TUPURWADI CO OP CREDIT SOCIETY LTD, MUMBAI V. ITO 21(3)(4), MUMBAI

ITA 3225/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7540 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 03-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA LD
• Assessee Lawyers: DILIP P BAPATLD
• Keywords: Question of law
• Section: 143(3)

Judgement Text

ITA NO.3225/MUM/2017 TUPURWADI CO-OP CREDIT SOCIETY LTD ASSESSMENT YEAR: 2012-13 - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI . , , BEFORE SHRI C.N. PRASAD, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.3225/MUM/2017 ( / ASSESSMENT YEAR: 2012-13) TUPURWADI CO OP CREDIT SOCIETY LIMITED 2/28,FRUITWALA BUILDING N.M.JOSHI MARG, LOWER PAREL MUMBAI-400 013 / VS. INCOME - TAX OFFICER - 21(3)(4) MUMBAI ./ ./ PAN/GIR NO. AAAJT-1321-K ( ! /APPELLANT ) : ( ' ! / RESPONDENT ) REVENUEBY : N.HEMALATHA, LD. DR ASSESSEE BY : DILIP P.BAPAT,LD.AR / DATE OF HEARING : 19/03/2018 / DATE OF PRONOUNCEMENT : 04 /04/2018 /ORDER PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2012-13 ASSAILS THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)-33 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-33/RG.21/194/2015-16 DATED 27/02/2017. THE ASSESSMENT FOR THE IMPUGNED AY WAS FRAMED BY LD. 2 ITA NO.3225/MUM/2017 TUPURWADI CO-OP CREDIT SOCIETY LTD ASSESSMENT YEAR:2012-13 INCOME TAX OFFICER-21(3)(4), MUMBAI [AO] U/S 143(3) OF THE INCOME TAX ACT, 1961 ON 30/03/2015 DETERMINING TOTAL INCOME OF THE ASSESSEE AT RS.26,74,590/- AS AGAINST NIL RETURN E-FILED BY THE ASSESSEE ON 28/09/2012. IN THE QUANTUM ASSESSMENT, THE ASSESSEE HAS BEEN DE NIED DEDUCTION U/S 80P WHICH IS THE SOLE SUBJECT MATTER OF THIS APPEAL . THE ASSESSEE HAS RAISED ADDITIONAL GROUNDS OF APPEAL VIDE LETTER DAT ED 12/03/2018. THE SAME BEING LEGAL GROUNDS AND DO NOT REQUIRE APPRECIATION OF NEW FACTS AND THEREFORE, TAKEN ON RECORDS. THE EFFECTIVE GROUNDS, THUS RAISED READS AS FOLLOWS:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS E RRED IN CONFIRMING DENIAL OF DEDUCTION OF RS.26,74,591/- U/S 80P(2)(D) OF INCOME TAX ACT, 1961. WITHOUT PREJUDICE, THE DENIAL OF DEDUCTION BE RESTRICTED TO THE AMOUNT OF ALLEGED ELIGIBLE INCOME AS REDUCED BY THE AMOUNT OF INTEREST PAID / PAYABLE ON THE MONIES BORROWED WHICH HAVE BEEN DEPLOYED IN THE DEPOSITS O N WHICH THE ALLEGED INELIGIBLE INCOME HAS BEEN EARNED. 2 THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS E RRED IN HOLDING THAT THE ELIGIBILITY OF DEDUCTION CLAIMED FROM THE GROSS TOT AL INCOME NEED NOT BE EXAMINED UNDER SECTION 80P(2)(A)(I) OF THE INCOME TAX ACT. I T IS PRAYED THAT THE CLAIM FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT BE ADJUDICATED AS AN ALTERNATIVE TO CLAIM UNDER SECTION 80P(2)(D) OF THE ACT. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING REGISTERED COOPERATIVE SOCIETY UNDER THE MAHARASHTRA STATE COOPERATIVE SOCIETIES ACT, 1960 AS CREDIT RESOURCE SOCIETY TO CARRY OUT THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE SOCIETY WAS N OT REGISTERED UNDER BANKING REGULATION ACT 1949 I.E. WITH RESERVE BANK OF INDIA. 