Sagar Credit Co-Operative Society Ltd., Udupi V. CIT, Mangalore

ITA 306/BANG/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76976 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-04-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 04-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Revision of order; Opportunity of being heard; Application of stay; Question of law
• Section: 143(3); 263

Judgement Text

ITA NO.306 AND SP NO.90 OF 2014 SAGAR CREDIT COOP S OCIETIES LTD KUNDAPURA PAGE 1 OF 12 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE A BENCH, BANGALORE BEFORE SHRI GEORGE GEORGE K. JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.306/BANG/2014 (ASSESSMENT YEAR: 2009-10) SAGAR CREDIT COOPERATIVE SOCIETY LIMITED, NH 66, BYNDOOR, KUNDAPURA, UDUPI DISTT. 576214 PAN: AABAS 4278 A VS. COMMISSIONER OF INCOME TAX ATTAVARA, MANGALORE 575001 (APPELLANT) (RESPONDENT) S.P. NO.90/BANG/2014 (ARISING OUT OF ITA NO.306/BANG/2014 (ASSESSMENT YEAR: 2009-10) SAGAR CREDIT COOPERATIVE SOCIETY LIMITED, NH 66, BYNDOOR, KUNDAPURA, UDUPI DISTT. 576214 PAN: AABAS 4278 A VS. COMMISSIONER OF INCOME TAX ATTAVARA, MANGALORE 575001 (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI MAHESH, ADVOCATE DEPARTMENT BY: SHRI PATHANJALI,CIT (DR) DATE OF HEARING: 01/04/2014 DATE OF PRONOUNCEMENT: 04/04/2014 O R D E R PER GEORGE GEORGE K. J.M. THIS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DIR ECTED AGAINST THE CITS ORDER DATED 20.01.2014 PASSED U/S 263 OF THE ACT. THE RELEVANT ASSESSMENT YEAR IS 2009-10. ITA NO.306 AND SP NO.90 OF 2014 SAGAR CREDIT COOP S OCIETIES LTD KUNDAPURA PAGE 2 OF 12 2. THE SOLITARY ISSUE THAT ARISES FOR OUR CONSIDERA TION IS WHETHER THE CIT IS JUSTIFIED IN INVOKING THE REVISI ONARY JURISDICTION U/S 263 OF THE ACT AND SETTING ASIDE T HE ASSESSMENT ORDER DATED 20.12.2011, DIRECTING THE ASSESSING OFF ICER TO DENY THE BENEFIT OF DEDUCTION U/S 80P(2)(A)(I) OF THE AC T TO THE ASSESSEE SOCIETY. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLL OWS. THE ASSESSEE IS A COOPERATIVE CREDIT SOCIETY. IT I S PROVIDING CREDIT FACILITIES TO ITS MEMBERS. FOR THE RELEVANT ASSESSMENT YEAR THE ASSESSEE HAD E FILED ITS RETURN OF INCOME ON 30 .09.2009 DECLARING NIL INCOME AFTER CLAIMING DEDUCTION U/S 80P AMOUNTING TO RS.10,29,737/-. THE SCRUTINY ASSESSMEN T U/S 143(3) WAS COMPLETED VIDE ORDER DATED 20.12.2012 AC CEPTING THE RETURNED INCOME. SUBSEQUENTLY THE CIT ISSUED SHOW C AUSE NOTICE ON 06.12.2013 PROPOSING TO DISALLOW THE BENEFIT OF DEDUCTION U/S 80P(2) OF THE ACT. IN RESPONSE TO THE SHOW CAUSE NO TICE ISSUED BY THE CIT, DETAILED OBJECTIONS WERE FILED BY THE ASSE SSEE SOCIETY VIDE ITS LETTER DATED 14.12.2013. HOWEVER, THE CIT REJECTED THE OBJECTIONS RAISED BY THE ASSESSEE SOCIETY