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Income Tax Appellate Tribunal, ‘A’ BENCH : BANGALORE
Before: SHRI VIJAY PAL RAO & SHRI INTURI RAMA RAOShri Holehucheshwar Co-op. Credit Society Ltd.
This appeal by the revenue is directed against the order dated 11/5/2015 of the CIT(A) for the assessment year 2012-13.
2. The revenue has raised the following grounds:
1. “The learned CIT(Appeals) erred in law and on facts in not appreciating the fact that the assessee is a co- operative society which fulfills all the three conditions of being held a Primary Co-operative Bank as given in section 5(ccv) of the Banking Regulation Act, 1949.
Shri Holehucheshwar Co-op Credit Society Ltd. Page 2 of 6 2. The learned CIT(Appeals) erred in law and on facts in not appreciating the definition of a co-operative bank which as per Explanation below section 80P(4) "the co-operative bank" shall have the meaning assigned to it in Part-V of the Banking Regulation Act, 1949.
3. The learned CIT(Appeals) erred in law and on facts in not appreciating the fact that the assessee society being a credit co-operative society engaged in banking business is a Primary Co-operative Bank within the definition of section 5(ccv) of the Banking Regulation Act, 1949 and as such, not eligible for deduction under section 80P(2)(a)(i) of the I.T. Act, 1961.
The learned CIT(Appeals) erred in not appreciating the facts of the case and also relying upon the decision of High Court of Karnataka in CIT vs. Sri Biluru Gurubasava Pattin Sahakari Sangh Niyamit, Bagalkot, dated 5.2.2014 and other decisions ignoring the fact that the ITAT, Panaji Bench, has categorically distinguished the decision of Sri Biluru Gurubasava Pattin Sahakari Sangh Niyamit, in various cases of co-operative society and held that the decision is in regard to revisionary order u/s 263.”
The assessee is a co-operative society registered under the Karnataka Co-operative Societies Act 1959. The assessee filed return of income on 28/9/2012 after claiming deduction u/s 80P(2)(a)(i). The AO, while passing the assessment order u/s 143(3) on 22/10/2014, denied deduction u/s 80P on the ground that the assessee is a co-operative bank and hence not entitled to claim deduction by virtue of sec.80P(4).
On appeal, the CIT(A) has allowed the claim of the assessee by following the judgment of the Hon’ble jurisdictional High Court in the case of CIT vs. Sri Biluru Gurubasappa Pattina Sahakari Sangha Niyamita (369 ITR 86).
Shri Holehucheshwar Co-op Credit Society Ltd. Page 3 of 6 4. We have heard the learned DR as well as the learned AR of the assessee and considered the relevant material on record. At the outset, we note that an identical issue has been considered by the co-ordinate bench of this Tribunal in the assessee’s own case for assessment year 2011-12 vide order dated 26/6/2015 in in paragraphs 5 and 6 as under:
5. On the other hand, learned AR has submitted that the issue s squarely covered by the judgment of jurisdictional High Court in the case of CIT Vs Sri Biluru Gurubasava Pattina Sahakari Sangh Niyamit, Bagalkot, in dated 05-02-2014, Supra as well as in other decisions; “8.1. The Hon’ble High Court of Karnataka in the case of Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha, supra which was followed in the cases of General Insurance Employees Co-operative Credit Society Ltd. and Karnataka High Court decision in the case of Vasavi Multipurpose Souharda Sahakari Niyamitha, ITA No.505/2013 dated 27/06/2014, supra, has clearly held hat a co-operative society registered as co-operative society, providing credit facilities to members and not registered with the RBI cannot be denied the exemption under section 80P(1)(i) of the IT Act. The operative part of the judgment reads as follows; “Therefore, the intention of the legislature is clear, if a co-operative bank is exclusively carrying on banking business, then the income derived from the said business cannot be deducted in computing the total income of the assessee. The said income is liable for tax. A co-operative bank as defined under the Banking regulation Act includes the primary agricultural credit society or a primary co-operative agricultural and rural development bank. The legislature did not want to deny the said benefits to a primary agricultural credit society or a primary co-operative agricultural and rural development bank. They did not want to extend the said benefit to a co-operative bank which is exclusively carrying on banking business i.e the Shri Holehucheshwar Co-op Credit Society Ltd. Page 4 of 6 purpose of this amendment. Therefore, as the assessee is not a Co-operative bank carrying on exclusively banking business and as it does no possess a licence from Reserve Bank of India to carry on business, it is not a co-operative bank. It is a co-operative society which also carries on the business of lending money to its members which is covered under section 80P(2)(a)(i) i.e carrying on the business of banking for providing credit facilities to its members. The object of the aforesaid amendment is not to exclude the benefit extended under section 80P(1) to such society………………….in the instant case, when the status of the assessee is a co-operative society and is not a co-operative bank, the order passed by the Assessing authority extending the benefit of exemption from payment of tax under section 80P(2)(a)(i) of the Act is correct”. 8.2 The fact that the appellant is a co- operative society registered under the Karnataka Co-operative Societies Act, 1959 engaged in providing credit facilities to its members has been clearly mentio0ned by the AO in para-3 of his aforesaid assessment order. It is also not the case of the AO that the assessee is registered with the RBI as a bank. In its aforesaid submissions dated 18-11-2014 the appellant has clearly stated with the help of necessary evidence and an affidavit dated 02-9- 2014 to this effect that the appellant is a co- operative society registered under the Karnataka Co-operative Societies Act, 1959 engaged in providing credit facilities only to its members and it does not possesses any banking licence from the RBI. It is therefore, clear that the appellant’s case is squarely covered by the aforesaid decisions of the jurisdictional High Court of Karnataka in the cases of Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha, supra which was followed in the case of General Insurance Employees Co-operative Credit Society Ltd, and Karnataka High Court decision in the case of Vasavi Multipurpose Souharda Sahakari Niyamitha dated 7-06-2014, supra. Therefore, in view of the foregoing discussion and respectfully following the aforesaid decisions of the jurisdictional High Court of Karnataka. It is held that the appellant Shri Holehucheshwar Co-op Credit Society Ltd. Page 5 of 6 case is not covered by section 80P(4) as it is not a’ co-operative bank’ and therefore, it is entitled to the exemption u/s 80P(2)(a)(i) of the IT Act”.
We have considered rival submissions and perused the material available on record. There is no dispute that the assessee is a co-operative credit society registered under the Karnataka State Co- operative Societies Acct, 1959. The income earned by the assessee during the year is from the activity of providing credit facilities to its members. Therefore, the case of the assessee is covered by the judgment of the Hon’ble jurisdictional High Court in the case of CIT Vs Sri Biluru Gurubasava Pattina Sahakari Sangh Niyamit, Supra.”
Accordingly, in view of the judgment of the Hon’ble jurisdictional High Court in the case of Sri Biluru Gurubasappa Pattina Sahakari Sangha Niyamita (supra) as well as the decision of the co- ordinate bench in the assessee’s own case, we do not find any error or illegality in the impugned order of the CIT(A).
In the result, the appeal of the revenue is dismissed.