2.2 THE ASSESSEE, DURING ASSESSMENT PROCEEDINGS, SO UGHT TO DISTINGUISH THE CO-OPERATIVE BANKS AND CO-OPERATIVE CREDIT SOCIETIES AND STATED THAT IT 3 ITA NO.3225/MUM/2017 TUPURWADI CO-OP CREDIT SOCIETY LTD ASSESSMENT YEAR:2012-13 FULFILLED THE PRESCRIBED CONDITIONS OF SECTION-80P( 2)(A)(I) AND THEREFORE, ENTITLED TO CLAIM THE DEDUCTION. IT WAS FURTHER POI NTED OUT THAT THE ASSESSEE WAS A COOPERATIVE CREDIT SOCIETY AND PROVIDES CREDIT FACILITIES TO ITS MEMBER AND NOT TO GENERAL PUBLIC AND NOT ENGAGED IN BANKIN G BUSINESS AND THEREFORE, COULD NOT BE TREATED AS COOPERATIVE BANK. THE ASSESSEE, SIMILARLY, SUBMITTED THAT THE PROVISIONS OF SECTION 80P(4) DO NOT APPLY TO IT FOR THE REASONS THAT IT WAS A COOPERATIVE CREDIT SOCIETY AND NOT A COOPERATIVE BANK WITHIN THE MEANING OF PART-V OF THE BANKING REGULATION ACT, 1949. HOWEVER, NOT CONVINCED, LD. AO AFTER CONSIDERING T HE MEANING OF COOPERATIVE SOCIETY, COOPERATIVE BANK AND PRIMARY COOPERATIVE BANK IN TERMS OF SECTION -5(CCIA), (CCI) & (CCV) OF PART-V OF THE BANKING RE GULATION ACT, 1949 OPINED THAT THE ASSESSEE WAS A REGISTERED COOPERATIVE SOCIETY, WHOSE PRINCIPAL BUSINESS WAS BANKING BUSINESS AND I TS SHARE CAPITAL AND RESERVES EXCEEDED THE PRESCRIBED LIMIT AND THEREFOR E, IT WAS A COOPERATIVE BANK WITHIN THE MEANING OF PART-V OF THE BANKING REGULATION ACT, 1949 AND THEREFORE, NOT ELIGIBLE TO CLAIM ANY DEDUCTION. THE SAID OPINION WAS FURTHER SUBSTANTIATED WITH EXPLANATORY NOTES TO THE FINANCE ACT, 2006 AND AMENDED DEFINITION OF INCOME U/S 2(24)(VIIA) TO HOL D THAT THE COOPERATIVE SOCIETY PROVIDING CREDIT FACILITIES TO ITS MEMBERS WAS INELIGIBLE TO CLAIM ANY DEDUCTION. FINALLY, AFTER PLACING RELIANCE ON SEVER AL JUDICIAL PRONOUNCEMENTS, DEDUCTION U/S 80P AMOUNTING TO RS.3 1,90,812/- (WRONGLY REFERRED TO AS RS.39,90,812/- BY LD. AO) WAS DENIED TO THE ASSESSEE. 4 ITA NO.3225/MUM/2017 TUPURWADI CO-OP CREDIT SOCIETY LTD ASSESSMENT YEAR:2012-13 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITHO UT ANY SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 27/02/2 017 WHERE LD. CIT(A) CONCLUDED THAT DEDUCTION U/S 80P(2)(D) WAS NOT AVAI LABLE TO THE ASSESSEE BEING CO-OPERATIVE BANK CARRYING ON BANKING AND FINANCE BUSINESS. WHILE ARRIVING AT THE SAID CONCLUSION, RELIANCE WAS PLACE D ON THE DECISION OF MUMBAI TRIBUNAL IN SHRI SAIDATTA COOPERATIVE CREDIT SOCIETY LTD. VS. I TO [ITA NO.2379/MUM/2015 DATED 15/01/2016] WHICH WAS PASSED AFTER CONSIDERING THE DECISION OF HONBLE APEX COURT IN TOTGARS CO-OPERATIVE SALE SOCIETY LTD. VS. ITO [2010 322 ITR 283]. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. AT THE OUTSET, SO FAR AS THE EXCLUSION PROVIDED BY SECTION 80P(4) IS CONCERNED, LD. AUTHORIZED COUNSEL FOR ASSESSEE [AR] HAS RIGHTLY PLACED THE RELIANCE ON RECENT DECISION OF HONBLE APEX COU RT RENDERED IN THE CITIZEN COOPERATIVE SOCIETY LIMITED VS. ACIT [397 I TR 1 DATED 08/08/2017] WHERE THE HONBLE COURT HAS OBSERVED AS UNDER:- 23. WITH THE INSERTION OF SUB-SECTION (4) BY THE FI NANCE ACT, 2006, WHICH IS IN THE NATURE OF A PROVISO TO THE AFORESAID PROVISION, IT IS MADE CLEAR THAT SUCH A DEDUCTION SHALL NOT BE ADMISSIBLE TO A CO-OPERATIVE BANK. HOWEVER, IF I T IS A PRIMARY AGRICULTURE CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURE AND R URAL DEVELOPMENT BANK, THE