ITO, WARD-1(5), JODHPUR vs. M/S. PUSHTIKAR SAKH SAHAKARI SAMITI LTD., JODHPUR

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ITA 176/JODH/2018Status: DisposedITAT Jodhpur19 March 2020AY 2015-165 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee is a cooperative society and not a cooperative bank, following its own previous order and High Court decisions. Therefore, the assessee is entitled to deduction under Section 80P.

What were the facts?

The revenue appealed against the CIT(A)'s order allowing deduction under Section 80P to the assessee, a cooperative society. The revenue argued that the assessee was a primary cooperative bank and thus not eligible for the deduction.

What were the issues?

Whether a cooperative society, which is not a cooperative bank registered with RBI, is eligible for deduction under Section 80P of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 80P,Section 80P(4),Section 80P(2)(a)(i)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR

Before: SHRI R.C. SHARMA & SHRI SANDEEP GOSAIN

For Respondent: Shri Abhimanyu Singh, DR Assessee By None
Hearing: 16/03/2020

PER: SANDEEP GOSAIN, JM

This is an appeal filed by the revenue against the order of the ld.

CIT(A)-1, Jodhpur dated 26/02/2018 for the A.Y.2015-16. The grounds

taken by the revenue reads as under:

"On the facts and in the circumstances of the case the Ld. CIT(A)-1, Jodhpur has erred in:- 1. The CIT(A)-1 Jodhpur is justified in law in holding that the assessee is entitled to deduction U/s 80P of the IT Act, 1961 by ignoring that the assessee is a primary co-operative bank as per Section 56(c)(i)(cca) of the Banking Regulation Act,1946. 2. The CIT(A)-1 Jodhpur is justified in law in holding that the assessee is not a co-operative Bank by ignoring that the assessee fulfilled conditions applicable to co-operative banks as

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per Part V of the Banking Regulation Act, 1949 and is therefore, not eligible for such deduction as provided U/s 80P(4) of the IT Act, 1961. 3. The CIT(A)-1 Jodhpur is justified in allowing deduction U/s 80P(2)(a)(i) by ignoring the fact that the assessee society itself admitted doing banking business and, therefore, as per Explanation (a) to Section 80P(4) such deduction is not admissible to it. 4. The appellant craves leave to add, amend or alter any or all the grounds of appeal on or before the date the appeal is finally heard for disposal.” 2. No body appeared on behalf of the assessee in spite of giving the

opportunity, therefore, the Bench decided to dispose off the appeal after

considering the contention of the ld. Departmental Representative and the

material placed on record.

3.

The grievance of the revenue relates to action of ld.

CIT(A) in deleting the addition by the A.O. declining the claim of

deduction U/s 80P of the Act.

4.

We observe that the ld. CIT(A) has allowed the appeal of

the assessee wherein it has claimed deduction U/s 80P of the

Act by following the order of the Tribunal in assessee’s own

case passed in ITA Nos. 146 to 149/Jodh/2015 for the A.Y.

2007-08 & 2009-10 to 2011-12 dated 15/3/2016. The precise

observation of the ld. CIT(A) is as under:

“6. I have carefully considered the AO’s order and submissions of the appellant.

I find that the issue under consideration is squarely covered in favour of the

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appellant by the order of the Hon’ble Jurisdictional ITAT in the case of M/s

Pushtikar Sakh Sahakari Samiti Ltd., in ITA Nos. 146 to 149/JODH/2015 for

AY 2007-08 & 2009-10 to 2011-12 dated 15-03-2016. The operative part of

the Hon’ble ITAT’s order is reproduced as below:-

"7. We find that the issue is now covered by the decision of the Hon'ble Karnataka High Court in favour of the assessee in the case of CIT Vs. Sri Biluru Gurubasavl Pattina Sahakari Sangha Niyamitha, Bagalkot, in ITA No.5006/2013 dated 05-02-2014, which was followed in the cases of General Insurance Employees Co-operative Credit Society Ltd. and in the case of Vasavi Multipurpose Souharda Sahakari Niyamitha, ITA No.505/2013 dated 27/06/2014, has clearly held that a co-operative society registered as co-operative society, providing credit facilities to members and not registered with the RBI cannot be denied the exemption under section 80P(1) of the IT Act. The operative part of the judgment reads as follows:-

“Therefore, the intention of the legislature is clear, if a cooperative 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 under the Banking regulation Act includes the primary agricultural credit society or a primary co- operative 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 co-operative bank which is exclusively carrying on banking business i.e. the ITA No.ll49/Bang/2015 Shri Holehucheshwar Co- op Credit Society Ltd. Page 4 of 6 purpose of this amendment. Therefore, as the assessee is not a Co-operative bank carrying on exclusively banking business and as it does no possess a licence from Reserve Bank of India to carry on business, it is not a co- operative bank. It is a co-operative society which also carries on the business of lending money to its members which is covered under section 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 under section 80P(1) to such society………..in the instant case, when the

4 ITA 176/Jodh/2018 ITO Vs M/s Pushtikar Sakh Sahakari Samiti Ltd.

status of the assessee is a co-operative society and is not a co- operative bank, the order passed by the Assessing authority extending the benefit of exemption from payment of tax under section 80P(2)(a)(i) of the Act is correct”.

Respectfully following the same, we uphold that the assessee is a cooperative society and not a cooperative bank and, therefore, entitled to deduction under sec. 80P of the Act. We therefore, set aside the orders of the lower authorities and direct the Assessing Officer to allow deduction under sec. 80P of the Act to the assessee."

5.

The ld. Departmental Representative fairly conceded the

fact that the issue is covered by the order of the Tribunal in

assessee’s own case.

6.

As the facts and circumstances of the case during the year

under consideration are same, therefore, respectfully following

the order of the Tribunal in assessee’s own case, I do not find

any infirmity in the order of the ld. CIT(A) for allowing the claim

of deduction U/s 80P of the Act.

7.

In the result, the appeal of the revenue is dismissed. Order pronounced in the open court on 19th March, 2020.

Sd/- Sd/- (R.C. SHARMA) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 19/03/2020 *Ranjan Copy to : 1. The Appellant 2. The Respondent 3. The CIT

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4.

The CIT(A) 5. The DR 6. Guard File (ITA No. 176/Jodh/2018)

Assistant Registrar Jodhpur Bench

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