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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN
Aforesaid appeal by the Revenue is against the order dated 3rd January 2018, passed by the learned Commissioner of Income Tax (Appeals)–33, Mumbai, for the assessment year 2013–14.
The dispute in the present appeal is confined to the decision of learned Commissioner (Appeals) in allowing assessee’s claim of 2 Sanjay Co–operative Society Ltd.
deduction under section 80P(2) of the Income-tax Act, 1961 (for short "the Act").
Brief facts are, as stated by the Assessing Officer, the assessee is a Credit Co–operative Society. For the assessment year under dispute, the assessee filed its return of income on 28th September 2013, declaring nil income after claiming deduction of ` 78,39,987, under section 80P of the Act. During the assessment proceedings, the Assessing Officer noticed that in the course of its activity, the assessee had received deposits from Members amounting to ` 15,39,15,660, as on 31st March 2013. Whereas, it has given loans and advances to the Members amounting to ` 13,26,74,642, and received interest thereon amounting to ` 1,53,32,915. On going through the computation of income, he found that the assessee though has offered gross total income of ` 78,39,987, under the head income from business or profession, however, it has claimed deduction of the very same amount under section 80P of the Act. Referring to the provisions contained under section 80P of the Act, the Assessing Officer observed that the allowability of deduction under the said provision is subject to the condition imposed under sub–section (4) therein. He observed, as per the said provision, the deduction is not allowable to a Co–operative Bank. Accordingly, he called upon the assessee to justify its claim of deduction under section 80P of the Act. In response, it was submitted
3 Sanjay Co–operative Society Ltd. by the assessee that it is registered under the Maharashtra State Co– operative Societies Act, 1960, with the object of providing credit facilities to the members. It was also submitted that the society is not registered under the Banking Regulation Act, 1949 with Reserve Bank of India. It was submitted, the assessee is governed by The Maharashtra State Co–operative Societies Act, 1960, and rules framed there under as well as by the by laws of the Society. Thus, it was submitted, the assessee not being a Co–operative Bank, the restriction imposed under sub–section (4) of section 80P of the Act would not be applicable. The Assessing Officer, however, did not find merit in the submissions of the assessee and concluded that the assessee is a Co– operative Bank, hence, is not eligible to avail deduction under section 80P of the Act. Further, he held that the assessee fulfilled the conditions of section 56(c)(ccv) of Part–(v) of the Banking Regulation Act, 1949, hence, falls in the category of a Primary Co–operative Bank. Accordingly, he disallowed assessee’s claim of deduction under section 80P(2) of the Act, amounting to ` 78,39,987. Being aggrieved with the aforesaid disallowance, the assessee preferred appeal before the first appellate authority.
The learned Commissioner (Appeals), after considering the submissions of the assessee in the context of facts and material on record and the case laws cited before him, concluded that the 4 Sanjay Co–operative Society Ltd.
assessee cannot be treated as Co–operative Bank since assessee’s activity is restricted to acceptance and lending of money only from members and not from general public. Further, he observed, since the assessee is not recognized as a Co–operative Bank by the Reserve Bank of India under Banking Regulation Act, 1949, it cannot be treated as Co–operative Bank. Thus, he held that assessee’s claim of deduction under section 80P(2)(a)(i) of the Act amounting to ` 13,31,460, is allowable.
As regards deduction claimed under section 80P(2)(d) of the Act, learned Commissioner (Appeals) noted that in assessee’s own case for the assessment year 2010–11, the Tribunal in ITA no.7052/Mum./2013, dated 11th January 2017, has allowed such deduction. Accordingly, following the decision of the Tribunal, he allowed assessee’s claim of deduction under section 80P(2)(d) of the Act.
When the appeal was called for hearing, no one was present on behalf of the assessee to represent the case. Accordingly, we proceed to dispose off the appeal ex parte qua the assessee after hearing the learned Departmental Representative and on the basis of material available on record.
5 Sanjay Co–operative Society Ltd.
We have heard the learned Departmental Representative and perused the material on record. Undisputedly, the Assessing Officer has disallowed assessee’s claim of deduction under section 80P(2)(a)(i) of the Act primarily on the reasoning that the assessee being a Co–operative Bank falls within the restriction imposed under sub–section (4) of section 80P of the Act. However, as rightly observed by the learned Commissioner (Appeals) and the factual matrix of the case also reveals that the assessee is a credit Co–operative Society registered under the Maharashtra Co–operative Societies Act, 1960, and has not been recognized as a Bank by the Reserve Bank of India under the Banking Regulation Act, 1949. Further, the assessee is governed under the provisions of the Maharashtra State Co–operative Society Act, 1960 and rules made there under as well as the bylaws of the Society. Thus, from the aforesaid facts, it is very much clear that the assessee cannot be treated as a Co–operative Bank. That being the case, learned Commissioner (Appeals) was justified in allowing assessee’s claim of deduction under section 80P(2)(a)(i) of the Act. As regards assessee’s claim of deduction under section 80P(2)(d) of the Act, it is evident, the learned Commissioner (Appeals) has allowed assessee’s claim following the decision of the Tribunal in assessee’s own case in the assessment year 2010–11. Therefore, no fault can be found with the decision of the learned Commissioner (Appeals). In view of the aforesaid, we do not find any reason to interfere with the 6 Sanjay Co–operative Society Ltd.
decision of learned Commissioner (Appeals) on the issue. Grounds raised are dismissed.
Before parting, we must observe, the tax effect on the amount disputed by the Revenue in the present appeal is below the monetary limit of ` 50 lakh. That being the case, the present appeal by the Revenue is also not otherwise maintainable keeping in view the Circular no.17/2019, dated 8th August 2019, r/w Circular no.3/2018, dated 11th July 2018, issued by the Central Board of Direct Taxes.
In the result, Revenue’s appeal is dismissed. Order pronounced in the open Court on 11.10.2019