ADMITTED FROM THE JURISDICTIONAL AREA AS PER BY LAW S OF THE SOCIETY. SO ACTIVITY AND TRANSACTION OF THE SOCIETY ARE NOT OF BANKING BUSIN ESS AS DEFINED IN SECTION 5(B) OF BANKING REGULATION ACT. THE DEFINITION OF BANKIN G IS AS UNDER. 'BANKING MEANS THE ACCEPTING, FOR THE PURPOSE OF LE NDING OR INVESTMENT, OF DEPOSITS OF MONEY FROM THE PUBLIC REPAYABLE ON DEMA ND OR OTHER WISE AND WITHDRAWAL BY CHEQUE DRAFT ORDER OR OTHERWISE ' THE READING OF DEFINITION OF BANKING CLARIFY THAT T HE MAIN CONTENT OF BANKING BUSINESS IS ACCEPTING DEPOSITS FROM PUBLIC AND AS C REDIT SOCIETIES CANNOT ACCEPT DEPOSITS FROM PUBLIC. SO IT CANNOT BE CONSIDERED AS BANKS. THUS CO OP CREDIT SOCIETIES IS NOT PRIMARY CO OP BANK AS PER PART V O F BANKING REGULATION ACT 1949. IN VIEW OF THE ABOVE, CO OP CREDIT SOCIETY IS NONE OUT OF CENTRAL CO OP BANK, STATE CO OP BANK OR PRIMARY CO OP BANK. SO IT IS NOT A CO OP BANK AS DEFINED IN PART V OF BANKING REGULATION ACT. WE FURTHER POINT OUT THE FACTS THAT WE ARE DIFFEREN T FROM BANKS AS UNDER. 1. CO. OP. CR. SOC. CANNOT ACCEPT DEPOSIT FR OM PUBLIC AS DISCUSSED ABOVE. 2. CO. OP. CR. SOC. CANNOT BE MEMBER OF CLEA RING HOUSE. .. 3. CO. OP. CR. SOC. ARE NOT CONTROLLED BY BA NKING REGULATION ACT OR RBI 4. CO. OP. CR. SOC. CANNOT USE THE WORD 'BAN K'ALONG WITH ITS NAME. 5. SEPARATE DEFINITIONS FOR CO,OP.CREDIT SOC IETY AND CO.OP.BANKS ARE DEFINED IN PART V OF BANKING REGULATION ACT 1949. THUS CO OP CREDIT SOCIETIES ARE NOT BANKS AS PER PA RT V OF BANKING REGULATION ACT 1949. AND AS PER ITS DISTINCTIVE FACTS AS MENTI ONED ABOVE. SO BOARDS INSTRUCTION CLEARLY APPLIES TO CO OP CRED IT SOCIETY. SO SUB SECTION (4) OF SECTION 80-P WILL NOT APPLY IN ITS CASE THEREFORE D EDUCTION U/S. 80-P(2)(A)(I) CLAIMED IN RETURN OF INCOME BY US IS IN ACCORDANCE WITH LEGAL PROVISIONS OF I.T.ACT, 1.3 APPEAL IS ALSO DECIDED FOR A. Y. 2009-10 IN FA VOUR OF APPELLANT ON ABOVE GROUND. 1.4 ATTENTION IS DRAWN TO THE DECISION OF ITAT BA NGALORE 'B' BENCH IN THE CASE OF 'ACJT V/S M/S. BANGALORE COMMERCIAL TRANSPORT CR EDIT CO OPERATIVE SOCIETY LTD.' IN JTA NO.L069/BANG/2010 DATED 08.04.2011 IN WHICH THE A.O. HAD NOT ALLOWED DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT. THE ITAT BANGALORE 'B' BENCH ITA NO. 2941/AHD/2013 ASST. YEAR 2010-11 5 DECIDED THE APPEAL IN FAVOUR OF THE ASSESSEE AND AG AINST THE REVENUE BY OBSERVING AT PARA 9.3 ON PAGE 5 OF THE ORDER WHICH IS REPRODUCED AS UNDER. 19.5 IF THE INTENTION OF THE LEGISLATURE WAS NOT TO GRAN T DEDUCTION U/S, 80P(2)(A)(L) TO CO OPERATIVE SOCIETIES CARRYING ON THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS, THEN THIS SECTION WOULD HAVE BEEN DELETED. THE NEW PROVISO TO SECTION 80P(4) WHICH IS BROUGHT INTO STATURE IS APPLICABLE ONLY TO CO OPERATIVE BANKS AND NOT TO CR EDIT CO OPERATIVE SOCIETIES THE-INTENTION OF THE LEGISLATURE OF BRING 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 ASSESSEE'S CASE