INCOME TAX OFFICER, BANGALORE vs. M/S.VASAVI CREDIT CO-OPERATIVE SOCIETY LTD., BANGALORE

PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER :

2.1 The assessee, a credit co-operative society, filed its return of income for asst. year 2012-13 declaring income of Rs.3,23,495/-. The return was processed u/s 143(1) of the Income-tax Act, 1961 (in short ‘the Act’) and the case was subsequently taken up for scrutiny. The assessment was completed u/s 143(3) of the Act vide order dated 30/5/2015; wherein the income of the assessee was determined at Rs.92,94,440/-. This was in view of the Assessing Officer (‘AO’) denying the assessee claim for exemption u/s 80P(2)(a)(i) amounting to Rs.89,15,937/- as he was of the opinion that the assessee credit co- operative society is in fact a bank as per section 5(ccv) of the Banking Regulation Act, 1949 and, therefore, as per the provision of sec. 80P(4) of the Act, the deduction claimed u/s 80P(2)(a)(i) of the Act was not allowable. On appeal, the ld CIT(A) vide the impugned order dated 15/6/2016 allowed the assessee’s appeal for grant of deduction u/s 80P(2)(a)(i) of the Act following the decisions of the Hon’ble Karnataka High Court in the case of Yashwanthpur Credit Co-operative Society Ltd. (ITA No.237/2012 dated 27/6/2014) and the case of Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha, Bagalkot in dated 5/2/2014.

3.1 Revenue, being aggrieved by the order of the CIT(A)-2, Bangalore dated 15/6/2016, has preferred this appeal raising the following grounds:-

3.2.1 We have heard the rival contentions of the ld DR for Revenue and the ld AR for the assessee, and perused and carefully considered the material on record, including the judicial pronouncements cited.

We find that the ld CIT(A), in the impugned order, following the decisions of the Hon’ble Karnataka High Court in the cases of Yashwanthpur Credit Co-operative Society Ltd. (ITA No.237/2012 dated 27/6/2014) and the case of Sri Biluru Gurubasav Pattina Sahakari Sangha Niyamitha, Bagalkot in dated 5/2/2014 allowed the assessee’s appeal holding as under that the assessee co-operative society cannot be treated as a bank and is eligible for the deduction claimed u/s 80P(2)(a)(i) of the Act.

3.2.2 Respectfully following the decision of the Hon’ble Karnataka High Court in the case of Yashwanthpur Credit Co-operative Society Ltd. (Supra) and the case of Sri Biluru Gurubasav Pattina Sahakari Sangha Niyamitha, Bagalkot (Supra), we hold that the assessee co- operative society is a credit co-operative society which is eligible for deduction u/s 80P(2)(a)(i) of the Act and is not a bank, and, therefore, the provisions of sec. 80P(4) of the Act are not applicable. In this view of the matter, we find no reason to interfere with the impugned order of the ld CIT(A) on this issue. Consequently, the grounds raised by Revenue, being devoid of merit, are dismissed.