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Income Tax Appellate Tribunal, “A”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI RAVISH SOOD, JM
आदेश / O R D E R PER R.C.SHARMA (A.M): This appeal filed by the Revenue against order of CIT(A) for the assessment year 2010-2011 in the matter of order passed u/s. 143(3) of the I.T. Act. 2. In this appeal, revenue is aggrieved by the action of CIT(A) for allowing deduction u/s.80P of the I.T. Act. 3. Rival contentions have been heard and record perused. 4. Facts in brief are that the assessee is a Co-operative Society registered under the Maharashtra Co-operative Societies Act 1960. For the assessment year under appeal return of income was filed 2 Kulswami Co-operative Credit Society on 21.09.2010 declaring income at Nil after claiming deduction u/s 80P amounting to Rs.1,69,89,044/-. The assessment was completed vide order dated 06.12.2012 u/s.143(3) of the I.T.Act,1961 determining total income at Rs.1,69,89,044/-, by declining assessee’s claim of deduction u/s. 80P. By the impugned order CIT(A) allowed assessee’s claim after having detailed observation at para 7 of its order wherein CIT(A) has followed the order of the ITAT-Pune Bench.
At the outset, learned AR placed on record the order of the Tribunal in assessee’s own case for the assessment year 2009- 2010 wherein claim of deduction u/s.80P was allowed by Tribunal after having the following observation vide order dated 21/08/2015.
“6. Before us, it was a common point between the parties that identical controversy has been considered by the Tribunal in the assesse's own case for assessment years 2007-08, and 2008-09 vide & 505/Mum/2012 dated 28.03.2014, whereby it has been held that assessee Co- operative Society does not fall within the restriction placed in sub-section (4) ofsection 80P of the Act. The following discussion in the order of the Tribunal dated 28.03.2014 (supra) is relevant:- ITA NO 6790/Mum/2012 and CO No. 05/Mum/2014 Assessment Year 2009-10 "4. Having heard both the sides and perused the material on record, it is pertinent to mention that the only issue arising out of both the appeals relate to the allowability of the exemption/deduction claimed by the assessee u/s 80P of the Income Tax Act. The allowability of exemption of the said income depends on whether the assessee/cooperative credit society is a co-operative bank or not for the purposes of section 80P(4) of the Act since according to the said provision, deduction under section 80P shall not be available to any co-operative bank other than primary agricultural society or primary co-operative agricultural and rural development bank. 4.1 It is the case of the Revenue that the assessee has been functioning as a cooperative bank and by virtue of section 80P(4), the assessee is 3 Kulswami Co-operative Credit Society not entitled for the benefit of section 80P and also the assessee is not coming within the purview of primary agricultural society or primary co-operative agricultural and rural development bank. It is the case of the assessee that it is not a cooperative bank but only a cooperative society to which clause (4) of section 80P is not applicable. 4.2 In this connection, it is pertinent to mention that the assessee has brought on record before the lower authorities, 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 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 subsection indicates only the State, Central and Primary Co-operative Banks only. 4.3 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 interest and dividend 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 this section would have been deleted. 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 Vividodeshagala Souharda Sahakari Ltd. [2012] 137 ITD 163. and CO No. 05/Mum/2014 Assessment Year 2009-10 4.4 In addition to the aforementioned discussion, the distinction between cooperative society registered under the Banking Regulation Act 1949 and the cooperative society registered under the Maharashtra State Cooperative Societies Act 1960 as brought out by the Ld.CIT(A) on the basis of the submission of the assessee is extracted hereunder: Sl. Co-operative societies Co-operative Banks No. 1 The Co-operative Credit Societies are Co-operative Banks are registered under 4 Kulswami Co-operative Credit Society registered under Maharashtra State Maharashtra Co-operative Societies Act, 1960 Cooperative Societies Act, 1960 and and administered by Registrar of Co-operative governed, regulated, administered and Societies, Govt. Of Maharashtra. Co- supervised by the Registrar of the operative Banks are regulated and supervised Cooperative Societies, Government Of by the Reserve Bank of India. Provisions of Maharashtra. Banking Regulation Act, 1949 with modifications specified in section 56 of the Banking Regulation Act, 1949 are applicable to Co-operative Banks. Schedule 1 to Schedule V are applicable to Co-operative Bank. 2 Co-operative Societies are classified as Co-operative Banks are classified as Co- resource/thrifts Societies in the operative Bank. certificate of registration issued by Registrar of Cooperative Society. 3 Co-operative Credit Societies can Co-operative Banks can accept deposits from accept deposits and advance loans only public. However, unlike Co-operative credit to the members. Hence the business societies they can advance loans to the activities are restricted to members and members only. hence it can be termed as a mutual association/self help group. 4 C5o-operative Credit Societies can6not Co-operative can accept deposits from public. accept deposits from public. 5 The7 provisions of Banking Regulation The provisions of Banking Regulation Act Act 1949 are not applicable to the Co- 1949 are applicable to the Co-operative Bank. operative Credit Societies. 6 The Co-operative credit societies do not The Co-operative banks are required to obtain required license from Reserve Bank of license from Reserve Bank of India to carry on India to carry on its business. its business. 7 The Co-operative credit societies do not The Co-operative have cheque facilities, have cheque facilities, clearing facilities clearing facilities and they issue demand and they cannot issue demand drafts, drafts, Assessment Year order, bank pay orders etc. guarantees etc. 8 Co-operative Credit Societies cannot Co-operative Banks are mandatorily required use work Bank/Bankers in their name to use world Bank/Bankers in their name. 9 Reserve Bank of India has no statutory Reserve Bank of India has vested with power of control and supervision of statutory powers of control and supervision of and CO No. 05/Mum/2014 Assessment Year 2009-10 Cooperative Societies. Cooperative Banks. The above distinction makes it very clear that the assessee is not a co- operative bank for the purposes of section 80P(4) of the Act.
5 Kulswami Co-operative Credit Society 4.5 As regards the claim of the revenue that for the Assessment Year 2007-08, the assessee has not claimed the deduction of the section 80P of the Act in the return of income but claimed the same only during the course of the assessment proceedings and hence the claim of the assessee is not admissible in view of the findings of the Hon'ble Apex Court in the case of Goetze India Ltd. [284 ITR 323 (SC) (2006)], it is pertinent to mention that the Hon'ble Bombay High Court in the case of the CIT Vs. Pruthvi Brokers and Shareholders P. Ltd. [(2012) 349 ITR 336 (Bom)] has held that the appellate authorities have the power to consider the claim not made in return of income. The Ho'ble Bombay High Court while deciding so, has considered the judgment of the Hon'ble Apex Court in the case of Goetze India Ltd. (supra). In view of that matter, the Ld.CIT(A) giving relief to the assessee at the appellate stage on the claim of deduction not made in the return of income is justified. 4.6 Considering the entire facts and position of law, we are of the considered opinion that the Ld.CIT(A) is justified in directing the AO to allow the deduction claimed by the assessee u/s 80P of the Act on the reason that the assessee, a cooperative credit society is not a bank for the purposes of section 80P(4) of the Act. Thus the orders of the Ld.CIT(A) dated 11.02.2011 and 29.11.2011 for the Assessment Years 2007-08 and 2008- 09 respectively are upheld.
7. Following the aforesaid precedent, which has been rendered in assessee's own case under identical circumstances, we hereby affirm the order of CIT(A) upholding assessee's claim for exemption u/s 80P of the Act. Thus the Revenue fails in its appeal.
Insofar as the Cross Objection raised by the assessee is concerned, it does not involve any independent issue but is primarily in support of the conclusion drawn by the CIT(A). Since we have already confirmed the order of CIT(A) in the context of the appeal of the Revenue in earlier paras, the Cross Objection raised by the assessee is rendered infructuous. and CO No. 05/Mum/2014 Assessment Year 2009-10 9. In the result, both the captioned appeals are dismissed.”
As the facts and circumstances during the year under consideration are exactly same, respectfully following the order of Tribunal in assessee’s own case, we do not find any infirmity in the order of CIT(A) for allowing assessee’s claim of deduction u/s. 80P.
In the result, appeal of the revenue is dismissed.