Judgement on Co-op Bank Vs Co-op Society u/s 80P

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section 80p

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 10245 OF 2017
(ARISING OUT OF SLP (C) NO. 20044 OF 2015)

THE CITIZEN CO-OPERATIVE SOCIETY
LIMITED, THROUGH ITS MANAGING
DIRECTOR, HYDERABAD …..APPELLANT(S)

VERSUS

ASSISTANT COMMISSIONER OF INCOME
TAX, CIRCLE -9 (1), HYDERABAD …..RESPONDENT(S)

J U D G M E N T

A.K. SIKRI, J.
Leave granted.
2) The appellant herein, after losing in all the fora below, has knocked the doors of this Court by means of the present appeal seeking the benefit of Section 80P of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’). The Assessing Officer held that deduction in respect of income of co-operative societies under Section 80P of the Act is not admissible to the appellant as the benefit of deduction, as contemplated under the said provision is, inter alia, admissible to those co-operative http://www.itatonline.org

2) societies which carry on business of banking or providing credit facilities to its members. On the contrary, the appellant society was carrying on the banking business for public at large and for all practical purposes it was acting like a co-operative bank governed by the Banking Regulation Act, 1949, and its operation was not confined to its members but
outsiders as well.

3) It may be noted at this stage itself that Section 80P of the Act provides for certain deduction in respect of incomes of the co-operative societies. A co-operative society is defined by Section 2(19) of the Act. Where the gross total income of such co-operative societies includes any income referred to in sub-section (2) of Section 80P, the sums specified in sub-section (2) are allowed as deduction in accordance with and subject to the provisions of the said Section, while computing the total income of the assessee. The profit exempted is the net profit included in the total income and not the gross profit of the business. Sub-section (2) enlists those sums which are allowed as deductions. Clause (a) of sub-section

(2) includes seven kinds of co-operative societies which are entitled tothis benefit, and in respect of the co-operative societies engaged in the activities mentioned in those seven classes, the whole of the amount of profits and gains of business attributable to anyone or more of such activities is exempted from income by allowing the said income as deduction. We are concerned with sub-clause (i) of clause (a) of http://www.itatonline.org

sub-section (2) of Section 80P which enlists a co-operative society engaged in carrying on the business of banking or providing credit facilities to its members. For the sake of better understanding, we reproduce below the aforesaid portion of Section 80P:

 

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