ITO 20(3)4), MUMBAI vs. CENTRAL RAILWAY EMPLOYEE CO-OP CREDIT SOCIETY LTD, MUMBAI

The present appeal has been filed by the revenue against the order dated 16.05.2017 passed by the Commissioner of Income Tax (Appeals)-32, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the assessment year 2014-15.

The revenue has raised the following grounds: - "1. On the facts and circumstances of the case the Ld. CIT(A) has erred in allowing deduction u/s 80P to the assessee even though assessee carries on the banking business and other business in the name of the co-operative credit society.

The brief facts of the case are that the assessee filed its return of income on 13.09.2014 for the A.Y. 2014-15 declaring total income to the tune of Rs. Nil after claiming the deduction u/s 80P of the I.T. Act, 1961. Thereafter, the return was processed u/s 143(1) of the I.T. Act, 1961. Thereafter, the case was selected for scrutiny. Notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. The assessee is an AOP running a Co-operative Credit society and doing banking business for their members. The society was also collecting deposits from members by way of fixed deposits, saving deposits and recurring daily deposits etc. The income of the assessee under the year of assessment was to the tune of Rs.35,04,13,487/-. The assessee claimed the deduction u/s 80P(2) of the I. T. Act, 1961. Considering this fact that the assessee was doing the banking business, therefore, the claim of deduction u/s 80P(2)(a)(i) of the Act was denied and the income of the assessee was assessed to the tune of Rs.35,04,13,490/-Feeling aggrieved, the assessee filed an appeal A.Y.2014-15 before the CIT(A) who allowed the claim of the assessee, therefore, the revenue has filed the present appeal before us.

All the issues are inter-connected which are in fact challenged the allowance of the claim of the assessee in view of the provisions u/s 80P of the Act. The Ld. Representative of the revenue has argued that the assessee was doing the banking business, therefore, the assessee was not entitled for deduction u/s 80P of the Act and in support of this contention. The Ld. Representative of the revenue has placed reliance upon the decision of the Hon’ble Supreme Court in the case of Citizen Co-operative Society Ltd. ACIT, Circle 9(1), Hydrabad (2017) 84 taxmann.com 114 (SC). However, on the other hand, the Ld. Representative of the assessee has refuted the said contention and argued that the assessee nowhere doing the business banking, therefore, the CIT(A) has rightly allowed the claim of the assessee. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record.: - “5. I have perused the assessment order, written submission and facts of the case. The grounds are disposed off as under. 5.1 Ground No. 1 & 2: These grounds of appeal are against the treating co-operative bank u/s 80P(4) and disallowance u/ 80P(2)(a)(i) of the I.T. Act. The AO proceeded to analyze the provisions of Sec. 80P, the Banking Regulation Act, more particularly sec 56(c)(CCV) and a number cooperative society. He has however not led any fact to show that the appellant is engaged in the business of banking. The AO has examined provision of Banking Regulation Act 1949 and tried to demonstrate how A.Y.2014-15