AND THEREFORE, IT IS ENTITLE D TO DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT. HENCE, WE ARE OF THE VIEW THAT THE ORDER OF THE CTT(A) IS CORRECT AND IN ACCORDANCE WITH LAW AND NO INTERFERENCE IS CALLED FOR' 1.5 ATTENTION IS DRAWN TO THE DECISION OF ITATPAN AJI BENCH IN CASE OF DY CJT V/S M/S, JAYALAXMI MAHILA VIVIDOESHAGELA SOUHARDA S AHAKARI LTD IN : WHICH DECISION OFACFT V/S M/S. BANGALORE COMMERCIAL TRANS PORT CREDIT CO OP. SOC WAS FOLLOWED AND IT WAS HELD AS UNDER. 'FROM THE AFORESAID OBJECTS, IT IS APPARENT THAT NO NE OF THE AIMS AND OBJECTS ALLOWS THE ASSESSEE CO OPERATIVE SOCIETY TO ACCEPT DEPOSITS OF MONEY FROM PUBLIC FOR THE PURPOSE OF LENDING OR INV ESTMENT IN OUR OPINION UNTIL AND UNLESS THAT CONDITION IS SATISFIED, IT CA NNOT BE SAID THAT THE PRIME OBJECT OR PRINCIPAL BUSINESS OF THE ASSESSEE IS BAN KING BUSINESS. THEREFORE, THE ASSESSEE WILL NOT COMPLY WITH THE FI RST CONDITION AS LAID DOWN IN THE DEFINITION AS GIVEN U/S. 5(CCV) OF THE BANKING REGULATION ACT, 1959 FOR BECOMING 'PRIMARY CO OPERATIVE BANK'. THE ASSESSEE, THEREFORE, CANNOT BE REGARDED TO BE A PRIMARY CO OPERATIVE BAN K AND IS CONSEQUENCE THEREOF, IT CANNOT BE A CO OPERATIVE BA NK AS DEFINED UNDER PART V OF THE BANKING REGULATION ACT 1949. ACCORDIN GLY, IN OUR OPINION THE PROVISIONS OF SECTION 80P(4) READ WITH EXPLANATION THERE UNDER WILL NOT BE APPLICABLE IN THE CASE OF THE ASSESSEE. THE ASSESSE E, THEREFORE, IN OUR OPINION WILL BE ENTITLED FOR THE DEDUCTION U/S.80P (2)(A)(I). WE ACCORDINGLY CONFIRM THE ORDER OF CIT(A) ALLOWING TO THE ASSESSE E.' IN VIEW OF THE ABOVE, WE HUMBLY SUBMITS THAT CLAIM OF DEDUCTION U/S. SOP BE ALLOWED TO US AS CO OP CREDIT SOCIETY. IN VIEW OF ABOVE, WE PRAY FOR RELIEF FOR ALLOWING T HE CLAIM OF DEDUCTION U/S. SOP OF THE IT ACT, 1962. 8. THE ABOVE SUBMISSIONS MADE BY THE ASSESSEE WERE REJECTED BY THE ASSESSING OFFICER BY OBSERVING THAT THE ASSE SSEE CO-OPERATIVE SOCIETY IS ENGAGED IN THE BUSINESS OF PROVIDING CRE DIT FACILITY TO ITS ITA NO. 2941/AHD/2013 ASST. YEAR 2010-11 6 MEMBERS AND DOING BANKING BUSINESS AND THE PROVISI ONS OF SECTION 80P(2)(4) OF THE ACT APPLIES ON THE ASSESSEE WHICH DEVOID IT FROM CLAIMING DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. LD. ASSESSING OFFICER DENIED THE DEDUCTION BY OBSERVING AS FOLLOWS :- 5. THE DEDUCTION CLAIMED UNDER CHAPTER VL-A IS NOT ALLOWABLE FOR THE REASON THAT THE ASSESSEE CO-OPERATIVE SOCIETY IS ENGAGED IN THE BUS INESS OF PROVIDING CREDIT FACILITY TO MEMBERS AND BANKING BUSINESS. AS PER PROVISIONS OF SECTION 80P(2)(A) IN CASE OF COOPERATIVE SOCIETY PROVIDING CREDIT FACILITIES TO ITS MEMBERS, THE WHOLE OF THE AMOUNT OF PROFIT AND GAINS FROM SUCH BUSINESS ARE DEDUCTIB LE. HOWEVER, AS PER THE PROVISION OF SUB SECTION (4) OF THE SECTION 80P INSERTED BY F INANCE ACT, 2006 FROM ASSESSMENT YEAR 2007-08, THE PROVISION OF SECTION 80P SHALL NO T APPLY IN RELATION TO ANY CO- OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CR EDIT SOCIETY OR A PRIMARY CO- OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. FURTHER ON GOING THROUGH THE BY-LAWS OF THE SOCIETY , THE PURPOSE OF THE SOCIETY IS FOUND AS FOLLOWS: 1. CREATE GOOD RELATION BETWEEN ITS MEMBERS AND IN CREASE ZEAL. 2. COLLECT FUNDS AND DEPOSITS FROM ITS MEMBERS. 