DEDUCTION WOULD STILL BE PROVIDED. THUS, CO-OPERATIVE BANKS A RE NOW SPECIFICALLY EXCLUDED FROM THE AMBIT OF SECTION 80P OF THE ACT. 24. UNDOUBTEDLY, IF ONE HAS TO GO BY THE AFORESAID DEFINITION OF CO-OPERATIVE BANK, THE APPELLANT DOES NOT GET COVERED THEREBY. IT IS ALSO A MATTER OF COMMON KNOWLEDGE THAT IN ORDER TO DO THE BUSINESS OF A CO-OPERATIVE BANK, IT IS IMPERATIVE TO HAVE A LICENCE FROM THE RESERVE BANK OF INDIA, WHICH THE APPELLANT DOES NOT POSSESS. NOT ONLY THIS, AS NOTICED ABOVE, THE RESERVE BANK OF INDIA HAS ITSELF CLARIFIED THAT THE BUSINESS OF THE APPELLANT DOES NOT AMOUNT TO THAT OF A CO-OPERATIVE BANK. THE APPELLANT, THEREFORE, WOULD NOT COME WITHIN THE MISCHIEF OF SUB-SECTION ( 4) OF SECTION 80P. 5 ITA NO.3225/MUM/2017 TUPURWADI CO-OP CREDIT SOCIETY LTD ASSESSMENT YEAR:2012-13 SIMILAR VIEW HAS BEEN TAKEN BY HONBLE BOMBAY HIGH COURT IN THE QUEPEM URBAN CO-OPERATIVE CREDIT SOCIETY LTD. VS. A CIT [377 ITR 272] WHERE THE HONBLE COURT HAS HELD AS UNDER:- 5. THE APPELLANT-ASSESSEE IS IN APPEAL BEFORE US FR OM THE IMPUGNED ORDER DATED 26 NOVEMBER 2014 OF THE TRIBUNAL. IT IS CONTENTED THAT IT IS ENTITLED TO THE BENEFIT OF SECTION 80P(2)(A)(I) OF THE ACT AND NOT HIT BY THE EXCLUSIO N IN SECTION 80P(4) OF THE ACT. FOR THE PROPER CONSIDERATION OF THE RIVAL SUBMISSIONS, IT I S NECESSARY TO REPRODUCE THE RELEVANT PROVISIONS OF SECTION 80P OF THE ACT AND ALSO THE D EFINITION OF A PRIMARY CO-OPERATIVE BANK AND BANKING AS DEFINED IN CHAPTER V OF THE BAN KING REGULATION ACT, 1949. SECTION 80P : (1) WHERE, IN THE CASE OF AN ASSESSEE BEING A CO-OP ERATIVE SOCIETY, THE GROSS TOTAL INCOME INCLUDES ANY INCOME REFERRED TO IN SUB-SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE WITH AN D SUBJECT TO THE PROVISIONS OF THIS SECTION, THE SUMS SPECIFIED IN SUB-SECTION (2) , IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. (2) THE SUMS REFERRED TO IN SUB-SECTION (1) SHALL B E THE FOLLOWING, NAMELY :- (A) IN THE CASE OF A CO-OPERATIVE SOCIETY ENGAGED I N - (I) CARRYING ON THE BUSINESS OF BANKING OR PROVIDIN G CREDIT FACILITIES TO ITS MEMBERS, OR... THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUS INESS ATTRIBUTABLE TO ANY ONE OR MORE OF SUCH ACTIVITIES. (II)TO (VII)....; (B) TO (F).....; (3) ........ (4) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY IN RELATION TO ANY CO-OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIE TY OR A PRIMARY CO- OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. EXPLANATIO N FOR THE PURPOSES OF THIS SUB-SECTION, - (A) CO-OPERATIVE BANK AND PRIMARY AGRICULTURAL C REDIT SOCIETY SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO THEM 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 TALUKA AND THE PRINCIPAL OBJECT OF WHICH IS TO PROVIDE FOR LONG- TERM CREDIT FOR AG RICULTURAL AND RURAL DEVELOPMENT ACTIVITIES. BANKING REGULATION ACT 1949 SECTION 5 (CCV) : PRIMARY CO-OPERATIVE BANK MEANS A CO-OPERATIVE SOC IETY, OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY - (1) THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF WHI CH IS TRANSACTION OF BANKING BUSINESS : 6 ITA NO.3225/MUM/2017 TUPURWADI CO-OP CREDIT SOCIETY LTD ASSESSMENT YEAR:2012-13 (2) THE PAID-UP SHARE CAPITAL AND RESERVES OF WHICH ARE NOT LESS THAN ONE LAKH OF RUPEES : AND (3) THE BYE-LAWS OF WHICH DO NOT PERMIT ADMISSION O F ANY OTHER CO-OPERATIVE SOCIETY AS A MEMBER : PROVIDED THAT THIS SUB-CLAUSE SHALL NOT APPLY TO TH E ADMISSION OF A CO-OPERATIVE BANK AS A MEMBER BY REASON OF SUCH CO-OPERATIVE BAN K SUBSCRIBING TO THE SHARE CAPITAL OF SUCH CO-OPERATIVE SOCIETY OUT OF F INDS PROVIDED BY THE STATE GOVERNMENT FOR THE PURPOSE. 