AND PASSE D AN ORDER U/S 263 OF THE ACT ON 20.01.2014. THE LEARNED CIT SET ASIDE THE ASSESSMENT ORDER, DIRECTED THE ASSESSING OFFICER TO DENY THE BENEFIT OF DEDUCTION U/S 80P(2) TO THE ASSESSEE SOC IETY. THE RELEVANT FINDINGS OF THE CIT READS AS FOLLOWS: 17. IN VIEW OF A THOROUGH AND COMPREHENSIVE ANALYSI S OF THE FACTUAL AND LEGAL POSITION, THE FOLLOWING CONCLUSIONS ARE DRAWN: ITA NO.306 AND SP NO.90 OF 2014 SAGAR CREDIT COOP S OCIETIES LTD KUNDAPURA PAGE 3 OF 12 A) THE ASSESSEE IS MAINLY ENGAGED IN THE ACTIVITY OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS FROM OUT OF THE DEPOSITS COLLECTED AND INCOME GENERATED THEREOF WHICH IS IN THE NATURE OF BANKING BUSINESS. B) BY VIRTUE OF INCLUSIVE DEFINITION OF INCOME IN SECTION 2(24)(VIIA), PROVIDING CREDIT FACILITIES BY A CO-OPERATIVE SOCIETY WITH ITS MEMBERS ARE TO BE INCLUIDED AS PROFITS AND GAINS OF BUSINESS OF BANKING C) THE MEMBERSHIP TO THE ASSESSEE SOCIETY IS NOT RESTRICTIVE AND ALSO SATISFIES THE CONDITIONS PRESCRIBED FOR TREATING IT AS A PRIMARY CO-OPERATIV E BANK IN ACCORDANCE WITH THE DEFINITION LAID DOWN IN PART V OF THE BANKING REGULATION ACT, 1949. D) THE ASSESSEE SATISFIES ALL THE 3 CONDITIONS PRESCRIBED TO COME UNDER THE PRUVIEW OF THE DEFINITION OF PRIMARY COOPERATIVE BANK AS PER SECTION 5(CCV) OF THE BANKING REGULATION ACT, 1949. E) THE PROVISIONS OF SECTION 80P(4) R.W.S. 2(24)(VIIA) ARE OVERRIDING OVER SECTION 80P AS IT STOOD AFTER THE AMENDMENTS TO THESE PROVISIONS W.E.F. AY 2007-08. F) THERE APPEARS TO BE UNIFORMITY IN THE ACTIVITIES OF THE ASSESSEE WITH THAT OF A BANK IN AS MUCH AS FOR COLLECTING DEPOSITS THE DEPOSITOR HAS TO ENROLL AS A MEMBER AND DEPOSIT THE MONEY THEN AND THERE AND AN IDENTICAL PROCESS IS FOLLOWED FOR CLAIMING BACK THE AMOUNTS. IN THE BANKING BUSINESS ALSO, THE DEPOSITORS ARE TO TAKE DEPOSIT RECEIPTS AND BECOME ACCOUNT HOLDERS FOR TAKING LOANS AS WELL. EFFECTIVELY, THE TRANSACTIONS ARE COMPARABLE AND SIMILAR. MOREOVER, AS ALREADY POINTED OUT, THE ACTIVITIES ARE NOT RESTRICTIVE. G) THE KERALA HIGH COURT IN KERALA CO-OPERATIVE CONSUMERS FEDERATION LTD., VS. CIT 170 ITR 455 AND ADDITIONAL CIT VS UP CO-OPERATIVE CANE UNION 114 ITR 70, WHEREIN RELIANE HAS BEEN PLACED ON THE DIVISION BENCH DECISION OF KERALA HIGH COURT IN CI VS. PARUKUTTY MOOPPILAMMA 149 ITR 131 (KER), ADDITIONAL CIT VS. UP CO-OPERATIVE CANE UNION 114 ITR 70 AND CIT VS. CO-OPERATIVE SUPPLY & COMMISSION SHOP LTD., 204 ITR 173, ARRIVED AT ITA NO.306 AND SP NO.90 OF 2014 SAGAR CREDIT COOP S OCIETIES LTD KUNDAPURA PAGE 4 OF 12 THE CONCLUSION THAT PROVIDING CREDIT FACILITIES TO THE MEMBERS ARE PART OF BANKING BUSINESS WHICH IS SQUARELY APPLICABLE TO THE FACTS OF THIS CASE. THE ASSESSEE ALSO HAS PAID-UP SHARE CAPITAL AND RESERVES FAR IN EXCESS OF RS.1,00,000/- AS ON 31.03.2009 AND THE BYELAWS DO NOT PERMIT MEMBERSHIP OF ANOTHER CO-OPERATIVE SOCIETY AS A MEMBER. HENCE THE APPELLANT HAS SATISFIED ALL THE CONDITIONS REQUIRED TO COME UNDER THE PURVIEW OF THE DEFINITION OF PRIMARY CO-OPERATIVE BANK. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, THE ASSESSEE IS CLEARLY NOT ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) IN VIEW OF THE SPECIFIC PROVISIONS OF SECTION 2(24)(VIIA) READ WITH EXPLANATION TO 80P(4) OF THE INCOME TAX ACT, 1961 INSERTED W.E.F. 01.04.2007. THE ASSESSING OFFICER IS DIRECTED TO RE-DO THE ASSESSMENT BRINGING TO TAX THE TOTAL INCOME COMPUTED AS PER THE PROVISIONS OF THE I.T. ACT, 196 1 WITHOUT ALLOWING DEDUCTION CLAIMED U/S 80P(2)(A)(I) TO THE EXTENT OF RS.10,29,737/-. BASED ON THE FACTUAL POSITION ELUCIDATED ABOVE, IT IS CLEAR THAT THE ASSESSMENT ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE SINCE T HE ASSESSING OFFICER FAILED TO DISALLOW THE DEDUCTION CLAIMED U/S 80P(2)(A)(I) TO THE TUNE OF RS.10,29,73 7/- IN THE ASSESSMENT ORDER U/S 143(3) DATED 20.12.2011. I, THEREFORE, SET ASIDE THE ASSESSMENT ORDER FOR AY 2009-10 PASSED BY THE ASSESSING OFFICER AND RESTORE THE ISSUE TO THE ASSESSING OFFI CER FOR PASSING A FRESH ORDER AFTER EXAMINING THE RELEV ANT FACTS, THE LEGAL POSITION AND AFFORDING THE ASSESSE E AN OPPORTUNITY OF BEING HEARD. THE ASSESSING OFFICE R SHOULD TAKE COGNIZANCE OF THE ISSUES RAISED AND THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE PASSING A FRESH ASSESSMENT ORDER IN ACCORDANCE WITH LAW. 4. THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFORE US. THE LEARNED AR SUBMITTED THAT THE ISSUE IN QUESTION IS SQUARELY COVERED BY THE JUDGMENT OF THE HON'BLE JURISDICTION AL HIGH COURT (DHARWAD BENCH) IN THE CASE OF CIT VS SRI BILURU GU RUBASAVA ITA NO.306 AND SP NO.90 OF 2014 SAGAR CREDIT COOP S OCIETIES LTD KUNDAPURA PAGE 5 OF 12 PATTINA SAHAKARI SANGHA NIYAMITHA, BAGALKOT IN INCO ME TAX APPEAL NO.5006/2013 DATED 5 TH FEBRUARY, 2014, THE JUDGMENTS OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CI T VS. JAFARI MOMIN VIKAS CO-OP CREDIT SOCIETY LTD IN INCOME TAX APPEAL NO.442 OF 2013 WITH TAX APPEAL NO.443 OF 2013, WITH TAX APPEAL NO.863 OF 2013 AND VARIOUS ORDERS OF THE BANGALORE BENCH OF THE TRIBUNAL. 5. THE LEARNED DR ON THE OTHER HAND APART FROM SUPP ORTING THE ORDER OF THE CIT SUBMITTED THE ISSUE IN QUESTIO N IS SQUARELY COVERED IN FAVOUR OF THE REVENUE BY THE ORDER OF TH E HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF CITIZEN CO-OP. SOCIETY LTD VS. ADDITIONAL CIT, RANGE-9, HYDERABAD IN ITA NO.10 03, 1004, 1049, 1200 & 1201/HYD/2011 DATED 2 ND JULY, 2012. 6. 