Oftthe Commissioner Of Income Tax v. Srtbilurugurubasavapattinasaha Kart

IN THE HIGH COURT OF KARNATAKA ATBENGALURU DATED THIS THE 20 DAY OK MARCH 2015 PRESENT THE HON’BLE MR.JUSTICE VINEET SARAN AND THE HON’BLE MRS.JUSTICE S SUJATHA ITA NO.304 OF 2014 BETWEEN 1.THERE COMMISSIONER OF INCOME TAC.R.BUILDING,QUEENS ROAD,BANGALORE. 2.THER INCOME-TAX OFFICERWARD-3(1),UNITY BUILDING ANNEXE,MISSION ROAD,BANGALORE-560027.WARD-3(1),UNITY BUILDING ANNEXE,MISSION ROAD,BANGALORE-560027. APPEBILILANTS (BY SRI. K V ARAVIND, ADV., ) ANI M/S. SAPTHARISHI CREDITCO-OPERATIVE SOCIETY LTD.,6/1, MALLIKARJUNA TEMPLE STREET, DVG ROAD, BASAVANAGUDI, BANGALORE-560004. ~. RESPONDENT THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX.ACT 1961, ARISING OUT OF ORDER DATED:25/02/2014PASSED IN ITA NO.1148/BANG/2013, FOR THE ASSESSMENTYEAR 2008-2009 PRAYING TO: I FORMULATE THE SUBSTANTIAL QUESTIONS OFLAW STATED ABOVE. Il ALLOW THER APPEAL AND SET ASIDE THER ORDERPASSEDBYTHE|ITAT, BANGALORE.IN|ITANO.1148/BANG/2013 DATED:25/02/2014 CONFIRMING THEORDER OF THER APPELLATE COMMISSIONER AND CONFIRMTHE ORDER PASSED BY THE INCOME TAX OFFICER, WARD-3(1), BANGALORE. THIS APPEAL COMING ON FOR ADMISSION THIS DAY,VINEETSARAN|., DELIVERED THE FOLLOWING: JUDGMENT This appeal is preferred by the revenue challenging theorder passed by the Tribunal, wherein it is held that sub-section (4) of Section 80P of the Income Tax Act, 1961 1s|applicable only to co-operative banks and not to credit co-Operative societies. | 2.|The substantial questions ot law which are raised| in the appeal are as under: 1. Whether the Tribunal was correct 1n holding that|the assessee is not a co-operative bank but only a co-Operative society engaged in providing credit|facilities to its members? 2? Whether the ‘Tribunal was correct in notappreciating that the main motto of the co-operativeSociety is lending for its members which ts itn the nature of banking transaction, treated on par as perthe new clause introduced in the definition ofincome in section 2(24)(viia) and comes under the|purview of 80P sub-section (4) of the Act as insertedin Finance Act 2006 to be effective from 01.04.2007? % ‘The Tribunal in its order has set out the difference|between the Co-operative Bank and Co-operative Society andhas arrived at the conclusion, since the assessee is a Co-operative Society and not a Co-operative Bank, the provisions|of the said Section 80P(4) of the Act, will not be applicable tnthe case of the assessee. 4.This Court had an occasion to consider the said|question 1nITA No.5006/2013dated05.02.2014in the case oftTHE COMMISSIONER OF INCOME TAX vs. SRTBILURUGURUBASAVAPATTINASAHA KART SANGHA NIYAMITHA, BAGALKOT,where, after reterring to the relevant provisions of the Income Tax Act, andthe banking Regulation Act, held as under: “If a Co-operative Bank is exclusively carryingbanking business, then the income dertved from| the said business cannot be deducted in.computing the total income of the assessee. Thesaid income is liable for tax. A Co-operative bank|as defined under the Banking Regulation Actincludes the primary agricultural credit society oraprimaryco-operativeagriculturalruraldevelopment bank. The Legislature did not wantto deny the said benefit to a primary agriculturalcreditsocietyOraprimaryco-operativeagricultural and rural development bank. ‘They didnot want to extend the said benefit to 4a cooperative bank which is exclusively carrying on)banking business te, the purport of theamendment. If the assessee is not a Co-operative|bank carrying on exclusively banking business|and if it does not possess a license from theReserve Bank of India to carry on business, then|it is not a Co-operative bank. It is a Co-operativesociety which also carries on the business of)lending money to its members which is covered|under Section 80P(2)(a)(1) te. carrying on thebusiness of banking for providing credit facilitatesto its members. The object of the aforesaidAmendment is not to exclude the § benefiextended under Section 80P() to the society.” Therefore, the said issue was held in favour of theassessee and against the revenue. | 5. The said judgment answers the issues in this case also. Accordingly, we pass the following order. The appeal is dismissed. [The substantial questions of law ate answered in favour of the assessee and against the|TEVENUE. JT/- Sd/-| JUDGE Sd/-' JUDGE|