3. TO GIVE FUNDS FOR BUSINESS AND OTHER NEED TO ITS MEMBERS WHO ARE IN NEED. 4. TO PROVIDE GOODS FOR LIVELIHOOD AND HOUSE IN CON CESSION RATE TO ITS MEMBERS AND DO THE WORK OF PRODUCTION, PURCHASE AND SALE. . 6. THE REPLY FILED BY THE ASSESSEE IS DULY CONSIDER ED. IN VIEW OF THE ABOVE DISCUSSION IT IS DEAR THAT THE ASSESSEE SOCIETY IS A COOPERATIVE BANK OTH ER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY COOPERATIVE AGRICULTURA L AND RURAL DEVELOPMENT BANKS. THEREFORE, SUB SECTION (4) OF SECTION SOP IS APPLIC ABLE TO THE ASSESSEE AND DEDUCTION U/S.80P(2)(A)(I), IS NOT AN ALLOWABLE DEDUCTION, HE NCE THE ENTIRE PROFIT OF THE ASSESSEE SOCIETY IS TAXABLE. TAXABLE INCOME UNDER THIS HEAD COMES TO RS.65,09,757/-. 9. WE FURTHER OBSERVE THAT LD. DR HAS RELIED ON THE JUDGMENT OF HON. JURISDICTIONAL HIGH COURT IN THE CASE OF SBI V S. CIT(SUPRA) WHEREIN FACTS OF THE CASE WERE THAT CO-OP. SOCIETY REGISTERED WITH OBJECT OF ACCEPTING DEPOSITS FROM SALARIED PERSONS OF SBI WAS NOT ENGAGED IN THE BUSINESS OF BANKING EXCEPT TO GIVE F ACILITIES TO THOSE WHO WERE EMPLOYEES OF SBI AND SURPLUS FUNDS IN FORM OF DEPOSITS WERE MADE WITH SBI GIVING RISE TO INTEREST INCOME. THE ONLY ISSUE ITA NO. 2941/AHD/2013 ASST. YEAR 2010-11 7 WHICH AROSE IN THIS APPEAL WAS WHETHER THE INTERES T DERIVED BY DEPOSITING SURPLUS FUNDS WITH BANK BY A CREDIT CO-O P. SOCIETY ARE ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(IA) OF THE ACT AND HON. JURISDICTIONAL HIGH COURT DECIDED THE ISSUE IN FAVO UR OF REVENUE. HOWEVER, THE FACTS IN THE APPEAL BEFORE US ARE QUIT E DIFFERENT BECAUSE THE ISSUE BEFORE US IS WHETHER THE ASSESSEE, A CRE DIT CO-OP. SOCIETY FALLS UNDER THE CATEGORY OF BANK AS ENVISAGED UNDER THE PROVISIONS OF SECTION 80P(4) OF THE ACT. THE FACTS BEFORE US BEI NG DIFFERENT FROM THE FACTS ADJUDICATED BY HON. JURISDICTIONAL HIGH C OURT IN THE CASE OF SBI VS. CIT, THE SAME CANNOT BE APPLIED IN THE CASE OF RESPONDENT (ASSESSEE). 10. WE FURTHER OBSERVE THAT WHEN THE ISSUE CAME UP BEFORE LD. CIT(A), THE SAME WAS DECIDED IN FAVOUR OF ASSESSEE BY LD. CIT(A) BY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF JAFARI MOMIN VIKAS CO-OP. CREDIT SOCIETY VS. ITO, PATAN-2 IN ITA NO.1491/AHD/2012 BY OBSERVING AS FOLLOWS :- 5. I HAVE CONSIDERED THE FACTS OF THE CASE AND ALSO THE DECISION OF THE HON'BLE ITAT IN THE CASE OF M/S. JAFARI MOMIN VIKASH CO- OP CREDIT SOCIETY LTD VS. ITO, PATAN -2 (SUPRA); RELIED UPON BY THE APPELLANT. AS PER THE DEFINITION OF BANKING AS PER SEC 5(B) OF BANKING REGULATION ACT, 'BANKING' MEANS THE ACCEPTING