Ita/351/2011 Of The Commissioner Of Income- Tax v. M/S. Bangalore Commercial Transport

1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 27 DAY OF JUNE, 2014 PRESENT THE HON’BLE MR. JUSTICE N KUMAR ANTI THE HON’BLE MR. JUSTICE B MANOHAR| ITA No. 351/201 BETWEEN: Ll.Commissioner ot Income Jax © C. R. Building, Queens Road, Bangalore. iaThe Assistant Commissioner ofIncome TaxIncome Tax Circle — 3(1), C.R.Building, Queens Road, Bangalore. . Appellants (By Sri G. Kamaladhar, Adv.) AND: M/s. Bangalore Commercial Transport CreditCo-operative Society LimitedNo.21, 1[St]Cross, o Chikkanna Garden, Chamrajpet,Bangalore 560 018. | ...Respondent (By Sri A. Shankar & Sri M. Lava, Advs.) KREEKKRERERRE This ITA filed under Section 260-A of I.T. Act, 1961.arising out of order dated 08.04.2011 passed in ITANo.1069/Bang/2010, tor the Assessment year 2007-08,praying to (i) formulate the substantial questions of lawstated therein; (11) allow the appeal and set aside the orderspassed by the ITAT, Bangalore in ITA No.10609/Bang/2010dated 08.04.2011 confirming the order of the AppellateCommissioner and confirm the order passed by the AssistantCommissioner of Income Tax, Circle-3(1), Bangalore.| This ITA coming on for hearing this day,N. KUMAR Jdelivered the following: JU DBiGMENT Thisappeal1S|preferredbythe.TEVETLUE challenging the order passed by the Tribunal, wherein it is held that sub-section (4) of Section 80P of the Income Tax Act, 1961 is applicable only to co-operative banks.and not to credit co-operative societies. OoThe substantial questions of law which are| raised in the appeal are as under: 3 (1) Whether the Tribunal was correct inholding that the provision of sub-section (4)oft Section SOP ot the Income Tax Act areapplicable only to co-operative Banks andnot to credit Co-operative Societies, whichaTe€engaged|1nbusiness|oT|banking,including providing credit facilities to theirmembers?| (11)Whether the tribunal was correct inholding that the assessee is a co-operativesociety and not a co-operative Bank in terms—of sub-section (4) of section 8OP of theIncome Tax Act without considering themeaning of co-operative Bank as envisagedunder 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 co-operative|societywiththeprimaryobjectoT|transactions of Banking businessP” v 3.|The Tribunal in its order has set out the'difference between the co-operative bank and society asunder: 5 a |This Court had an occasion to consider the| said question inITA No.5006/2013' dated05.02.2014 ; in the case oftTHE COMMISSIONER OF INCOME TAXvs. SRI BILURU GURUBASAVA PATTINA SAHAKARISANGHANIYAMITHA,BAGALKOT,where,afterreferring to the relevant provisions of the Income TaxAct, and the banking Regulation Act, held as under: “Tt.aCo-operative Bank|1Sexclusivelycarrying banking business, then the incomederived from the said business cannot be!deducted in computing the total income ofthe assessee. The said income is liable for!tax. A Co-operative bank as defined under|the Banking Regulation Act includes theprimary agricultural credit society or aprimaryco-operativeagricultural ruraldevelopment bank. The Legislature did notwant to deny the said benefit to a primaryagricultural credit society or a primary co-operative agricultural and rural developmentbank. They did not want to extend the saidbenefit to a co-operative bank which is|exclusively carrying on banking business “Tt.aCo-operative Bank|1Sexclusivelycarrying banking business, then the incomederived from the said business cannot be!deducted in computing the total income ofthe assessee. The said income is liable for!tax. A Co-operative bank as defined under|the Banking Regulation Act includes theprimary agricultural credit society or aprimaryco-operativeagricultural ruraldevelopment bank. The Legislature did notwant to deny the said benefit to a primaryagricultural credit society or a primary co-operative agricultural and rural developmentbank. They did not want to extend the saidbenefit to a co-operative bank which is|exclusively carrying on banking business l.e., the purport of the amendment. If theassessee 1S not a Co-operative bank carryingon exclusively banking business and if itdoes not possess a license from the ReserveBank of India to carry on business, then it isnot a Co-operative bank. It is a Co-operativesociety which also carries on the business oflending money to its members which iscovered under|Section|SOP(2)(a)(i) 1.€.,.carrying on the business of banking forproviding credit facilitates to its members.The object of the aforesaid amendment is notto exclude the benefit extended umndersection 8OP(i) to the society.” | Therefore, the said issue was held in favour of theassessee and against the revenue. 5.|The said judgment answers the issues inthis case also. Accordingly, we pass the following order. < �-!�%33!%)����*������!*���-!��(?�.% .�%)�@(!�.�� ���#�)%A�%"!�% �A!"!*�� �#%5�("��#�.-!�%��!��!!�% *�%+%� �.�.-!�"!5! (!��� %�&�'(���& �� %�&�'(���*��� F��4