IN THE ITAT PANAJI BENCH
Deputy Commissioner of Income-tax, Central Circle, Panaji, Goa
V/s.
Jayalakshmi Mahila Vividodeshagala Souharda Sahakari Ltd.
IT APPEAL Nos. 1 to 3 (PNJ) of 2012
[ASSESSMENT YEARS 2007-08 TO 2009-10]
March 30, 2012
ORDER
All these appeals since involved common issue are being disposed by this common order at the outset both ld. AR and DR agreed that the facts involved and the issue involved in all these appeals relating to both the assessees namely Jayalaxmi Mahila Vividodeshagala Souharda Sahakari Ltd., Karwar and Dwarka Souharda Credit Sahakari Ltd, Karwar. The common affective grounds taken in all these appeals are reproduced as under: –
“1. Whether on the facts and circumstances of the case, the CIT(A) was correct in holding that the provisions of sub-section(4) of section 80P are applicable only to co-operative banks and not to credit co-operative societies, which are engaged in business of banking, including providing credit facilities to their members.
2. Whether on the facts and circumstance of the case, that CIT(A) was correct in holding that the assessee is a cooperative society and not a co-operative bank in terms of sub-section (4) of section SOP without considering the meaning of cooperative bank as envisaged under Part V of Banking Regulation Act 1949 wherein it is defined that co-operative bank includes primary co-operative bank, which is further defined as cooperative society with the primary object of transactions of banking business.”
2. We are taking the brief facts relating to the A. Y. 2007-08 in the case of Jayalaxmi Mahila Vividodeshagala Souharda Sahakari Ltd., Karwar as the facts involved in all these appeals are common in the case of both the assesses in all the assessment years involved except the change in figures. The brief facts are that the assessee is involved in the business of providing credit facilities to its member by granting loans for various purposes like business, housing, vehicles, personal purposes etc to its members. It also collect fixed deposits, short term deposits, recurring deposits, and pigmy deposit up to A.Y. 2006-07. The society was allowed deduction for interest income on such loans u/s 80P (2) (a) (i). The provisions of section 80P were amended w.e.f. 01/04/2007 where in sub-section 4 which read as under: –
“The provision of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank”.
Explanation – for the purpose of this sub-section
(a) “Co-operative bank” and “primary agricultural society” shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1994 [10 of 1949];
(b) “Primary Co -operative Agricultural and Rural Development Bank” means a society having its area of operation confined to a taluk and the principal object of which is to provide for long term credit for agricultural and rural development activities.”
3. Both the assessees claimed deduction U/s 80P (2) (a) (i) for the impugned Assessment Years in respect of interest income earned from its members on the loans advanced to them. The A.O. did not allow the deduction to each of the assessees in each of the Assessment Years and did not agree with the plea of the assessee that even after the amendment made in section 80P by insertion of section 80P(4) therein, they are eligible for deduction u/s 80P(2)(a) (i) as the assessee is not a co-operative bank as defined under part V of the Banking Regulation Act, 1949. The assesses went in appeal before the CIT (A). The CIT (A) allowed the deduction u/s 80P by holding as under: –
“After considering the appellant’s arguments on this issue, it is held as under: –
Hon’ble Tribunal in the case of ACIT, Circle -3(1), Bangalore Vs M/s Bangalore Commercial Transport Credit Co-operative Society Ltd in ITA No. 1069/Bang/2010 for A.Y. 2007-08 dt. 08/04/2011 has held as under:
“9. We have heard the rival submissions and perused the material on record. The assessee was denied the deduction u/s 80P (2) (a)
(i) of the Act for the reason of introduction of sub-section (4) to section SOP. Section 80P(4) reads as under: –
‘The provisions of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank.” Explanation-for the purpose of this sub-section –
(a) “Co-operative bank” and “primary agricultural society” shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949):
(b) “Primary Co-operative Agricultural and Rural Development Bank” means a society having its area of operation confined to a taluk and the principal object of which is to provide for long term credit for agricultural and rural development activities.”
9.1 The above sub-section 4 of section 80P provides that deduction under the said section shall not be available to any Co-operative bank other than a primary agricultural credit society or rural development bank. For the purpose of the said sub-section, Co-operative bank shall have the meaning assigned to it in part V of the Banking Regulation Act, 1949. In Part V of the Banking Regulation Act, “co-operative bank” means a State Co-operative Bank, a Central Co-operative bank and a Primate Co-operative Bank.
9.2. From the above section, it is clear that the provisions of section 80P(4) has got its application only to co-operative banks. Section 80P(4) does not define the word :
“Co-operative society”. The existing sub-section 80P (2)(a)(i) shall be applicable to a co-operative society carrying on credit facility to its members. This view is clarified by Central Board of Direct Tax vide its clarification No. 133/06/2007-TPL dated 9th May, 2007. The difference between a co-operative bank and a co-operative society are as follows: –