6 . MR. CHYTHANYA K. K., THE LEARNED COUNSEL FOR THE AP PELLANT IN SUPPORT OF THE APPEALS SUBMITS AS UNDER : (A) THE APPELLANT IS ADMITTEDLY A CO-OPERATIVE SOCI ETY REGISTERED UNDER THE CO- OPERATIVE SOCIETIES ACT AND IS ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS. CONSEQUENTLY, THE INCOME EARNED BY THE APP ELLANT FROM ITS ACTIVITY OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS, IS ENTI TLED TO DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. THE APPELLANT IS NOT A CO- OPERATIVE BANK AND THUS, THE EXCLUSION PROVIDED UNDER SECTION 80P(4) OF THE ACT WOULD HAVE NO APPLICATION. (B) THE IMPUGNED ORDER ERRONEOUSLY HOLDS THAT THE A PPELLANT TO BE A PRIMARY CO- OPERATIVE BANK, ON THE GROUND THAT IT DOES SATISFY SECTION 5(1)(CCV) OF THE BANKING REGULATION ACT, TO THE EXTENT THAT IT HOLDS THAT, IT SATISFIES ALL THE THREE CONDITIONS (1), (2) AND (3) SPECIFIED THEREIN. IT I S CLEAR FROM THE RECORD THE APPELLANT SOCIETY DOES NOT SATISFY CONDITION (1) & (3) ABOVE VIZ. BANKING IS NOT ITS PRIMARY OBJECT NOR ITS PRINCIPAL BUSINESS NOR DOES IT PROHIBIT ANY OTHER COOPERATIVE SOCIETY FROM BECOMING ITS MEMBER. THUS THE APPELLANT IS NOT A COOPERATIVE BANK AS DEFINED IN THE EXPLANATION TO S ECTION 80P(4) 0F THE ACT AND THEREFORE NOT HIT BY THE EXCLUSION PROVIDED THEREIN ; AND (C) THE IMPUGNED ORDER COMPLETELY IGNORES THE FACT THAT THE APPELLANT CANNOT BE HELD TO HAVE AS ITS PRINCIPAL BUSINESS AS BANKING B USINESS IN THE ABSENCE OF A BANKING LICENCE ISSUED TO THE APPELLANT BY THE RESE RVE BANK OF INDIA UNDER BANKING REGULATION ACT. THIS LICENCE IS A SINE QUO NON FOR RECOGNIZING TO THE APPELLANT BY A CO-OPERATIVE BANK. THE ISSUE OF THE APPELLANT NOT BEING A CO- OPERATIVE BANK IN THE ABSENCE OF A LICNECE TO DO BA NKING BUSINESS IS CONCLUDED BY THE DECISION OF THE KARNAKATA HIGH COURT IN COMMISSIONER OF INCOME TAX AND ANOTHER VS. SRI BILURU GURUBASVA PATTINA SAHAKA RI SANGHA NIYAMITHA BAGALKOT (2014) 369 ITR 86. 7. AS AGAINST THE ABOVE, MS. ASHA DESSAI, LEARNED C OUNSEL TOR THE REVENUE IN SUPPORT OF THE IMPUGNED ORDER SUBMITS AS UNDER : (A) THE IMPUGNED ORDER IS CORRECT IN LAW AND THUS CALLS FOR NO INTERFERENCE ; AND (B) IN ANY VIEW OF THE MATTER, AS THERE IS FINDING OF FACT THAT THE APPELLANT IS DOING BUSINESS ALONG WITH NON-MEMBERS. HOWSOEVER, MINISCU LE, IT WOULD BY ITSELF DISQUALIFY THE APPELLANT FROM ENJOYING THE EXEMPTIO N UNDER SECTION 80P(2)(A)(I) OF THE ACT. THIS ON THE GROUND THAT SECTION 80P(2)( A)(I) OF THE ACT SPECIFICALLY 7 ITA NO.3225/MUM/2017 TUPURWADI CO-OP CREDIT SOCIETY LTD ASSESSMENT YEAR:2012-13 PROVIDED THAT THE DEDUCTION THEREUNDER WILL BE AVAI LABLE ONLY IN CASE OF CO- OPERATIVE SOCIETY WHICH IS PROVIDING FACILITIES TO ITS MEMBERS. 