The Bhagyodaya Co-Op Credit Society ... vs Assessee

The Bhagyodaya Cooperative Vs. ITO, Ward-1(2), Credit Society Ltd., Belgaum Balaji Building, Mahadev Road, Kangrali Khurd, Belgaum.

PAN No. AAAAT 4822 G (Appellant) (Respondent)

Assessee by : Shri Pramod Y. Vaidya - Adv. Department By : Shri Nishant K. - D.R. Date of hearing : 15/06/2015. Date of pronouncement : 15/06/2015.

ORDER

PER N.K. BILLAIYA

This is an appeal by the assessee is preferred against the order of

Ld. CIT (A), Belgaum dated 20/11/2013 pertaining to A.Y. 2009-10.

2. The sum and substance of the grievance of the assessee is that

the Ld. CIT(A) erred in disallowing the deduction claimed

u/s. 80P(2)(a)(i) of the Act.

2 ITA No. 33/PNJ/2014

3. The assessee is a Cooperative Society registered under the

Karnataka State Cooperative Societies Act. The main object of the

society is to accept the deposits and to provide financial

accommodation to the Members of the society. It was, therefore,

claimed that the society is entitled to deduction u/s. 80P(2) of the

Act. The Assessing Officer proceeded by applying the provisions of

section 2(24)(viia) of the Act and disallowed the claim of deduction

u/s. 80P(2) of the Act. Aggrieved by this, assessee carried the matter

before the Ld. CIT(A), but without any success.

4. Before us, counsel for the assessee drew our attention to the

decision of the Tribunal Panaji Bench in assessee's own case for A.Y.

2010-11. Counsel also relied upon the decision of Hon'ble Karnataka

High Court in the case of CIT Vs. Billuru Gurubasava Pattinas Sahakari

Sangha Niyamat in ITA No. 50006/2013.

5. Learned DR supported the assessment order.

6. We have carefully perused the orders of the authorities below

and judicial decisions brought to our notice. In our considered opinion,

the assessee is not a Cooperative Bank. There is no finding that the 3 ITA No. 33/PNJ/2014

assessee has obtained any banking licence. The business of the

assessee is to provide credit facilities to its Members. Since, there is

no finding that the assessee can carry out any banking business, clearly

establishes that it is not a Cooperative Bank. Sec. 80P of the Act deals

with the deduction of income of the society. In case of any assessee

being a Cooperative Society, the whole of the amount of profits and

gains of business attributable to any other activities referred to sub-

sec. (2) of sec. 80P, shall be deducted in computing the total income

of the assessee. It is a benefit given to the Cooperative Society.

Sec. 80P(4) was introduced by the Finance Act 2006 w.e.f.

01/04/2007 excluding the said benefit to a Cooperative Bank. Thus,

the intention of the legislature is clear if a cooperative bank is

exclusively carrying on banking business, then income derived from the

said business cannot be deducted in computing the total income of the

assessee, as the assessee is not a Cooperative Bank carrying on

exclusively banking business and there is no finding that it possess a

licence from RBI to carryon business. It is not a Cooperative Bank, it is

a Cooperative Society which also carries on business of lending money

to its Members which is covered u/s. 80P(2)(a)(i). For this proposition,

we draw support from the decision of the Hon'ble Karnataka High

Court in the case of Billuru Gurubasava Pattinas Sahakari Sangha 4 ITA No. 33/PNJ/2014

Niyamat (supra), we accordingly, set aside the findings of the

Ld. CIT(A) and direct the Assessing Officer to allow deduction

u/s. 80P(2) of the Act as claimed by the assessee.

7. In the result, appeal filed by the assessee is, accordingly,

allowed.

(Order Pronounced in the open Court on 15 t h June, 2015).

Sd/- sd/- (GEORGE MATHAN) (N.K. BILLAIYA) Judicial Member Accountant Member

Dated : 15 t h June, 2015.

vr/- Copy to: 1. The Appellant 2. The Respondent 3. The ld.CIT 4. The CIT(A) 5. The D.R 6. Guard file. By order

Assistant Registrar I.T.A.T., Panaji 5 ITA No. 33/PNJ/2014

Date Initial

Original dictation pad is enclosed in the file

1. Draft dictated on 15.06.2015 Sr.PS

2. Draft placed before author 15.06.2015 Sr.PS

3. Draft proposed & placed 16/06/2015 JM/AM before the second member

4. Draft discussed/approved by 16/06/2015 JM/AM Second Member

5. Approved Draft comes to the 16/06/2015 Sr.PS Sr.PS/PS

6. Date of pronouncement 16/06/2015 Sr.PS

7. File sent to the Bench Clerk 16/06/2015 Sr.PS

8. Date on which file goes to the Head Clerk

9. Date of dispatch of Order