INCOME TAX ACT, 1961

Section 80P(4)

Deduction under section 80P - Co-operative society - Applicability of section 80P(4) -

In present case question of law was 'whether Tribunal was justified as claimed by assessee on ground that assessee, a co-operative credit society and was not a bank for purpose of section 80P(4).' Held: Primary Agricultural Credit Societies could not be termed as Co-operative Banks under Banking Regulation Act and, therefore, such credit societies shall be entitled to exemption under section 80P(2). However, it was required to be noted that merely giving credit to its members only could not be said to be Co-operative Banks/Banks under Banking Regulation Act. Banking activities under Banking Regulation Act are altogether different activities. There is a vast difference between the credit societies giving credit to their own members only and the Banks providing banking services including the credit to the public at large also. There are concurrent findings recorded by CIT(A), ITAT and the High Court that the respondent/Assessee cannot be termed as Banks/Co-operative Banks and that being a credit society, they are entitled to exemption under section 80P(2). Such finding of fact is not required to be interfered with by this Court in exercise of powers under Article 136 of the Constitution of India. Even otherwise, on merits also and taking into consideration the CBDT Circulars and even the definition of Bank under the Banking Regulation Act, the respondent/Assessee cannot be said to be Co-operative Bank/Bank and, therefore, section 80P(4) shall not be applicable and that the respondent/Assessee shall be entitled to exemption/benefit under section 80(P)(2).

Applied:Mavilayi Service Cooperative Bank Limited and Others v. Commissioner, Calicut and Another (2021) 7 SCC 90

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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