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Income Tax Appellate Tribunal, MUMBAI BENCHES, ‘G’ MUMBAI
Before: Shri Joginder Singh, & Shri Manoj Kumar Aggarwal
आदेश / O R D E R
Per Joginder Singh(Judicial Member) The Revenue is aggrieved by the impugned order dated 18/05/2016 of the Ld. First Appellate Authority, Mumbai and the assessee has preferred cross objection defending the impugned order.
During hearing, the ld. DR, Ms. Anupama Singla, defended the addition made by the Assessing Officer on the ground, the assessee is doing banking business and also other business, therefore, deduction u/s 80P of the Income Tax Act, 1961 (hereinafter the Act) is not available to the assessee and further the Ld. Commissioner of Income Tax (Appeal) did not consider section 80P(4), sub-clause (viia) to section 2(24) introduced by Finance Act, 2006 w.e.f. 01/04/2007.
2.1. On the other hand, Shri Gautam V. Gokhle, the ld. counsel for the assessee, defended the impugned order by contending that reasonably a possible view has been taken by the Ld. Commissioner of Income Tax (Appeal) as the assessee is a cooperative society transacting with members only.
2.2. We have considered the rival submissions and perused the material available on record. The facts, in brief,
C.O. No.04/Mum/2017 Vishwabharati Sahakari Patsanstha Ltd. are that the assessee society provides financial assistance to its members as per rules and regulations and operates on the principle of cooperation, declared nil income in its return, showing total income of Rs.35,06,492/- after claiming deduction of the same amount u/s 80P of the Act. The case of the assessee was selected for scrutiny under CASS, therefore, notice u/s 143(2) and 142(1) along with questionnaire was served upon the assessee to which the assessee attended from time to time and filed necessary details/submissions. The case of the Revenue is that the assessee is a cooperative bank by relying upon sub-clause (viia) inserted in clause (24) of section 2 of the Act, introduced by Finance Act, 2006. The ld. Assessing Officer concluded that provisions of section 80P(4) applies to cooperative society carrying on banking business including providing of credit facilities to its members, thus, the ld. Assessing Officer held that the claimed deduction u/s 80P of the Act is not applicable/allowable to the assessee.
2.3. On appeal before the Ld. Commissioner of Income Tax (Appeal), the factual matrix was considered in the light of various judicial pronouncements and the impugned addition was deleted. The Revenue is aggrieved and is in appeal before this Tribunal 2.4. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in C.O. No.04/Mum/2017 Vishwabharati Sahakari Patsanstha Ltd. juxtaposition and analyzed, it is noted that the main object of the assessee society is to provide financial assistance only to its members. Admittedly, the assessee society is not a bank as per Banking Regulation Act, 1949 so that it may attract sub- section (4) of section 80P of the Act. The issue was deliberated upon in Income Tax Officer vs Jankalyan Nagri Sahakari Sansthan Ltd. by the Pune Bench of the Tribunal. It is also noted that identical deduction was disallowed by the Assessing Officer for Assessment year 2011-12 in the case of Mumbai Teleworkers Co-Op. Credit Society Ltd. in order dated 02/11/2016 and the Tribunal granted relief to the assessee by affirming the order of the Ld. Commissioner of Income Tax (Appeal). No contrary decision was brought to our notice. The ratio laid down in CIT vs Jafari Momin Vikas Cooperative Credit Society Ltd. (Tax Appeal No.442, 443 and 863 of 2013) order dated 15/01/2014, supports the case of the assessee. While coming to this conclusion, the Hon'ble High Court duly considered CBDT Circular No.133 of 2007 dated 09/05/2007 clarifying that sub-section 4 of section 80P of the Act will not apply to an assessee which is not a Cooperative Bank.
2.5. In this connection, it is pertinent to mention that the letter of the CBDT bearing No. F. No. 133/06/2007-TPL dated 09/05/2008 addressed to the Delhi Urban T&C Society Ltd., stating that for the purposes of subsection 4 of section 80P, ‘cooperative bank’ shall have the same meaning as C.O. No.04/Mum/2017 Vishwabharati Sahakari Patsanstha Ltd. assigned to it in part V of the Banking Regulation Act 1949, according to which ‘cooperative banks’ means a State Co- operative Bank, a Central Co-operative Bank and Primary Co- operative Bank. Though the said clarification is given by the CBDT in connection with some other assessee, the crux of the matter pertains to the clarification of ‘co-operative bank’ for the purpose of subsection 4 of section 80P. It is observed that the said clarification has also been relied by the Tribunal in many cases. Therefore, ‘cooperative banks’ mentioned in the said sub-section indicates only the State, Central and Primary Co-operative Banks only. Moreover, for commencing a banking business by the co-operative society, due license has to be obtained from the Reserve Bank of India and in the assessee’s case, there is no such license obtained for commencing any banking business. The mere fact that the assessee has been providing credit facilities to its members and thereby earns some income cannot make the ‘society’ into a ‘bank’ for the purposes of section 80P(4) of the Act. If the intention of the legislature was not to grant deduction to cooperative societies carrying on the business of providing credit facilities to its members, then nothing prevented the legislature to make a specific provision/legislation and to include cooperative societies under the sphere of banking business. This proposition is supported by various decisions including the decision of the Gujarat High Court in the case of CIT Vs. Jafari Momin Vikas Cooperative Credit Society Ltd and the decision of the Tribunal in the case of DCIT Vs. Jayalakshmi Mahila
C.O. No.04/Mum/2017 Vishwabharati Sahakari Patsanstha Ltd.
Vividodeshagala Souharda Sahakari Ltd. [2012] 137 ITD 163. Considering the totality of facts, we find no infirmity in the order of the Ld. Commissioner of Income Tax (Appeal). It is affirmed.
So far as, the cross objection No.04/Mum/2017 (arising out of ) is concerned, the ld. counsel for the assessee contended that it is merely in support of the order of the Ld. Commissioner of Income Tax (Appeal). Since, we have affirmed the conclusion drawn by the Ld. Commissioner of Income Tax (Appeal), therefore, as agreed by the ld. counsel for the assessee, the cross objection has remained for academic interest only. The cross objection of the assessee is, therefore, dismissed as in-fructuous.
Finally, the appeal of the Revenue is dismissed and the cross objection of the assessee is dismissed as in-fructuous.