FOR THE PURPOSE OF LE NDING OR INVESTMENT, OF DEPOSITS OF MONEY FROM THE PUBLIC, REPAYABLE ON DEM AND OR OTHERWISE, AND WITHDRAWAL BY CHEQUE, DRAFT, ORDER OR OTHERWISE. TH E DEFINITION IS BASIC LAW TO BE CONSIDERED TO DECIDE WHETHER A CREDIT SOCIETY IS A CO-OPERATIVE BANK OR NOT. ONLY, THOSE CREDIT SOCIETIES WHICH ARE ALLOWED TO TAKE DE POSITS OF MONEY FROM THE PUBLIC AND DO OTHER BANKING ACTIVITIES AS DEFINED I N THE SEC 5(B) OF BANKING REGULATION ACT WOULD QUALIFY TO BE A COOPERATIVE BA NK. I AGREE THAT TAKING DEPOSITS FROM PUBLIC CANNOT BE EQUIVALENT TO TAKING DEPOSITS FROM MEMBER S OF THE SOCIETY ONLY WHICH HAS GOT A MUCH RESTRICTED MEANIN G AND THE RELATIONSHIP ITA NO. 2941/AHD/2013 ASST. YEAR 2010-11 8 BETWEEN A SOCIETY AND A PUBLIC HAS, TO BE UNDERSTOO D IN A MUCH LARGER SENSE. IN THIS CONNECTION, IT WOULD 1 BE USEFUL TO REFER TO THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT WHEREIN, THEIR LORDSHIPS OF GUJARAT HIGH COURT HAVE CONSIDERED THE ABOVE PROVISIONS OF S. 80P(2)(A)(I) IN THE CASE OF CIT VS BARODA PEOPLES CO-OP. BANK LTD 280 ITR 282 (GUJ) . THEIR LORDSHIPS HAVE HELD AT PARA 28 OF SAID JUDGMENT AS UNDER: '28. SECTION 80P(2)(A )(I) OF THE ACT PERMITS A CO- OPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF BANKING OR P ROVIDING CREDIT FACILITIES TO ITS MEMBERS TO CLAIM DEDUCTION OF THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUSINESS ATTRIBUTABLE TO SUCH ACTIVITY VIZ., BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. ON A PLAIN READING, IT BECOMES APPARENT THAT THE TWO ACTIVITIES ARE DISTIN CT AND SEPARATE ACTIVITIES. THE FIRST ACTIVITY VIZ., CARRYING ON TH E BUSINESS OF BANKING CONNOTES A LARGER ACTIVITY THAN THE ACTIVITY OF PRO VIDING CREDIT FACILITIES TO ITS MEMBERS. THE LATTER IS RESTRICTED QUA THE MEMBERS O F THE SOCIETY WHILE THE FORMER IS WIDE ENOUGH TO TAKE WITHIN ITS SWEEP AS I TS POTENTIAL CUSTOMS, BOTH THE MEMBERS AND NON-MEMBERS. CONSIDERING THE ABOVE FACTS, IT IS CLEAR THAT THE A PPELLANT IS NOT ALLOWED TO DO BANKING BUSINESS AS DEFINED UNDER BANKING REGULA TION ACT AND THEREFORE, IS NOT A CO-OPERATIVE BANK. THEREFORE, IT IS NOT EXCLU DED FROM THE BENEFIT OF DEDUCTION U/S 80P(2)(A)(I) OF THE IT ACT AS IT DOES NOT FALL UNDER THE EXCEPTIONS AS PROVIDED U/S 80P(4). I HAVE ALSO NOTED THE DECISION OF HON'BLE ITAT MUMBAI BENCH IN THE CASE OF SALGAON SANMITRA SAHAKARI PATH PED LTD, 12 TAXMANN.COM 246 ; WHERE BOTH THE CIT (APPEALS) AND THE ITAT HAV E HELD THAT THE CORPORATIVE CREDIT SOCIETY IN THAT CASE WAS NOT A CO-OPERATIVE BANK. I ALSO RESPECTFULLY AGREE WITH THE DECISION OF THE ITAT BANGALORE 'B' BENCH I N THE CASE OF ACIT VS M/S. BANGALORE COMMERCIAL TRANSPORT CREDIT CO-OPERATIVE SOCIETY LTD IN ITA NO.L069/BANG/2010 FOR AY 2007-08 DATED 08/04/2011 W HICH HAS DECIDED THE ISSUE IN FAVOUR OF THE APPELLANT. THE HON'BLE JURIS DICTIONAL ITAT, AHMEDABAD 'B' BENCH IN ITA NO.L491/AHD/2012 A.Y.2009-10 