THE JANAKALYAN COOPERATIVE CREDIT SOCIETY LIMITED ,NORTH 24 PARGANAS vs. ITO, WARD - 11(2), KOLKATA , KOLKATA

आदेश /O R D E R This assessee’s appeal for assessment year 2012-13, arises against the Commissioner of Income-tax (Appeals)-4, Kolkata’s order dated 08.03.2018 passed in case No. 79/CIT(A)-4/W.11(2)/2015-16 involving proceedings u/s. 143(3) of the Income Tax Act, 1961; in short ‘the Act’. Heard both the parties. Case file perused.

ITA No.1060/Kol/2018 A.Y. 2012-13 The Janakalyan Co-Op. Credit Society Ltd. vs. ITO Wd.11(2) Kol. Page 2 of the Act not entitled for the deduction relief to co-operative society in respect of income derived from its members. Learned Departmental Representative vehemently contends during the course of hearing that the CIT(A) has rightly held the assessee to be a co-operative bank since deriving interest income from its members alike on bank. I find no merit in the instant reasoning hon'ble Gujarat high court’s decision in (2014) 362 ITR 331 (Guj) CIT vs. Jafari Momi Vikas Co-Op Credit Society Ltd., has rejected the identical reasoning in case of co-operative credit society after taking into account the CBDT’s 133/2007 dated 09.05.2007 as follows:- “3. Issue pertains interpretation of section to 80P(2) and 80P(4) of the Income Tax Act, 1964 ("the Act" for short). Respondent assessee is a Cooperative Credit Society and claims benefit of deduction under section 80P(1) of the Act by virtue of the provisions contained in section 80P(2) (a) (i) of the Act. As is well known under sub-section (l) of section 80P certain co-operative societies are granted deductions of the sum specified in sub-section (2) in computing the total income. As per section 80P(2) (a) (i), the sums referred in sub-section(l) would be in case of a co-operative society engaged in carrying on the business of banking or providing credit facilities to its members the whole of the amount of profits and gains of business attributable to anyone or more of such activities. Revenue, however, contends that by virtue of newly amended sub- section (4) of section 80P inserted with effect from 1.4.2007 by Finance Act, 2006, section 80P would not apply to the respondent assessee. Section 80P(4) in the present form refers as under:- " (4) The provisions of this section shall not apply in relation to any co- operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. Explanation-For the purposes of this sub-section,- (a) "co-operative bank" and "primary agricultural credit 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 development bank" means a society having its area of operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities." 4. As per section BOP(4), the provisions of section 80P would not apply in relation to any co-operative bank other than primary agricultural credit society or primary co-operative agricultural and rural development bank. As per the explanation, the terms "co-operative bank" and "primary agricultural credit society" shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949.

ITA No.1060/Kol/2018 A.Y. 2012-13 The Janakalyan Co-Op. Credit Society Ltd. vs. ITO Wd.11(2) Kol. Page 3 5. Assessing Officer held that by virtue of section 80P(4), the respondent assessee would not be entitled to benefits of deduction under section 80P. CIT(Appeals) as well as the Tribunal reversed the decision of the Assessing Officer on the premise that the respondent assessee not being a bank, provided in sub-section (4) of section 80P would not apply. This irrespective of the fact that the respondent would not fall within the expression "primary agricultural credit society". 6. Had this been the plain statutory provisions under consideration in isolation, in our opinion, the question of law could be stated to have arisen. When, as contended by the assessee, by virtue of sub-section (4) only co-operative banks other than those mentioned therein were meant to be excluded for the purpose of deduction under section 80P, a question would arise why then Legislature specified primary agricultural credit societies along with primary co-operative agricultural and rural development banks for exclusion from such exclusion and in other words, continued to hold such entity as eligible for deduction. However, the issue has been considerably simplified by virtue of CBDT circular No.133 of 2007 dated 9.5.2007. Circular provides as under:- "Subject: Clarification regarding admissibly of deduction under section 80P of the Income-Tax Act, 1961. 1. Please refer to your letter no. DCUS/30688/2007, dated 28.03.2007 addressed to Chairman, Central Board of Direct Taxes, on the above given subject. 2. In this regard, I have been directed to state that sub-section (4) of section 80P provides that deduction under the said section shall not be allowable to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. For the purpose of the said sub-section, co-operative bank shall have the meaning assigned to it in part V of the Banking Regulation Act, 1949. 3. In part V of the Banking Regulation Act, "Co-operative Bank" means a State Co-operative bank, a Central Co-operative Bank and a primary Co-operative bank. 4. Thus, if the Delhi Co op Urban T & C Society Ltd. does not fall within the meaning of "Co-operative Bank" as defined in part V of the Banking Regulation Act, 1949, sub- section (4) of section B OP will not apply in this case. 5. The issues with the approval of Chairman, Central Board of Direct Taxes." 7. From the above clarification, it can be gathered that sub-section (4) of section 80P will not apply to an assessee which is not a co-operative bank. In the case clarified by CBDT, Delhi Coop Urban Thrift & Credit Society Ltd. was under consideration. Circular clarified that the said entity not being a co- operative bank, section 80P (4) of the Act would not apply to it. In view of such clarification, we cannot entertain the Revenue's contention that section

ITA No.1060/Kol/2018 A.Y. 2012-13 The Janakalyan Co-Op. Credit Society Ltd. vs. ITO Wd.11(2) Kol. Page 4 80P(4) would exclude not only the co-operative banks other than those fulfilling the description contained therein but also credit societies, which are not co-operative banks. In the present case, respondent assessee is admittedly not a credit co-operative bank but a credit co-operative society. Exclusion clause of sub-section (4) of section 80P, therefore, would not apply. In the result, Tax Appeals are dismissed.” I adopt the above reasoning mutatis mutandis to accept assessee’s sole substantive ground raised in the instant appeal. 4. This assessee’s appeal is allowed. Order pronounced in open court on 28/09/2018 Sd/- (S.S. Godara) Judicial Member *Dkp/Sr.PS �दनांकः- 28/09/2018 कोलकाता आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. अपीलाथ�/Appellant-The Janakalyan Co-Op. Credit Society Ltd., N Ghosh Sarni, P.O. Hridaypur, Barasat, 24-Parganas (N), 700127 2. ��यथ�/Respondent-ITO Wd-11(2), Aayakar Bhawan, 6th Floor, P-7, Chowrinighee Square, Kolkata-69 3. संबं"धत आयकर आयु%त / Concerned CIT 4. आयकर आयु%त- अपील / CIT (A) 5. &वभागीय �)त)न"ध, आयकर अपील�य अ"धकरण कोलकाता / DR, ITAT, Kolkata 6. गाड+ फाइल / Guard file. By order/आदेश से, /True Copy/ Sr. Private Secretary, Head of Office/DDO आयकर अपील�य अ"धकरण, कोलकाता ।