8 . SECTION 80P OF THE ACT PROVIDES DEDUCTION IN SUPPOR T OF INCOME OF CO-OPERATIVE SOCIETIES. SUBSECTION (1) ALLOWS DEDUCTION TO COOPE RATIVE SOCIETY TO THE EXTENT ITS GROSS INCOME INCLUDES ANY INCOME REFERRED TO IN SUBSECTIO N (2) IN COMPUTING ITS TOTAL INCOME. SUBSECTION (2) REFERS TO VARIOUS INCOMES TO WHICH T HE DEDUCTION UNDER SUBSECTION (1) IS AVAILABLE. IN THIS CASE WE ARE CONCERNED WITH CLAUS E (A)(I) OF SUBSECTION (2), WHICH REFERS TO A COOPERATIVE SOCIETY ENGAGED IN CARRYING ON BANKING BUSINESS OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THUS THE DEDUCTIO N IS AVAILABLE ON EITHER OF THE TWO ACTIVITIES I.E. BANKING BUSINESS OR PROVIDING CREDI T FACILITIES TO ITS MEMBERS. WE ARE NOT CONCERNED WITH THE OTHER SUBCLAUSES OF SUBSECTION ( 2) OR SUBSECTION (3) OF SECTION 80P(4) OF THE ACT FOR THE PURPOSES OF THIS CASE. SU BSECTION (4) PROVIDES THAT SECTION 80P OF THE ACT WILL NOT APPLY IN RELATION TO A COOP ERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR PRIMARY AGRICULTURAL AND RURAL DEVELOPMENT BANK. BEFORE US, THE APPELLANT IS NOT CLAIMING TO BE A PRIMARY AGRIC ULTURAL CREDIT SOCIETY OR PRIMARY AGRICULTURAL AND RURAL DEVELOPMENT BANK BUT IT CLAI MS TO BE ENGAGED IN PROVIDING CREDIT FACILITIES AND NOT A BANKING SOCIETY. THUS NOT HIT BY SUBSECTION (4) OF SECTION 80P OF THE ACT. 9. THERE IS NO DISPUTE BETWEEN THE PARTIES THAT THE APPELLANT IS A CO- OPERATIVE SOCIETY AS THE SAME IS REGISTERED UNDER THE CO-OPERATIVE SO CIETIES ACT. THE APPELLANT IS CLAIMING DEDUCTION OF INCOME EARNED ON PROVIDING CR EDIT FACILITIES TO ITS MEMBERS AS PROVIDED UNDER SECTION 80P(2)(A)(I) OF THE ACT. IT IS APPELLANT'S CASE THAT, IT IS NOT CARRYING ON THE BUSINESS OF THE BANKING. CONSEQUENT LY, NOT BEING A CO-OPERATIVE BANK THE PROVISIONS OF SECTION 80P(4) OF THE ACT WOULD N OT EXCLUDE THE APPELLANT FROM CLAIMING THE BENEFIT OF DEDUCTION UNDER SECTION 80P (2)(A)(I) OF THE ACT. HOWEVER IN TERMS OF SECTION 80P OF THE ACT THE MEANING OF THE WORDS COOPERATIVE BANK IS THE MEANING ASSIGNED TO IT IN CHAPTER V OF THE BANKING REGULATION ACT, 1949. A COOPERATIVE BANK IS DEFINED IN SECTION 5(CCI) OF BANKING REGULA TION ACT TO MEAN A STATE COOPERATIVE BANK, A CENTRAL COOPERATIVE BANK AND A PRIMARY COOP ERATIVE BANK. ADMITTEDLY, THE APPELLANT IS NOT A STATE COOPERATIVE BANK, A CENTRA L COOPERATIVE BANK. THUS WHAT HAS TO BE EXAMINED IS WHETHER THE APPELLANT IS A PRIMAR Y COOPERATIVE BANK AS DEFINED IN PARA V OF THE BANKING REGULATION ACT. SECTION 5(CCV ) OF THE BANKING REGULATION ACT DEFINES A PRIMARY COOPERATIVE BANK TO MEAN A COOPER ATIVE SOCIETY WHICH CUMULATIVELY SATISFIES THE FOLLOWING THREE CONDITIONS : (1) ITS PRINCIPAL BUSINESS OR PRIMARY OBJECT SHOULD BE BANKING BUSINESS OF BANKING; (2) ITS PAID UP SHARE CAPITAL AND RESERVES SHOULD N OT BE LESS THAT RUPEES ONE LAKH. (3) ITS BYE-LAWS DO NOT PERMIT ADMISSION OF ANY OTH ER COOPERATIVE SOCIETY AS ITS MEMBER. IT IS ACCEPTED POSITION THAT CONDITION NO.(2) IS SA TISFIED AS THE SHARE CAPITAL IN AN EXCESS OF RUPEES ONE LAKH. IT HAS BEEN THE APPELLANT'S CON TENTION THAT THE CONDITIONS NO. (1) AND (3) PROVIDED ABOVE ARE NOT SATISFIED. 10. THEREFORE THE ISSUE THAT ARISES FOR CONSIDERATI ON IS WHETHER THE APPELLANT SATISFIES CONDITION NO.