Clipped from: https://www.taxscan.in/cooperative-credit-society-eligible-for-income-tax-exemption-u-s-80p2-of-income-tax-act-supreme-court/274337/?utm_source=izooto&utm_medium=push_notifications&utm_campaign=Cooperative%20Credit%20Society%20Eligible%20for%20Income%20Tax%20Exemption%20u/s%2080(P)(2)%20of%20Income%20Tax%20Act:%20Supreme%20Court
In a major decision the Supreme Court of India ruled that the cooperative credit society is eligible for income tax exemption under Section 80(P)(2) of Income Tax Act, 1961.
Feeling aggrieved and dissatisfied with the impugned passed by the High Court of Judicature at Bombay in ITA No.933/2017, by which the High Court has dismissed the said appeal preferred by the Revenue, relying upon its earlier decision in the case of M/s. Quepem Urban Co-operative Credit Society Ltd. vs. Assistant Commissioner of Income Tax,the Revenue has preferred the appeal.
The respondent in the present matter is M/sAnnasaheb Patil MathadiKamgarSahakariPathpedi Limited.
The High Court considered the following question of law – “Whether on the facts and in the circumstances of the case and in law, the Tribunal is justified as claimed by the assessee on the ground that the assessee, a co-operative credit society and is not a bank for the purpose of Section 80P(4) of the Income Tax Act.”
Aakansha Kaul, counsel appearing on behalf of the appellant/Revenue has tried to submit that the respondent/Assessee will fall under the definition of Co-operative Bank as activity is to give credit/loan. However, it is required to be noted that merely giving credit to its members only cannot be said to be the Co-operative Banks/Banks under the Banking Regulation Act. The banking activities under the Banking Regulation Act are altogether different activities.
In Mavilayi Service Cooperative Bank Limited and Others Vs. Commissioner of Income Tax, Calicut and Another, the Supreme Court has specifically observed and held that primary Agricultural Credit Societies cannot be termed as Co-operative Banks under the Banking Regulation Act and, therefore, such credit societies shall be entitled to exemption under Section 80(P)(2) of the Income Tax Act, 1961.
The Division Bench consisting of Justices MR Shah and CT Ravikumar observed that “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 80(P)(4) shall not be applicable and that the respondent/Assessee shall be entitled to exemption/benefit under Section 80(P)(2) of the Income Tax Act.”To Read the full text of the Order CLICK HERE
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THE PR. COMMISSIONER OF INCOME TAX 17 vs M/S ANNASAHEB PATIL MATHADI KAMGAR SAHAKARI PATHPEDI LIMITED
CITATION: 2023 TAXSCAN (SC) 165
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