We uphold that the assessee is a cooperative society and not a cooperative bank and, therefore, entitled to deduction under section 80P of the Act. We therefore, set aside the orders of the lower authorities and direct the assessing officer to allow deduction under section 80P of the Act to the assessee.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
These appeals preferred by the assessee emanates from the order of learned Commissioner (Appeals)-2, Jodhpur for assessment year 2008-09 vide order dated 19-11-2015; assessment year 2010-11 vide order dated 20-11-2015; and assessment year 2011-12 vide order dated 19-11-2015. The sole grievance of the assessee in all these three appeals are that learned Commissioner (Appeals) has not given the direction under section 80P(2)(a)(i) of the Income Tax Act, 1961 (in short “Act”). These appeals were heard together and since the facts are same and issues are similar. All these appeals are disposed of in this consolidated order.
2. First we take up ITA No. 35/Jodhpur/2016. The facts in brief are that the assessee’s society filed its return of income for the year under consideration on 30-9-2010 declaring income of Rs. NIL. The assessee’s society claimed deduction of Rs. 62,06,300 under section 80P of the Act. Subsequently, the assessing officer noticed that the assessee’s society was neither a primary agricultural credit society nor a primary co-operative agricultural and rural development bank but a co-operative bank doing banking business. Accordingly, notice under section 148 of the Act was issued by the assessing officer on 24-2-2012 for re-opening of the case. Ultimately, the assessment under section 147/143(3) was completed on 27-3-2014 denying the claim of deduction under section 80P. The assessee was assessed at Rs. 62,06,300 against NIL income shown in the return of income. Learned Commissioner (Appeals) in his detailed order which is on record has held that the assessee is not entitled for deduction under section 80P on the basis of section 80P(4). No deduction under section 80P was, therefore, allowed to the assessee. 3. That at the time of hearing before us, learned Authorised Representative of the assessee submitted that the assessee’s case is covered under section 80(2)(a)(i) as per the following decisions :–
(1) “Belgaum Merchants Co-op Credit Society Ltd. v. CIT (Appeals), Belgaum (2016) 235 Taxman 351 (Karnataka)(H. C.) order, dt. 21-9-2015.
(2) Quepem Urban Co-Operative Credit Society Ltd. v. Asstt. CIT Reported (2015) 120 DTR (Bombay) (H.C.) 153 order, dt. 17-4-2015.
(3) Dy. CIT v. Jayalakshmi Manila Vividodeshagala Souharda Sahakari Ltd. ITAT Panaji Bench (2012)137 ITD 163.
(4) Sikar Sahakari Bhoomi Vikas Bank Ltd., Sikar v. ITO Ward-1,Sikar ITAT Jaipur Bench. ITAT No. 999/JP/2011 assessment year 2008-2009 reported TKX WORLD Vol.54 Page 92 to 98.
(5) Kekri Sahakari Bhoomi Vikas Bank Ltd. v. ITO Ward-2,Bewar. ITAT No, 938/JP/2013 assessment year 2007-2008 ITAT, Jaipur Bench order, dt. 24-9-2015.”
4. Learned Authorised Representative further submitted the decision of ITAT, Jodhpur Bench in ITA No. 146 to 149/Jodhpur/2015 in the case of Pushtikar Laghu Vyaparik Pratisthan bachat Evam Sakh Sahakari Samiti Ltd. v. ITO Ward-1(3), Jodhpur wherein in the identical facts and circumstances in this case, the issue was decided in favour of the assessee. Learned Departmental Representative on the other hand, relied on the order of the authorities below.
5. We have perused the case records, analyzed the facts and circumstances in this case, heard the rival contentions and considered various judicial pronouncements placed before us and we observed that the ITAT, Jodhpur Bench on the facts and circumstances in ITA No. 146 to 149/Jodhpur/2015 has held as follows :–
7. “We find that the issue is now covered by the decision of the Hon’ble Karnataka High Court in favour of the assessee in the case of CIT v. Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha, Bagalkot, in ITA No. 5006/2013, dt. 5-2-2014, which was followed in the cases of General Insurance Employees Co-operative Credit Society Ltd. and in the case of Vasavi Multipurpose Souharda Sahakari Niyamitha, ITA No. 505/2013, dt. 27-6-2014, has clearly held that, a co-operative society registered as cooperative society, providing credit facilities to members and not registered with the RBI cannot be denied the exemption under section 80P(1) of the Income Tax 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 cooperative 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 ITA No. 1149/Bang/2015 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 not possess a licence from Reserve Bank of India to carry on business, it is not a cooperative 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 cooperative 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”. Respectfully following the same, we uphold that the assessee is a cooperative society and not a cooperative bank and, therefore, entitled to deduction under section 80P of the Act. We therefore, set aside the orders of the lower authorities and direct the assessing officer to allow deduction under section 80P of the Act to the assessee.”
6. We find that this issue is covered in favour of the assessee by the Co-ordinate Bench, ITAT Jodhpur (supra) and respectfully following the said decision, we hold that the assessee is a co-operative society and not a co-operative bank and, therefore, entitled to deduction under section 80P of the Act. Therefore, all the grounds in this appeal raised by the assessee are allowed.
7. Now, we take up ITA No. 36 & 37/Jodhpur/2016 for assessment years 2010-11 & 2011-12 respectively and since the facts and circumstances are similar that we have already taken in ITA No. 35/Jodhpur/2016 for assessment year 2008-09 following the decision of Coordinate Bench, ITAT-Jodhpur the same findings shall follow in ITA No. 36 & -37/Jodhpur/2016 as well and accordingly for all the three appeals, deduction under section 80P is allowed to the assessee. Therefore, all the grounds raised in ITA No. 36 & 37/Jodhpur/2016 are allowed.
8. In the result, all the three appeals filed by the assessee are allowed.