(1) AND (3) ABOVE. THE IMPUGNED ORDER AFTER REFERRING TO THE DEFINITION OF 'BANKING BUSINESS' AS DEFINED IN SECTION 5B OF THE BANKING REGULATION ACT, HELD THAT THE 8 ITA NO.3225/MUM/2017 TUPURWADI CO-OP CREDIT SOCIETY LTD ASSESSMENT YEAR:2012-13 PRINCIPAL BUSINESS OF THE APPELLANT IS BANKING. SEC TION 5B OF THE BANKING REGULATION ACT DEFINES BANKING TO MEAN ACCEPTING OF DEPOSITS FOR T HE PURPOSE OF LENDING OR INVESTMENT, OF DEPOSIT OF MONEY FROM THE PUBLIC REPAYABLE ON DE MAND OR OTHERWISE. THE IMPUGNED ORDER JUXTAPOSES THE ABOVE DEFINITION WITH THE FIND ING OF FACT THAT THE APPELLANT DID DEAL WITH NON MEMBERS IN A FEW CASES BY SEEING DEPOSITS. THIS READ WITH BYE LAW 43 LEADS TO THE CONCLUSION THAT IT IS CARRYING ON BANKING BU SINESS. THIS FACT OF ACCEPTING DEPOSITS FROM PEOPLE WHO ARE NOT MEMBERS HAS BEEN SO RECORDED BY THE CIT(A) IN HIS ORDER DATED 15 JULY, 2014. BEF ORE THE TRIBUNAL ALSO THE APPELLANT DID NOT DISPUTE THE FACT THAT IN A FEW CASES THEY HAVE DEALT WITH NON MEMBERS. HOWEVER SO FAR AS ACCEPTING DEPOSITS FROM NON MEMBERS IS CONCE RNED IT IS SUBMITTED THAT THE BYE- LAW 43 ONLY PERMITS THE SOCIETY TO ACCEPT DEPOSITS FROM ITS MEMBERS. IT IS SUBMITTED THAT BYE LAWS 43 DOES NOT PERMIT RECEIPT OF DEPOSITS FRO M PERSONS OTHER THEN MEMBERS, THE WORD ANY PERSON IS A GLOSS ADDED IN THE IMPUGNED ORDER AS IT IS NOT FOUND IN BYE LAW 43. IT IS UNDISPUTED THAT THE TRANSACTIONS WITH NON MEMBERS ARE INSIGNIFICANT/MINISCULE. ON THE ABOVE BASIS IT CANNOT BE CONCLUDED THAT THE APPELLANT'S PRINCIPAL BUSINESS IS OF ACCEPTING DEPOSITS FROM PUBLIC AND THEREFORE IT IS IN BANKING BUSINESS. IN FACT, THE IMPUGNED ORDER ERRONEOUSLY RELIES UPON BYE-LAW 43 O F THE SOCIETY WHICH ENABLES THE SOCIETY TO RECEIVE DEPOSITS TO CONCLUDE THAT IT CAN RECEIVE DEPOSITS FROM PUBLIC. HOWEVER, THE IMPUGNED ORDER RELIES UPON BYE-LAW 43 TO CONCLUDE THAT IT ENABLES THE APPELLANT TO RECEIVE DEPOSITS FROM ANY PERSON IS NO T CORRECT. THUS IN THE PRESENT FACTS THE FINDING THAT THE APPELLANT'S PRINCIPAL BUSINESS IS OF BANKING IS PERVERSE AS IT IS NOT SUPPORTED BY THE EVIDENCE ON RECORD. SO FAR AS THE ISSUE OF PRIMARY OBJECT OF THE APPELLANT IS CONCERNED THE IMPUGNED ORDER GIVES NO FINDING ON THAT BASIS TO DEPRIVE THE APPELLANT THE BENEFIT OF SECTION 80P OF THE ACT. TH E IMPUGNED ORDER SETS OUT THE OBJECT CLAUSE OF THE APPELLANT, WHICH HAS 24 OBJECTS BUT T HEREAFTER DRAWS NO SEQUITER TO CONCLUDE THAT THE PRIMARY OBJECT IS BANKING. CONSEQ UENTLY THERE IS NO OCCASION TO DEAL WITH THE SAME AS THAT IS NOT THE BASIS ON WHICH THE IMPUGNED ORDER HOLDS THAT IT IS A PRIMARY COOPERATIVE BANK. 11. IN THE ABOVE VIEW, THE ALTERNATIVE CONTENTION O F THE APPELLANT THAT IT IS NOT IN THE BUSINESS OF BANKING AS THE SINE QUO NON TO CARRY ON BANKING BUSINESS IS A LICENCE TO BE ISSUED BY THE RESERVE BANK OF INDIA, WHICH IT ADMIT TEDLY DOES NOT HAVE, IS NOT BEING CONSIDERED. 