IN THE CA SE OF M/S. JAFARI MOMIN VIKAS CO-OP CREDIT SOCIETY LTD VS. ITO, PATAN -2, R ELIED UPON BY THE APPELLANT HAS ON IDENTICAL FACTS HAS HELD THAT THE PROVISIONS OF SECTION 80P(4) OF THE I. T. ACT, 1961 ARE NOT APPLICABLE TO CO-OPERATIVE CREDIT SOCIETY AND CO-OPERATIVE SOCIETY IS ENTITLED DEDUCTION U/S 80P(2)(A)(I) OF T HE ACT IF IT IS NOT ALLOWED TO DO BUSINESS OF BANKING. FOLLOWING THE DECISION, I DO N OT FIND ANY REASON TO DEVIATE FROM THE DECISION RENDERED BY THE HON'BLE JURISDICT IONAL ITAT AND IT IS HELD THAT THE APPELLANT IS ENTITLED TO THE BENEFIT OF DEDUCTI ON U/S 80P(2)(A)(I) OF THE IT ACT CONSIDERING THE PROVISIONS OF SEC. 56 OF THE IT ACT . 11. IN THE LIGHT OF THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF M/S JAFARI MOMIN VIKAS CO-OP. CREDIT SOCIETY LTD . VS. ITO (SUPRA), DETAILED SPEAKING ORDER OF LD. CIT(A) AND IN THE GI VEN FACTS OF THE ITA NO. 2941/AHD/2013 ASST. YEAR 2010-11 9 CASE WE OBSERVE THAT ASSESSEE CREDIT CO-OP. SOCIETY IS NOT CARRYING ON THE ACTIVITY IN THE NATURE OF BANKING BUSINESS A ND IS ALSO NOT REGISTERED UNDER THE BANKING REGULATION ACT AND IS ONLY CONFINED FOR ACCEPTING AND PROVIDING FINANCE TO ITS MEMBERS. FUR THER ON GOING THROUGH THE DEFINITION OF BANKING AS PER THE BANKIN G REGULATION ACT - 'BANKING MEANS THE ACCEPTING, FOR THE PURPOSE OF LE NDING OR INVESTMENT, OF DEPOSITS OF MONEY FROM THE PUBLIC RE PAYABLE ON DEMAND OR OTHER WISE AND WITHDRAWAL BY CHEQUE DRAFT ORDER OR OTHERWISE.' FROM GOING THROUGH THIS DEFINITION IT IS CLEAR THA T UNDER THE BANKING BUSINESS LENDING AND ACCEPTING DEPOSIT IS FROM PUBLIC AT LARGE WHICH IS NOT SO IN THE CASE OF ASSESSEE SOCIE TY WHEREIN FINANCE BUSINESS IS CONFINED ONLY TO ITS MEMBERS. WE ARE, T HEREFORE, OF THE VIEW IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CA SE AND THE FINDING GIVEN BY LD. CIT(A) RELYING ON THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF M/S JAFARI MOMIN VIKAS CREDIT CO-OP. SOCIETY LTD. (SUPRA), WE FIND THAT PROVISIONS OF SECTION 80P(4) OF THE ACT ARE NOT APPLICABLE TO THE ASSESSEE AND IS, THEREFORE, ELIGI BLE TO CLAIM DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. WE FIND NO R EASON TO INTERFERE WITH THE ORDER OF LD. CIT(A). WE UPHOLD THE SAME. T HE GROUND RAISED BY THE REVENUE IS DISMISSED. 12. OTHER GROUNDS ARE OF GENERAL IN NATURE, WHICH N EED NO ADJUDICATION. 13. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ITA NO. 2941/AHD/2013 ASST. YEAR 2010-11 10 ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD DECEMBER, 2016 SD/- SD/- (R.P. TOLANI) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 23/12/2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NO. 2941/AHD/2013 ASST. YEAR 2010-11 11 1. DATE OF DICTATION: 14/12/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 19/12/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK:2 3/12/16 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: