INCOME TAX OFFICER WARD-2(1), HUBBALLI vs. M/S DHARWAD DISTRICT POLICE CO-OPERATIVE CREDIT SOCIETY LTD, DHARWAD

O R D E R Per Sunil Kumar Yadav, Judicial Member This appeal is preferred by the assessee against the order of CIT(A), interalia, on the following grounds: i) Whether, on the facts and in the circumstances of the case and in law, the Ld.CIT(A), Hubballi was justified in law in holding that the assessee-society is entitled to deduction under section 80P(2)(a)(i) of the - Income Tax Act even when the assessee- society is mainly involved in extending credit facilities to its members which is in the nature of a bank trans acti on, tr eated on par wit h the new clause introduced i n the definition of income in section 2(24)(viia) of the act and comes under the purview of section 80P(4) w.e.f. 01/04/2007. ii) Any other ground that may be made during the appeal. iii) The appellant craves leave to add, alter, amend and delete any of the grounds of leave.

“2. I have carefully examined the orders of lower authorities and I find that the AO has denied the benefit of deduction claimed u/s. 80P(2)(a)(i) of the Act against which the appeal was filed before the CIT(Appeals) and placed reliance upon the judgment of Hon'ble jurisdictional High Court in the case of CIT, Hubli v. Bhavasar Kshatriya Co-op. Credit Society Ltd. in which they have confirmed the view of the Tribunal and allowed deduction u/s. 80P of the Act against the income earned from members/deposits.

The CIT(Appeals) allowed the appeal of assessee against which revenue is in appeal before me and placed reliance upon the assessment order.

3. Though none appeared for the assessee, I have examined the order of CIT(Appeals) and find that he has adjudicated the issue in the light of the ratio laid down by the Hon'ble jurisdictional High Court in the case of Shri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha and CIT, Hubli v.

Bhavasar Kshatriya Co-op. Credit Society Ltd. Since the CIT(Appeals) has decided the following the judgments of Hon'ble jurisdictional High Court, I find no infirmity in his order. However, for the sake of reference, I extract the relevant portion of the order of CIT(Appeals) hereunder:- "6. In the case of Shri. Biluru Gurubasava Pattina Sahakari Sangha Niyamita, Bagalkot, the Hon'ble High Court of Karnataka has held as under.

If a Co-operative Bank is exclusively carrying 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 o-operative agricultural rural development bank. The Legislature did not want to deny the said benefit to the primary agricultural credit society or a primary a- operative agricultural 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 purport of the amendment. If the assessee is not a Cooperative Bank carrying on exclusively banking business and if it does not possess a licence from the Reserve Bank of India to carry on business, then 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 u/s. 80P(2)(a)(i) i.e. carrying on the business of banking providing credit facilities to its members The object of the aforesaid amendment is to exclude the benefit extended u/s 80P(i) to the society.

4. Since the Tribunal has taken a particular view in a similar set of facts, we have no justification to take a contrary view in this appeal. Accordingly, following the same, we confirm the order of the CIT(A) who has rightly adjudicated the issue.

5. In the result, appeal of the Revenue stand dismissed .

Pronounced in the open court on November, 2017.