12. SO FAR AS CONDITION NO.3 OF THE DEFINITION/MEAN ING OF PRIMARY COOPERATIVE BANK AS PROVIDED IN SECTION 5(CCV) OF THE BANKING REGULATIO N ACT IS CONCERNED, THE SAME REQUIRES THE BYE LAWS OF SOCIETY TO CONTAIN A PROHI BITION FROM ADMITTING ANY OTHER COOPERATIVE SOCIETY AS ITS MEMBER. IN FACT THE BYE- LAWS OF THE APPELLANT SOCIETY ORIGINALLY IN BYE-LAW 9(D) CLEARLY PROVIDED THAT NO CO-OPERATIVE SOCIETY SHALL BE ADMITTED TO THE MEMBERSHIP OF THE SOCIETY. THUS THERE WAS A BAR BUT THE SAME WAS AMENDED W.E.F. 12 JANUARY, 2001 AS TO PERMIT A SOCIETY TO B E ADMITTED TO THE MEMBERSHIP OF THE SOCIETY. THEREFORE FOR THE SUBJECT ASSESSMENT YEARS THERE IS NO PROHIBITION TO ADMITTING A SOCIETY TO ITS MEMBERSHIP AND ONE OF THREE CUMULA TIVE CONDITIONS PRECEDENT TO BE A PRIMARY COOPERATIVE BANK IS NOT SATISFIED. HOWEVER THE IMPUGNED ORDER CONSTRUED THE AMENDED CLAUSE 9(D) OF THE APPELLANT'S BYE LAWS TO MEAN THAT IT ONLY PERMITS A SOCIETY TO 9 ITA NO.3225/MUM/2017 TUPURWADI CO-OP CREDIT SOCIETY LTD ASSESSMENT YEAR:2012-13 BE ADMITTED TO THE MEMBERSHIP OF THE APPELLANT AND NOT A CO-OPERATIVE SOCIETY. ACCORDING TO THE IMPUGNED ORDER, A SOCIETY AND A CO -OPERATIVE SOCIETY ARE CLEARLY WORDS OF DIFFERENT AND DISTINCT SIGNIFICANCE AND THE MEMB ERSHIP IS ONLY OPEN TO SOCIETY AND NOT TO A CO-OPERATIVE SOCIETY. AS RIGHTLY POINTED OUT O N BEHALF OF THE APPELLANT THE WORD SOCIETY AS REFERRED TO BYE LAW 9(D) WOULD INCLUDE T HE CO-OPERATIVE SOCIETY. THIS IS SO AS THE DEFINITION OF A SOCIETY UNDER THE CO-OPERATIVE ACT IS CO-OPERATIVE SOCIETY REGISTERED UNDER THE CO- OPERATIVE ACT. BESIDES THE QUALIFYING CONDITION 3 FOR BEING CONSIDERED AS A PRIMARY COOPERATIVE BANK IS THAT THE BYE LAWS MUS T NOT PERMIT ADMISSION OF ANY OTHER COOPERATIVE SOCIETY. THIS IS A MANDATORY CONDITION I.E. THE BYE LAWS MUST SPECIFICALLY PROHIBIT ADMISSION OF ANY OTHER COOPERATIVE SOCIETY TO ITS MEMBERSHIP. THE REVENUE HAS NOT BEEN ABLE TO SHOW ANY SUCH PROHIBITION IN T HE BYE LAWS OF THE APPELLANT. THUS EVEN THE AFORESAID QUALIFYING CONDITION (3) FOR BEI NG CONSIDERED AS A PRIMARY COOPERATIVE BANK IS NOT SATISFIED. THUS, THE THREE CONDITIONS AS PROVIDED UNDER SECTION 5 (CVV) OF THE BANKING REGULATION ACT, 1949, ARE TO BE SATISFIED CUMULATIVELY AND EXCEPT CONDITION (2) THE OTHER TWO QUALIFYING CONDI TIONS ARE NOT SATISFIED. ERGO, APPELLANT CANNOT BE CONSIDERED TO BE A CO-OPERATIVE BANK FOR THE PURPOSES OF SECTION 80P(4) OF THE ACT. THUS, THE APPELLANT IS ENTITLED TO THE BEN EFIT OF DEDUCTION AVAILABLE UNDER SECTION 80P(2)(A)(I) OF THE ACT. 13. THE CONTENTION OF MS. DESSAI, LEARNED COUNSEL F OR THE REVENUE THAT THE APPELLANT IS NOT ENTITLED TO THE BENEFIT OF SECTION 80P(2)(A)(I) OF THE ACT IN VIEW OF THE FACT THAT IT DEALS WITH NON-MEMBERS CANNOT BE UPHELD. THIS FOR THE REA SON THAT SECTION 80P(1) OF THE ACT RESTRICTS THE BENEFITS OF DEDUCTION OF INCOME OF CO -OPERATIVE SOCIETY TO THE EXTENT IT IS EARNED BY PROVIDING CREDIT FACILITIES TO ITS MEMBER S. THEREFORE, TO THE EXTENT THE INCOME EARNED IS ATTRIBUTABLE TO DEALINGS WITH THE NON- ME MBERS ARE CONCERNED THE BENEFIT OF SECTION 80P OF THE ACT WOULD NOT BE AVAILABLE. IN T HE ABOVE VIEW OF THE MATTER, AT THE TIME WHEN EFFECT HAS BEEN GIVEN TO THE ORDER OF THI S COURT, THE AUTHORITIES UNDER ACT WOULD RESTRICT THE BENEFIT OF DEDUCTION UNDER SECTI ON 80P OF THE ACT ONLY TO THE EXTENT THAT THE SAME IS EARNED BY THE APPELLANT IN CARRYIN G ON ITS BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. 