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 ITA NO.306 AND SP NO.90 OF 2014 SAGAR CREDIT COOP S OCIETIES LTD KUNDAPURA PAGE 6 OF 12 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 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. 6.1 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) R.W.S 2(24)(VIIA) BEING INCOME FROM PROVIDING CREDIT FACILITIES CARRI ED ON BY A CO-OPERATIVE SOCIETY WITH ITS MEMBER?. THE HON'BLE COURT HELD AS FOLLOWS: ITA NO.306 AND SP NO.90 OF 2014 SAGAR CREDIT COOP S OCIETIES LTD KUNDAPURA PAGE 7 OF 12 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 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 ITA NO.306 AND SP NO.90 OF 2014 SAGAR CREDIT COOP S OCIETIES LTD KUNDAPURA PAGE 8 OF 12 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 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. 6.2. 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 ITA NO.306 AND SP NO.90 OF 2014 SAGAR CREDIT COOP S OCIETIES LTD KUNDAPURA PAGE 9 OF 12 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, (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 ITA NO.306 AND SP NO.90 OF 2014 SAGAR CREDIT COOP S OCIETIES LTD KUNDAPURA PAGE 10 OF 12 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. 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 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. 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 ITA NO.306 AND SP NO.90 OF 2014 SAGAR CREDIT COOP S OCIETIES LTD KUNDAPURA PAGE 11 OF 12 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. 6.3 THE CIT HAS RELIED ON THE HYDERABAD BENCH OF TH E TRIBUNAL REFERRED (SUPRA). WE AGREE THAT HYDERABAD BENCH ORD ER OF THE TRIBUNAL IS IN FAVOUR OF THE REVENUE. HOWEVER, WE A RE BOUND BY THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COU RT AND THE JUDGMENTS OF THE HON'BLE GUJARAT HIGH COURT REFERRE D ABOVE. HENCE WE FOLLOW THE JUDGMENTS OF THE HON'BLE JURISD ICTIONAL HIGH COURT AND THE HON'BLE GUJARAT HIGH COURT AND HOLD T HAT THE CIT IS NOT JUSTIFIED IN DENYING THE BENEFIT OF SECTION 80P(2) TO THE ASSESSEE SOCIETY. THEREFORE, WE RESTORE THE ASSESSM ENT ORDER DATED 20.12.2011 WHEREIN RELIEF U/S 80P(2) AS CLAIM ED BY THE ASSESSEE WAS GRANTED. IT IS ORDERED ACCORDINGLY. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. S.P. NO.306/BANG/2014 8. SINCE WE HAVE ALREADY DISPOSED OFF THE APPEAL, T HE STAY APPLICATION FILED BY THE ASSESSEE SOCIETY HAS BECOM E REDUNDANT ITA NO.306 AND SP NO.90 OF 2014 SAGAR CREDIT COOP S OCIETIES LTD KUNDAPURA PAGE 12 OF 12 AND SUPERFLUOUS HENCE THE SAME IS DISMISSED AS INFR UCTUOUS. IT IS ORDERED ACCORDINGLY. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH APRIL, 2014. SD/- SD/- (JASON P. BOAZ) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DATED 4 TH APRIL, 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