10 January 2012
All urban Co operative credit society and Pat-Pedhis by virtue of provisions of [Note :Part V contains amendement in definition ] - Section 5(ccii),5(ccv) and 5(ccvi) of Banking Regulation Act, 1949 Further, Section 5A of Banking regulation Act,1949 overrides Bye laws of the co op credit society whose principal business of a primary credit society is the transaction of banking business and When its paid up capital and reserves attain the level of Rs. 1 lakh, a primary credit society automatically becomes a primary cooperative bank. Once the urban Co operative credit society and Pat-Pedhis are classified as Bank then they are not eligible for benefit provided under section 80P of the Income Tax Act,1961, from Assessment Year 2007-08 by virtue of Section 80P(4) read with section 2(24)(viia) both of income Tax Act, 1961.
Further, vide para 8 in the case of [Salgaon Sanmitra Sahakari Pathpedhi Ltd. v. Additional Commissioner of Income-tax, Ward-17(3),Mumbai. - [12 Taxmann.com 246 (2011)] the assessee society was classified as 'cooperative bank' [to argue that section 269SS do not apply to Bank] under section 12(1) of the Maharashtra Cooperative Society Act, 1960 as per the registration certificate issued by the Assistant Registrar, Cooperative Society, Mumbai.
Further, Federation doing Banking Activities with co operative credit societies or Pat Pedhi’s who are its members and located in urban area is also not entitled for benefit provided under section 80P of the Income Tax Act,1961, from Assessment Year 2007-08 by virtue of Section 80P(4) read with section 2(24)(viia) both of income Tax Act, 1961. The said view is Kerala State Co-operative Agricultural Rural Development Bank Ltd., Statue, Trivandrum-695001. Vs. The Assistant Commissioner of Income-tax, Circle-1(2), Trivandrum vide ITA No. 506/Coch/2010 & S.P. No.67/Coch/2010 For AY 2007-08.(unreported but available on internet)
Further, There is no aspect of mutuality in the case of the assessee registered under the Co-operative Societies Act as one of the objectives of a co-operative society will be to make profits and declare dividends to its members. In the case of a mutual concern, there is no room for such intention of making profit and distribute the same among the members.[ Sri Laxminarayana Swamy Co-Operative Society Ltd. v. Income-tax Officer [2010] 4 ITR(TRIB.) 27 (BANG.)][ Totgar's Co-operative Sale Society Ltd. v. ITO [2010] 322 ITR 283 (SC) ; 229 CTR 209]. Note : Please also refer point no. 4 of page 15 of Banking regulation Amendment Bill No. 18 of 2011 introduced in the loksabha.
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