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Income Tax Appellate Tribunal, BENCH “F”, MUMBAI
Before: SHRI SHAMIM YAHYA & SHRI PAWAN SINGHShri Rohit Kasat (AR) PER PAWAN SINGH:
Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by Revenue under section 253 of Income Tax Act is directed against the common order of Ld. Commissioner of Income-Tax (Appeals)- 32, Mumbai, [for short the ld. CIT(A)] dated 24.04.2016 for Assessment Year 2012-2013. The Revenue has raised the following grounds of appeal:
1. "On the facts and in the circumstances of the case in law, 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 a co- operative credit society? 2. "On the facts and in the circumstances of the case in law, the Ld. CIT(A) has erred in allowing deduction u/s. 80P(2)(a)(i) without considering inserted section 80P(4) and sub-clause (viia) to section 2(24) vide Finance Act, 2006 w.e.f. 01.04.2007? 3. "On the facts and in the circumstances of the case in law, the Ld. CIT(A) has erred in finding the decision of the Supreme Court in the case of M/s. Totgar Co.op Sales Society Ltd. (322 ITR 285) wherein interest received by a co-operative society from investment of surplus funds is assessable as "Income from Other Sources" and thus not eligible for deduction u/s. 80P of the I.T Act, 1961."
M/s Mumbai Agnishaman Dal Sahakari Patpedhi Ltd.
Brief facts of the case are that the assessee is a Co-operative Credit Society registered under the Maharashtra Co-operative Societies Act, 1960. The assessee’s society is providing loan facilities to its members, filed its return of income Assessment Year 2012-13 on 17.08.2012 declaring total income of Rs. 51,757/-. The assessment was completed on 31.03.2015 under section 143(3) of the Act. The Assessing Officer while passing the assessment order denied the deduction under section 80P(2)(a)(i) for Rs. 9630448/- and treated the same as Income of the assessee. On appeal before the Ld. CIT(A), the assessee was allowed deduction under section 80P(2)(a)(i). Thus, aggrieved by the order of Ld. CIT(A), the Revenue has filed the present appeal before us.
We have heard the Ld. Departmental Representative (DR) for the Revenue and Ld. Authorized Representative (AR) of the assessee and perused the material available on record. The Ld. DR for the Revenue submits that the Assessing Officer has not made complete enquiry regarding the natures of credit facilities and activities carried out by the assessee’s society. The Ld. DR for the Revenue prayed to restore the matter back to the file of Assessing Officer for proper enquiries in support of his submission. The Ld. DR for the Revenue relied upon the decision of Hon'ble Delhi High Court in case of CIT Vs Jansampark Advertising & Marketing (P.) Ltd. [2015] 56 taxmann.com 286 (Delhi). On the other hand, the Ld. AR of the assessee supported the order of Ld. CIT(A). The Ld. AR of the assessee 2 M/s Mumbai Agnishaman Dal Sahakari Patpedhi Ltd. argued that assessee is a Co-operative society and not a Co-operative Bank.
The assessee is not having any licence under the Banking Regulation Act, 1949 to carry out banking business and the assessee cannot be classified as Co-operative Bank. The Ld. AR of the assessee further submits that the Ld. CIT(A) granted the relief to the assessee by following the decision of jurisdictional High Court in Quepem Urban Co-operative Credit Society Ltd[2015] 58 taxmann.com 113(Bom). The ld AR for the assessee further relied and the decision of Single Member bench of Mumbai Tribunal in case of ITO Vs. M/s Ashirwad Co-op. Credit Society Ltd. in ITA No. 5069/Mum/2017.
We have considered the rival submission of the parties and have gone through the orders of authorities below. There is no dispute that assessee is a Co-operative Society. The assessee is registered under the Maharashtra State Co-operative Societies Act. The assessee is providing credit facilities to its members only. The Assessing Officer after comparing the provision of Banking Regulation Act as well as Maharashtra State Co-operative Societies Act, took the view that the assessee’s society squarely fall within the definition of Co-operative Bank and therefore, hit by the provisions of section 80P(4) of the Act. Therefore, the assessing officer denied the deduction under section 80P(2)(a)(i) and treated the dividend received from Mumbai District Central Co-operative Bank as Income from Other Sources. During the first appellate stage the Ld. CIT(A) observed that the 3 M/s Mumbai Agnishaman Dal Sahakari Patpedhi Ltd. Assessing Officer has not examined the core ingredients of banking business. Merely, the assessee have been accepting the deposit and advance/loan to its member cannot be held as engaged in the business of banking. The assessee’s society has no licence under the Banking Regulation Act. The Ld. CIT(A) after following the decision of Nagpur and Panaji Bench in case of ACIT Vs. Buldana Urban C-op. Credit Society Ltd. (32 Taxman 69) and DCIT Vs. Jayalaxmi Mahila Vividodeshagala Souharda Sahakari Ltd. (23 Taxman 313) and the Hon'ble jurisdictional High Court in Quepem Urban Co-operative Credit Society Ltd. (supra) held that the assessee cannot be treated as a Co-operative Bank and thus, the deduction cannot be denied. We have noted that similar view has been taken by Single Member Bench of this Tribunal in M/s Ashirwad Co-op.
Credit Society Ltd. (supra) (authored by Ld. Accountant Member). We have noted that the Ld. CIT(A) has followed the decision of jurisdictional High Court while granting relief to the assessee. No contrary decision is brought to our notice to take the different view. The decision relied by ld DR is not helpful to the revenue as the sole ground of appeal raised by the revenue is covered by the decision of Hon’ble Bombay High Court in Quepem Urban Co-operative Credit Society Ltd (supra). In the decision of Jansampark Advertising (P) Ltd, the revenue authorities have not examined the fact properly and the additions were deleted, here the sole issues is whether the assessee-society is Co-operative Society or Co-operative Bank,
4. M/s Mumbai Agnishaman Dal Sahakari Patpedhi Ltd. which has been examined by ld CIT(A). Thus, we do not find any illegality or infirmity in the order passed by Ld. CIT(A).
In the result, appeal filed by Revenue is dismissed. Order pronounced in the open court on 15th day of March 2018.