14. ACCORDINGLY, THE SUBSTANTIAL QUESTION OF LAW AS FRAMED IS ANSWERED IN THE NEGATIVE I.E. IN FAVOUR OF THE APPELLANT AND AGAINST THE RES PONDENT-REVENUE. UPON PERUSAL OF THE SAME, WE FIND THAT THE TERMS COOPERATIVE SOCIETIES AND COOPERATIVE BANK CARRY DIFFERENT MEANING UNDER LAW FOR THE PURPOSE OF SECTION 80P(4) AND EXCLUSION CLAUSE ONLY DEBARS THE COOPERATIVE BANK AND NOT COOPERATIVE SOCIETIES TO CLAIM DEDUCTION U/S 80P. THE REVENUE HAS NOT CONTROVERTED THE FACT THAT THE ASSESSEE WAS NOT IN POSSESSION OF LICENSE FROM RBI AND NOTHING IS AVAILABLE ON RECORD TO SUGGEST THAT THE ASSESSEE 10 ITA NO.3225/MUM/2017 TUPURWADI CO-OP CREDIT SOCIETY LTD ASSESSMENT YEAR:2012-13 HAS DEALINGS WITH NON-MEMBERS ALSO AND WAS ACCEPTIN G DEPOSIT FROM PUBLIC AT LARGE. THEREFORE, THE ASSESSEE, IN OUR OPINION, WAS NOT CARRYING OUT THE BUSINESS OF BANKING AND THEREFORE, NOT HIT BY THE P ROVISIONS OF SECTION 80P(4) OF THE ACT AND THEREFORE, ELIGIBLE TO CLAIM DEDUCTION WITHIN THE PROVISIONS OF SECTION 80P. 5. PROCEEDING FURTHER, WE FIND THAT THE ASSESSEE HA S CLAIMED DEDUCTION U/S 80P(2)(D) WHICH PROVIDES FOR DEDUCTION IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY THE CO-OPERATIV E SOCIETY FROM ITS INVESTMENTS WITH ANY OTHER CO-OPERATIVE SOCIETY. WE FIND THAT THIS DEDUCTION IS AVAILABLE ONLY IF THE INCOME OR DIVIDENDS ARE DE RIVED BY THE ASSESSEE FROM COOPERATIVE SOCIETY. A PERUSAL OF THE IMPUGNED ORDER REVEALS THAT THE ASSESSEE HAS DERIVED INCOME FROM VARIOUS BANKS, COO PERATIVE OR OTHERWISE, AND NOT FROM ANY CO-OPERATIVE SOCIETY . EXTENDING THE SAME LOGIC AND FINDING CLEAR-CUT DISTINCTION BETWEEN COOPERATIVE SOCIETY AND COOPERATIVE BANK, WE HOLD THAT THE ASSESSEE WAS NOT ENTITLED FOR DED UCTION U/S 80P(2)(D). THIS GROUND OF ASSESSEES APPEAL STA NDS DISMISSED. 6. NOW THE ONLY QUESTION THAT SURVIVES FOR OUR CONS IDERATION IS ALTERNATIVE CLAIM OF THE ASSESSEE U/S 80P(2)(A)(I) WHICH PROVID ES FOR DEDUCTION WITH RESPECT TO PROFITS AND GAINS OF BUSINESS ATTRIBUTABLE TO CARRY ING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. FOR THE SAID CLAIM, LD. AR HAS PLACED RELIANCE ON CERTAIN DECISI ONS AS PLACED IN THE PAPER BOOK TO CONTEND THAT DEDUCTION THEREOF WAS AVAILABLE TO THE ASSESSEE. HOWEVER, WE FIND THAT THIS ISSUE WOULD RE QUIRE EXAMINATION OF 11 ITA NO.3225/MUM/2017 TUPURWADI CO-OP CREDIT SOCIETY LTD ASSESSMENT YEAR:2012-13 CERTAIN FINANCIAL ASPECTS AND LD. FIRST APPELLATE A UTHORITY HAS NOT EXAMINED THE CLAIM OF THE ASSESSEE U/S 80P(2)(A)(I). THEREFO RE, WITHOUT DELVING MUCH DEEPER, WE DEEM IT FIT TO RESTORE THE MATTER BACK T O THE FILE OF LD. CIT(A) FOR ADJUDICATION THEREOF. RESULTANTLY, THIS GROUND OF A SSESSEES APPEAL STANDS ALLOWED FOR STATISTICAL PURPOSES. 7. RESULTANTLY, THE APPEAL STANDS PARTLY ALLOWED FO R STATISTICAL PURPOSES IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH APRIL, 2018. SD/- SD/- (C. N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 04 . 04.2018 SR.PS:-THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. ' ! / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. + $ , , , , / DR, ITAT, MUMBAI 6. -./ / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI