Shri Ram Pistron & Rings Emp. Sal. Edu. Society, Ghaziabad V. JCIT, Ghaziabad

ITA 1794/DEL/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6547 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 30-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Keywords: Gift; Question of law
• Section: 143(3); 56; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER ITA NO.1794/DEL/2015 ASSESSMENT YEAR : 2010-11 SHRI RAM PISTRON & RINGS EMP. SAL. EDU. SOCIETY, C/O AKHILESH KUMAR, ADVOCATE, CHAMBER NO.206-07, ANSAL SATYAM, RDC RAJ NAGAR, GHAZIABAD. VS. JCIT, RANGE- 2, GHAZIABAD. PAN : AACAS 6140 C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AKHILESH KUMAR, ADV. RESPONDENT BY : SHRI S. K. JAIN, SR.DR DATE OF HEARING : 01-02-2017 DATE OF PRONOUNCEMENT : 17-02-2017 O R D E R PER S.V. MEHROTRA, A.M : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 09.12.2014 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS), GHAZIABAD, U/S 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) RELATING TO ASSESSMENT YEAR 2010-11. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE, A COO PERATIVE SOCIETY DULY REGISTERED WITH REGISTRAR OF COOPERATIVE SOCIETY VI DE NO.2773 DATED 21.08.1997, E-FILED ITS RETURN OF INCOME ON 26.09.2 010 DECLARING NIL INCOME. THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD CLA IMED DEDUCTION U/S 80P 2 ITA NO.1794/DEL/2015 TO THE TUNE OF RS.22,71,949/-. IN COMPLIANCE TO TH E SHOW-CAUSE NOTICE, ISSUED BY THE ASSESSING OFFICER, ASKING AS TO WHY N OT DEDUCTION U/S 80P MAY BE DISALLOWED, THE ASSESSEE POINTED OUT AS UNDE R :- THE ASSESSEE IS A REGISTERED COOPERATIVE SOCIETY, PROVIDING CREDIT FACILITY TO ITS MEMBERS, SO INCOME IS DEDUCTIBLE U/S 80P OF THE ACT . 3. THE ASSESSING OFFICER DENIED THE DEDUCTION U/S 8 0P FOR THE FOLLOWING REASONS :- (A) THE ASSESSEE SOCIETY IS REGISTERED WITH THE REG ISTRAR OF SOCIETY FOR RECEIVING DEPOSITS AND PROVIDING CREDIT FACILIT Y TO ITS MEMBERS. (B) THE SOCIETY IS CREATED FOR THE BENEFIT OF EMPLO YEES OF M/S SRI RAM PISTONS AND RINGS LTD., (C) THE OBJECT OF SOCIETY WAS AS UNDER :- 3 ITA NO.1794/DEL/2015 FROM PERUSAL OF THE OBJECT OF SOCIETY, HE CONCLUDED THAT THE SOCIETY HAD DECLARED ITSELF AS BANKING ORGANIZATION PROVIDI NG CREDIT FACILITY TO ITS MEMBERS. HE POINTED OUT SECTION 80P PROVIDES T HE DEDUCTION IN RESPECT OF INCOME OF CO-OPERATIVE SOCIETY. FURTHER , THE FINANCE ACT, 2006 W.E.F. 01.04.2007 HAD INSERTED SECTION 80P(4) WHICH PROVIDES THAT THE PROVISIONS OF THIS SECTION SHALL NOT APPLY IN RELATION TO ANY CO- OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CR EDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOP MENT BANK. (D) HE REJECTED THE ASSESSEES CLAIM THAT SOCIETY WAS REGISTERED CO- OPERATIVE SOCIETY OBSERVING THAT PART V OF THE BANK ING REGULATIONS ACT, 1949 DEFINES PRIMARY AGRICULTURAL CREDIT SOCIE TY AS UNDER :- PRIMARY AGRICULTURAL CREDIT SOCIETY MEANS A CO-OP ERATIVE SOCIETY- (1) THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF WH ICH IS TO PROVIDE FINANCIAL ACCOMMODATION TO ITS MEMBERS FOR AGRICULT URAL PURPOSES OR FOR PURPOSES CONNECTED WITH AGRICULTURAL ACTIVITIES (IN CLUDING THE MARKETING OF CROPS); (E) HE OBSERVED THAT INTENTION OF LEGISLATION WAS T O ENCOURAGE CO- OPERATIVE ACTIVITY IN THE RURAL SOCIETY AND COMMUNI TY DEVELOPMENT OF THE AGRICULTURAL SOCIETY AND NOT THE ACTIVITY OF RE CEIVING DEPOSITS AND PROVIDING CREDIT FACILITIES TO THE EMPLOYEES. 4. LD. CIT(A) DISMISSED THE ASSESSEES APPEAL BY OB SERVING AS UNDER :- 5.3 I FIND THAT IN THE BYE LAWS OF SOCIETY, IT HAS USED THE TERM BANK/SOCIETY WHICH SHOWS THE INTENTION OF SOCIETY TO CONDUCT BANKING TRANSACTIONS. I ALSO FIND THAT THE SOCIETY HAS CHARGED INTEREST AT THE RATE O F 12% WHEREAS THE BANK HAS CHARGED INTEREST AT 10%. THE PROFIT AND LOSS ACCOUN T OF THE SOCIETY SHOWS THAT IT HAS EARNED INTEREST OF RS. 82,07,335/- DURING THE Y EAR BUT HAS PAID INTEREST OF RS. 5757555/-. BESIDES, IT HAS EARNED A DIVIDEND OF RS. 499767/- FROM BANK. ALL THESE FACTS CLEARLY PROVE THAT THE SOCIETY EXISTS F OR PROFIT MAKING AND PRINCIPLE OF MUTUALITY DOES NOT APPLY IN THIS CASE. THE PAID CAP ITAL OF THE SOCIETY IS RS. 10293500/T AND BY VIRTUE OF SECTION 56(CCV) OF BANK ING REGULATION ACT, 1949 A COOPERATIVE SOCIETY OTHER THAN THE PRIMARY AGRICULT URAL CREDIT SOCIETY WOULD BE DEEMED TO BE A 'PRIMARY COOPERATIVE BANK' IF IT FUL FILLS FOLLOWING CONDITION:- 'PRIMARY CO-OPERATIVE BANK' MEANS A CO-OPERATIVE SO CIETY, OTHER THAN A 4 ITA NO.1794/DEL/2015 PRIMARY AGRICULTURAL CREDIT SOCIETY- (1) THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF WHI CH IS THE TRANSACTION OF BANKING BUSINESS; (2) THE PAID-UP SHARE CAPITAL AND RESERVE OF WHICH ARE NOT LESS THAN ONE LAKH OF RUPEES. (3) THE BYE-LAW OF WHICH DO NOT PERMIT ADMISSION OF ANY OTHER CO- OPERATIVE SOCIETY AS A MEMBER. PROVIDED THAT THIS SUB-CLAUSE SHALL NOT APPLY TO TH E ADMISSION OF A CO- OPERATIVE BANK AS A MEMBER BY REASON OF SUCH CO-OPE RATIVE SOCIETY OUT OF FUNDS PROVIDED BY THE STATE GOVERNMENT FOR THE PURP OSE;' 5.4 IN CASE OF THE APPELLANT SOCIETY ALL THE THREE CONDITIONS ARE SATISFIED. ITS PRIMARY OBJECT IS BANKING BUSINESS OF TAKING DEPOSI TS AND ADVANCING LOANS. ITS OBJECT IS TO EARN PROFIT AS CAN BE SEEN FROM THE DI FFERENCE IN RATE OF INTEREST CHARGED BY BANK AND BY IT. IN THE BYE LAWS, THERE I S NO MENTION OF THE FACT THAT IT IS OPEN TO OTHER COOPERATIVE SOCIETY EXCEPT COOPERA TIVE BANK. THE RELEVANT CLAUSE REGARDING THE MEMBERSHIP IN BYE LAWS IS AS UNDER :- THE TERM SEWAYOJAK DOES NOT TRANSLATE TO COOPERAT IVE. THUS, MEMBERSHIP IS NOT OPEN TO OTHER COOPERATIVE SOCIETY . THEREFORE, FOR THE PURPOSE OF SECTION 80P(4) THE SO CIETY IS DEEMED TO BE PRIMARY COOPERATIVE BANK AS PER SECTION 56(CCV) OF BRA 1949 IRRESPECTIVE OF THE FACT THAT IT HAS NOT SOUGHT OR BEEN GRANTED LICENSE FOR BANKING. HAVING LICENSE IS NOT MATERIAL. THIS IS ALTOGETHER A DIFFERENT MATTE R THAT THE ASSESSEE SOCIETY DESPITE COMING UNDER DEFINITION OF PRIMARY COOPERAT IVE BANK BY VIRTUE OF SECTION 56(CCV) OF BANKING REGULATION ACT, 1949, IT HAS NOT TAKEN THE REQUISITE LICENSE. 5. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT A CO -OPERATIVE SOCIETY HAS BEEN TREATED AS A CO-OPERATIVE BANK. HE REFERRED T O THE ASSESSMENT ORDER PAGE 2 AND POINTED OUT THAT THE ASSESSING OFFICER H AS NOT DISPUTED THAT THE 5 ITA NO.1794/DEL/2015 ASSESSEES SOCIETY IS REGISTERED WITH THE REGISTRAR OF SOCIETY FOR RECEIVING DEPOSITS AND PROVIDING CREDIT FACILITIES TO ITS MEM BERS. HE FURTHER POINTED OUT THAT IT IS NOT DISPUTED THAT THE SOCIETY HAD BE EN CREATED FOR THE BENEFIT OF EMPLOYEES OF M/S SRI RAM PISTONS AND RINGS LTD.. L D. COUNSEL FURTHER REFERRED TO PAGE 7 OF PAPER BOOK, WHEREIN, THE LD. CIT(A)S ORDER IS CONTAINED AND POINTED OUT THAT HE HAS ALSO NOT DISP UTED THAT THE SOCIETY WAS TAKING DEPOSITS FROM MEMBERS AND PROVIDING THEM CRE DIT FACILITIES. LD. COUNSEL FURTHER REFERRED TO PAGE 48 OF PAPER BOOK, WHEREIN, SOCIETYS MEMORANDUM IS CONTAINED, WHEREIN, THE NAME OF ASSES SEE HAS BEEN REFERRED TO AS M/S SRI RAM PISTONS AND RINGS LTD. EMPLOYEES (SALARY OWNERS) COOPERATIVE DEBT AND CREDIT SOCIETY LTD.. FURTHER , SCOPE OF SOCIETY IS LIMITED TO THE EMPLOYEES OF M/S SRI RAM PISTONS AND RINGS L TD.. LD. COUNSEL SUBMITTED THAT BEFORE ANY CO-OPERATIVE SOCIETY CAN BE TREATED AS CO-OPERATIVE BANK, THE VARIOUS CONDITIONS OF THE BANKING REGULAT IONS ACT, 1949 (BRA) HAVE TO BE FULFILLED. IN THIS REGARD, LD. COUNSEL REFERRED TO PAGE 33 OF PAPER BOOK, WHEREIN, BRA IS CONTAINED, AND REFERRED TO SE CTION 5(B) OF THE SAME WHICH READS AS UNDER :- 5. INTERPRETATION. - [IN THIS ACT], UNLESS THERE IS ANYTHING REPUGNANT IN THE SUBJECT OR CONTEXT, - (B) 'BANKING' MEANS THE ACCEPTING, FOR THE PURPOSE OF LENDING OR INVESTMENT, OF DEPOSITS OF MONEY FROM THE PUBLIC, REPAYABLE ON DEM AND OR OTHERWISE, AND WITHDRAWAL BY CHEQUE, DRAFT, ORDER OR OTHERWISE; 6 ITA NO.1794/DEL/2015 6. WITH REFERENCE TO ABOVE DEFINITION OF BANKING, L D. COUNSEL POINTED OUT THAT UNLESS THE DEPOSITS OF MONEY ARE RECEIVED FROM GENERAL PUBLIC, THE CO- OPERATIVE SOCIETY CANNOT FALL WITHIN THE DEFINITION OF BANKING. LD. COUNSEL FURTHER REFERRED TO PAGE 39 OF PAPER BOOK AND REFER RED TO SECTION 22 OF THE BANKING REGULATIONS ACT, 1949, SUB-SECTION (1) OF W HICH READS AS UNDER :- 22. LICENSING OF BANKING COMPANIES - [(1) SAVE AS HEREINAFTER PROVIDED, NO COMPANY SHALL CARRYON BANKING BUSINESS IN INDIA UNL ESS IT HOLDS A LICENCE ISSUED IN THAT BEHALF BY THE RESERVE BANK AND ANY SUCH LIC ENCE MAY BE ISSUED SUBJECT OF SUCH CONDITIONS AS THE RESERVE BANK MAY THINK FIT T O IMPOSE.] 7. WITH REFERENCE TO THIS SECTION, LD. COUNSEL POIN TED OUT THAT UNLESS A COMPANY HOLDS A LICENCE ISSUED IN REGARD TO BANKING ACTIVITY BY THE RESERVE BANK OF INDIA, IT CANNOT CARRY ON BANKING BUSINESS. LD. COUNSEL FURTHER REFERRED TO PAGE 42 TO 44 OF THE PAPER BOOK, WHEREI N, PART V OF THE BANKING REGULATIONS ACT, 1949 IS CONTAINED, WHICH DEALS WIT H THE APPLICATION OF THE ACT TO CO-OPERATIVE BANKS. HE REFERRED TO RELEVANT SECTIONS OF THIS SECTION AS UNDER :- 56. ACT TO APPLY TO CO-OPERATIVE SOCIETIES SUBJECT TO MODIFICATIONS.-- THE PROVISIONS OF THIS ACT, AS IN FORCE FOR THE TIME BE ING, SHALL APPLY TO, OR IN RELATION TO, CO-OPERATIVE SOCIETIES AS THEY APPLY TO, OR IN RELATION TO BANKING COMPANIES SUBJECT TO THE FOLLOWING MODIFICATIONS, NAMELY:-- . (C) IN SECTION 5,-- [(I) AFTER CLAUSE (CC), THE FOLLOWING CLAUSES SHALL BE INSERTED, NAMELY:-- (CCI) 'CO-OPERATIVE BANK' MEANS A STATE CO-OPERATIV E BANK, A CENTRAL CO- OPERATIVE BANK AND A PRIMARY CO-OPERATIVE BANK; 7 ITA NO.1794/DEL/2015 (CCII) 'CO-OPERATIVE CREDIT SOCIETY' MEANS A CO-OPE RATIVE SOCIETY, THE PRIMARY OBJECT OF WHICH IS TO PROVIDE FINANCIAL ACCOMMODATI ON TO ITS MEMBERS AND INCLUDES A CO-OPERATIVE LAND MORTGAGE BANK; . (CCV) 'PRIMARY CO-OPERATIVE BANK' MEANS A CO-OPERAT IVE SOCIETY, OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY,-- (1) THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF WHICH I S THE TRANSACTION OF BANKING BUSINESS; (2) THE PAID-UP SHARE CAPITAL AND RESERVES OF WHICH ARE NOT LESS THAN ONE LAKH OF RUPEES; AND (3) THE BYE-LAWS OF WHICH DO NOT PERMIT ADMISSION OF AN Y OTHER CO- OPERATIVE SOCIETY AS A MEMBER: PROVIDED THAT THIS SUB-CLAUSE SHALL NOT APPLY TO TH E ADMISSION OF A CO- OPERATIVE BANK AS A MEMBER BY REASON OF SUCH CO-OPE RATIVE BANK SUBSCRIBING TO THE SHARE CAPITAL OF SUCH CO-OPERATI VE SOCIETY OUT OF FUNDS PROVIDED BY THE STATE GOVERNMENT FOR THE PURPOSE; (CCVI) 'PRIMARY CREDIT SOCIETY' MEANS A CO-OPERATIV E SOCIETY, OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY,-- (1) THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF WHICH I S THE TRANSACTION OF BANKING BUSINESS; (2) THE PAID-UP SHARE CAPITAL AND RESERVES OF WHICH ARE LESS THAN ONE LAKH OF RUPEES; AND (3) THE BYE-LAWS OF WHICH DO NOT PERMIT ADMISSION OF AN Y OTHER CO- OPERATIVE SOCIETY AS A MEMBER: PROVIDED THAT THIS SUB-CLAUSE SHALL NOT APPLY TO TH E ADMISSION OF A CO- OPERATIVE BANK AS A MEMBER BY REASON OF SUCH CO-OPE RATIVE BANK SUBSCRIBING TO THE SHARE CAPITAL OF SUCH CO-OPERATI VE SOCIETY OUT OF FUNDS PROVIDED BY THE STATE GOVERNMENT FOR THE PURPOSE. EXPLANATION.--IF ANY DISPUTE ARISES AS TO THE PRIMA RY OBJECT OR PRINCIPAL BUSINESS OF ANY CO-OPERATIVE SOCIETY REFERRED TO IN CLAUSES (CCIV), (CCV) AND (CCVI), A DETERMINATION THEREOF BY THE RESERVE BANK SHALL BE FINAL; 8. WITH REFERENCE TO AFOREMENTIONED MANDATE OF BANK ING REGULATIONS ACT, 1949, LD. COUNSEL SUBMITTED THAT IF THE DISPUT E ARISES AS TO THE PRIMARY OBJECTS OF PRINCIPLE BUSINESS OF ANY CO-OPERATIVE S OCIETY I.E. A PRIMARY CREDIT 8 ITA NO.1794/DEL/2015 SOCIETY OR A CO-OPERATIVE BANK THEN THE DISPUTE IS TO BE RESOLVED BY RBI AND THIS CANNOT BE DONE BY THE ASSESSING OFFICER. 9. IN VIEW OF THE AFOREMENTIONED SECTIONS OF THE BA NKING REGULATIONS ACT, 1949, LD. COUNSEL SUBMITTED THAT LD. CIT(A) WR ONGLY CONCLUDED THAT THE ASSESSEE IS TO BE DEEMED AS PRIMARY CO-OPERATIVE BA NK AS PER SECTION 56(CCV) OF BANKING REGULATIONS ACT, 1949 IRRESPECTI VE OF THE FACT THAT IT HAD NOT SOUGHT OR BEING GRANTED LICENSE FOR BANKING. L D. COUNSEL RELIED ON FOLLOWING CASE LAWS IN SUPPORT OF HIS SUBMISSIONS : - (1) CIT VS. SHRI LAXMI CREDIT SOUHARD SAHAKARI LTD. , (2016) 65 TAXMANN.COM 96 (KARNATAKA), WHEREIN THE HONBLE KAR NATAKA HIGH COURT HELD AS UNDER :- 4. THE QUESTION OF LAW THAT ARISE FOR OUR CONSIDER ATION IN THIS APPEAL ARE : I. WHETHER THE BENEFIT OF DEDUCTION, UNDER SECTION 80P(2)(A)(I) OF THE IT ACT, COULD BE DENIED TO THE ASSESSEE ON THE FOOT ING THAT, THOUGH THE RESPONDENT WAS SAID TO BE A CO-OPERATIVE SOCIETY, I T WAS IN FACT A CO- OPERATIVE BANK, WITHIN THE MEANING AS ASSIGNED TO S UCH BANK UNDER PART V OF THE BR ACT. II. WHETHER THE AUTHORITIES UNDER THE IT ACT WERE C OMPETENT AND POSSESSED THE JURISDICTION TO RESOLVE THE CONTROVER SY AS TO WHETHER THE ASSESSEE WAS A CO-OPERATIVE SOCIETY OR CO-OPERATIVE BANK, AS DEFINED UNDER THE PROVISIONS OF THE BR ACT? . ATTENTION IS ALSO DRAWN TO THE RELEVANT PORTION OF THE FINANCE MINISTERS BUDGET SPEECH EXPLAINING THE REASONS FOR WITHDRAWAL OF TAX BENEFITS TO SOME SOCIETIES BY WAY OF INSERTION OF SUB-SECTION 8 0P(4) AND INSERTION OF NEW SUB-CLAUSE (VIIA) IN CLAUSE (24) OF SECTION 2 D EFINITION OF INCOME BY THE FINANCE ACT, 2006, WITH EFFECT FROM 1.4.2007 , IS AS UNDER: THE CO-OPERATIVE BANKS ARE FUNCTIONING AT PAR WITH OTHER COMMERCIAL BANKS, WHICH DO NOT ENJOY ANY TAX BENEFITS. IT IS, THEREFORE PROPOSED TO AMEND SECTION 80P BY INSERTING A NEW SUB-SECTION (4 ) SO AS TO PROVIDE 9 ITA NO.1794/DEL/2015 THAT THE PROVISIONS OF THE SAID SECTION SHALL NOT A PPLY IN RELATION TO ANY CO-OPERATIVE BANK OTHER THAN PRIMARY CREDIT SOCIETY OR A PRIMARY CO- OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. IT IS ALSO PROPOSED TO DEFINE THE EXPRESSIONS CO-OPERATIVE BANK, PRIMAR Y AGRICULTURAL CREDIT SOCIETY AND PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. . IT IS ALSO STATED THAT IN SOME MATTER, THE TRIBUNAL HAS GRANTED RELIEF BY HOLDING THAT SECTION 80P(4) IS NOT APPLICABLE, BY R EFERRING TO ONE CIRCULAR OF CBDT NO.133 OF 2007 DATED 9.5.2007 WHICH PROVIDE D AS UNDER : SUBJECT: CLARIFICATION REGARDING ADMISSIBILITY OF D EDUCTION UNDER SECTION 80P OF THE INCOME-TAX ACT, 1961. 1. PLEASE REFER TO YOUR LETTER NO.DCUS/30688/2007, DAT ED 28.03.2007 ADDRESSED TO THE CHAIRMAN, CENTRAL BOARD OF DIRECT TAXES, ON THE ABOVE GIVEN SUBJECT. 2. IN THIS REGARD, I HAVE BEEN DIRECTED TO STATE THAT SUB-SECTION (4) OF SECTION 80P PROVIDES THAT DEDUCTION UNDER THE SAID SECTION SHALL NOT BE ALLOWABLE TO ANY CO-OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATI VE AGRICULTURAL AND RURAL DEVELOPMENT BANK. FOR THE PURPOSE OF THE SAI D SUB-SECTION, CO- OPERATIVE BANK SHALL HAVE THE MEANING ASSIGNED TO I T IN PART V OF THE BANKING REGULATIONS ACT, 1949. 3. IN PART V OF THE BANKING REGULATION ACT, CO-OPERAT IVE BANK MEANS A STATE CO-OPERATIVE BANK, A CENTRAL CO-OPERATIVE B ANK AND A PRIMARY CO-OPERATIVE BANK. 4. THUS, IF THE DELHI CO-OP URBAN T AND C SOCIETY LTD. DOES NOT FALL WITHIN THE MEANING OF CO-OPERATIVE BANKS AS DEFIN ED IN PART V OF THE BANKING REGULATION ACT, 1949, SUB-SECTION (4) O F SECTION 80P WILL NOT APPLY IN THIS CASE. 7. INSOFAR AS THE FIRST QUESTION OF LAW IS CONCERNE D, THERE ARE A SERIES OF DECISIONS OF THIS COURT WHEREIN IT HAS BEEN REPEATE DLY ANSWERED IN FAVOUR OF THE ASSESSEE. TWO OF THE SAID DECISIONS ARE AS FOLLOWS : 1. SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NI YAMITHA (SUPRA) 2. CIT V. BANGALORE COMMERCIAL TRANSPORTER CREDIT S OCIETY IN ITA NO.351/2011 & ITA NO.599/2013. IN INTERPRETING SECTION 80P(4) IN SRI BILURA GURUBA SAVA PATTINA SAHAKARI SANGHA NIYAMITHA CASE (SUPRA) OF THE IT ACT, IT WAS HELD AS FOLLOWS : IF A CO-OPERATIVE BANK IS EXCLUSIVELY CARRYING ON BANKING BUSINESS, THEN THE INCOME DERIVED FROM THE SAID BUSINESS CANNOT BE DEDUCTED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. THE SA ID INCOME IS LIABLE FOR TAX. A CO-OPERATIVE BANK AS DEFINED UNDER THE BANK ING REGULATION ACT 10 ITA NO.1794/DEL/2015 INCLUDES THE PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. THE LEGIS LATURE DID NOT WANT TO DENY THE SAID BENEFITS TO A PRIMARY AGRICULTURAL CR EDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOP MENT BANK. THEY DID NOT WANT TO EXTEND THE SAID BENEFIT TO A CO-OPERATI VE BANK WHICH IS EXCLUSIVELY CARRYING ON BANKING BUSINESS I.E. THE P URPORT OF THIS AMENDMENT. THEREFORE, AS THE ASSESSEE IS NOT A CO- OPERATIVE BANK CARRYING ON EXCLUSIVELY BANKING BUSINESS AND AS IT DOES NOT POSSESS A LICENCE FROM RESERVE BANK OF INDIA TO CARRY ON OF L ENDING MONEY TO ITS MEMBERS WHICH IS COVERED UNDER SECTION 80(2)(A)(I) I.E. CARRYING ON THE AMENDMENT IS NOT TO EXCLUDE THE BENEFIT EXTENDED UN DER SECTION 80P(1) TO SUCH SOCIETY. THEREFORE, THERE WAS NO ERROR COMMIT TEE BY THE ASSESSING AUTHORITY. IN BANGALORE COMMERCIAL TRANSPORTER CREDIT SOCIETY (SUPRA), THIS COURT HAS CITED WITH APPROVAL THE FOLLOWING DIFFERENCES B ETWEEN A CO-OPERATIVE SOCIETY AND A COOPERATIVE BANK AS DEPICTED BY THE TRIBUNAL IN TABULAR FORM THUS : NATURE CO-OPERATIVE SOCIETY REGISTERED UNDER BANKING REGULATION ACT, 1949 CO-OPERATIVE SOCIETY REGISTERED UNDER KARNATAKA CO-OPERATIVE SOCIETY ACT, 1959 UNDER THE BANKING REGULATION ACT, 1949 AND REGISTRATION CO-OPERATIVE SOCIETIES ACT, 1959 CO-OPERATIVE SOCIETIES ACT, 1959 NATURE OF BUSINESS 1. AS DEFINED IN SECTION 6 OF BANKING REGULATION ACT. 1. AS PER THE BYE-LAWS OF THE CO-OPERATIVE SOCIETY. 2. CAN OPEN SAVINGS BANK ACCOUNT, CURRENT ACCOUNT, OVERDRAFT ACCOUNT, CASH CREDIT ACCOUNT ISSUE LETTER OF CREDIT, DISCOUNTING BILLS OF EXCHANGE, ISSUE CHEQUES, DEMAND DRAFTS (DD), PAY ORDERS, GIFT CHEQUES, LOCKERS, BANK GUARANTEES ETC. 2. SOCIETY CANNOT OPEN SAVINGS BANK ACCOUNT, CURRENT ACCOUNT, ISSUE LETTER OF CREDIT, DISCOUNTING BILLS OF EXCHANGE, ISSUE CHEQUE, DEMAND DRAFT, PAY ORDERS, GIFT CHEQUES, LOCKERS, BANK GUARANTEES, ETC. 3. CO-OPERATIVE BANKS CAN ACT AS CLEARING AGENT FOR CHEQUES, DDS PAY ORDERS AND OTHER FORMS. 3. SOCIETY CANNOT ACT CLEARING AGENT, FOR CHEQUES, DDS, PAY ORDERS AND OTHER FORMS. 4. BANKS ARE BOUND TO FOLLOW THE RULES, REGULATIONS AND DIRECTIONS ISSUED BY RESERVE BANK OF INDIA (RBI) 4. SOCIETY ARE BOUND BY RULES AND REGULATIONS AS SPECIFIED BY IN THE CO- OPERATIVE SOCIETIES ACT. FILING OF RETURNS CO-OPERATIVE BANKS HAVE TO SOCIET Y HAS TO SUBMIT THE 11 ITA NO.1794/DEL/2015 SUBMIT ANNUAL RETURN TO RBI EVERY YEAR. ANNUAL RETURN TO REGISTRAR OF SOCIETIES. INSPECTION RBI HAS THE POWER TO INSPECT ACCOUNTS AND OVERALL FUNCTIONING OF THE BANK. REGISTRAR HAS THE POWER TO INSPECT ACCOUNTS AND OVERALL FUNCTIONING OF THE BANK. PART V PART V OF THE BANKING REGULATION ACT IS APPLICABLE TO CO-OPERATIVE BANKS. PART V OF THE BANKING REGULATION ACT IS NOT APPLICABLE TO CO-OPERATIVE BANKS. USE OF WORDS THE WORD BANK, BANKER, BANKING CAN BE USED BY A CO-OPERATIVE BANK. THE WORD BANK, BANKER, BANKING CANNOT BE USED BY A CO-OPERATIVE SOCIETY. AND THIS COURT HAD DISMISSED THE APPEAL OF THE REVE NUE FOLLOWING THE DECISION IN SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA (SUPRA). THE SAME VIEW HAS BEEN TAKEN IN THE FOLLOWING DECIS IONS : 1. BANGALORE CREDIT CO-OPERATIVE SOCIETY LTD. (SUPRA) 2. CIT V. YESHWANTHPUR CREDIT CO-OPERATIVE SOCIETY LTD . IN ITA 237/2012 3. CIT V. MYSORE UNIVERSITY EMPLOYEES CO-OPERATIVE CRE DIT SOCIETY LTD. IN ITA 298/2013 4. CIT V. VASAVI CREDIT CO-OPERATIVE SOCIETY LTD. IN I TA NO.118/2012 5. CIT V. SRI VASAVI MULTI PURPOSE SOUHARDA SAHAKARI S ANGHA NIYAMITHA IN ITA NO.505/2013 6. CIT V. GENERAL INSURANCE EMPLOYEES CO-OPERATIVE SOC IETY LTD. IN ITA NO.273/2013. 10. WE ARE IN RESPECTFUL AGREEMENT WITH THE GENERAL VIEW TAKEN AS TO THE INTERPRETATION OF THE RELEVANT PROVISIONS OF LA W, BY THE CO-ORDINATE BENCH OF THIS COURT, IN THE ABOVE AND SEVERAL OTHER JUDGMENTS ADOPTING THE SAME VIEW. HOWEVER, IT IS TO BE NOTICED THAT THERE IS A SERIOUSLY DISPUTED QUESTION OF FACT WHICH THE AUTHORITIES UNDER THE IT ACT HAVE TAKEN UPON THEMSELVES TO INTERPRET IN THE FACE OF THE BR ACT P RESCRIBING THAT IN THE EVENT OF A DISPUTE AS TO THE PRIMARY OBJECT OR PRIN CIPAL BUSINESS OF ANY CO- OPERATIVE SOCIETY REFERRED TO IN CLAUSES (CCIV), (C CV) AND (CCVI) OF SECTION 56 OF THE BR ACT, A DETERMINATION THEREOF BY THE RE SERVE BANK SHALL BE FINAL, WOULD REQUIRE THE DISPUTE TO BE RESOLVED BY THE RESERVE BANK OF INDIA, BEFORE THE AUTHORITIES COULD TERM THE ASSESS EE AS A CO-OPERATIVE BANK, FOR PURPOSES OF SECTION 80P OF THE IT ACT. A NY OPINION EXPRESSED THEREFORE IS TENTATIVE AND IS NOT FINAL. THE VIEW EXPRESSED BY THIS COURT, HOWEVER, AS TO THE ASSESSEE BEING A CO-OPERATIVE SO CIETY AND NOT A CO- OPERATIVE BANK IN TERMS OF SECTION 80P(4) OF THE IT ACT, SHALL HOLD THE 12 ITA NO.1794/DEL/2015 FIELD AND SHALL BIND THE AUTHORITIES UNLESS HELD OT HERWISE BY THE RESERVE BANK OF INDIA. IN THE RESULT, THE ABOVE QUESTIONS ARE ANSWERED IN FAVOUR OF THE ASSESSEE AND THE PRESENT APPEAL OF THE REVENUE IS DISMISSED. 2. ACIT VS. PALHAWAS PRIMARY AGRICULTURE CO-OP. SOC IETY LTD., (2012) 23 TAXMANN.COM 318 (DELHI), WHEREIN, THE TRI BUNAL HELD AS UNDER :- HEAD NOTES : THE ASSESSEE WAS A REGISTERED AGRICULTURE CO-OPERAT IVE SOCIETY CARRYING OUT BANKING ACTIVITIES LIKE BORROWING, RAISING OR TAKIN G UP MONEY AND LENDING OR ADVANCING MONEY FOR THE PURPOSE OF AGRICULTURE, SAL E AND PURCHASE OF SEEDS AND FERTILIZERS, ETC. IT WAS ACCEPTING DEPOSITS FROM NO N-MEMBERS ALSO. HOWEVER, CREDIT FACILITIES AND SUPPLY OF SEEDS, UREA, ETC. FOR THE PURPOSE OF AGRICULTURE WERE GIVEN ONLY TO THE MEMBERS OF THE ASSESSEE-SOCI ETY. THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80P(2)(A)(I) AND 80P(2)(A)( IV). THE ASSESSING OFFICER REJECTED THE ASSESSEES CLAIM HOLDING THAT INCOME O F THE ASSESSEE WAS NOT ATTRIBUTABLE TO THE QUALIFYING ACTIVITY OF CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS ME MBERS AND THE PURCHASE OF AGRICULTURAL IMPLEMENTS, SEEDS, LIVESTOCK OR OTHER ARTICLES INTENDED FOR AGRICULTURE FOR THE PURPOSE OF SUPPLYING THEM TO IT S MEMBERS AS THE SIMILAR ACTIVITIES WERE BEING PERFORMED FOR THE NON-MEMBERS ALSO. ON APPEAL, THE COMMISSIONER (APPEALS) HELD THAT MERELY BECAUSE THE ASSESSEE WAS UNABLE TO BIFURCATE THE EXPENDITURE FOR THE DEPOSITS FROM THE MEMBERS AND NON-MEMBERS, DEDUCTION UNDER SECTION 80P(2)(A)(I) AND UNDER SECT ION 80P(2)(A)(IV) COULD NOT BE DENIED. ON REVENUES APPEAL : THE EXEMPTION UNDER SECTION 80P(2)(A) IS AVAILABLE TO THE INCOME OF A COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS OR ACTI VITIES FACILITATING TO ITS MEMBERS AS MENTIONED IN CLAUSES (I) TO (VI) OF SUB- SECTION (A) OF SECTION 80P(2). AS THE PROVISIONS OF SECTION 80P(2)(A)(I) OF THE AC T CLEARLY STATES THAT INCOME EARNED FROM CREDIT FACILITIES TO MEMBERS AND AS PER SUB-CLAUSE (IV), THE PURCHASE OF AGRICULTURAL IMPLEMENTS, SEEDS, LIVESTOCK OR OTH ER ARTICLES INTENDED FOR AGRICULTURE FOR THE PURPOSE OF SUPPLYING THEM TO IT S MEMBERS, THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUSINESS ATTRIBUTED TO ANY ONE OR MORE OF SUCH ACTIVITIES ARE ENTITLED FOR DEDUCTION. FIRST LIMB O F SUB-CLAUSE (I) OF CLAUSE (A) STATES THAT CARRYING ON THE BUSINESS OF BANKING A ND AFTER OR SECOND LIMB STATES THAT AS PROVIDING CREDIT FACILITIES TO ITS MEMBERS, THEREFORE, IT CONSTRUED THAT INCOME FROM BUSINESS OF BANKING AS WELL AS INC OME FROM CREDIT FACILITIES 13 ITA NO.1794/DEL/2015 RESTRICTED TO ITS MEMBERS ONLY ARE ENTITLED FOR DED UCTION AND INCOME FROM NON- MEMBERS IS NOT INCLUDED AND ENTITLED FOR DEDUCTION UNDER SAID PROVISIONS. BUT IN THE PRESENT CASE, IT WAS NOT IN DISPUTE THAT CREDIT FACILITIES AND SUPPLY OF SEEDS, UREA ETC. WERE GIVEN ONLY TO THE MEMBERS OF THE APPELLANT SOCIETY. ONLY WITH REGARD TO THE DEPOSITS, THE APPELLANT BANKING SOCIETY ACCEPTED FROM NON- MEMBERS DOES NOT, IN ANY WAY, AFFECT THE REVENUE GE NERATED BY THE APPELLANT IN PROVIDING CREDIT FACILITIES AND SUPPLY OF OTHER AGR ICULTURE RELATED EQUIPMENTS AND FERTILIZERS ETC. TO ITS MEMBERS. BANKING COOPERATIV E SOCIETY DOES NOT EARN INCOME FROM DEPOSITS BUT IT HAS TO PAY INTEREST ON THE DEP OSITS, THEREFORE, DEPOSITS FROM NON-MEMBERS CAN NEVER EARN INCOME IN THE HANDS OF A SSESSEE ALTHOUGH IF OUT OF DEPOSITS, THE BANK COOPERATIVE SOCIETY HAD PROVIDED CREDIT TO ITS MEMBERS, ONLY THEN THE INCOME ARISING FROM THESE ACTIVITIES ARE E NTITLED FOR DEDUCTION. ON THE BASIS OF FOREGOING DISCUSSION, THE AO WAS NO T JUSTIFIED IN DISALLOWING DEDUCTION ON THIS SOLE GROUND THAT THE INCOME DECLA RED BY THE ASSESSEE INCLUDES INCOME FROM BUSINESS OF BANKING FROM ITS NON-MEMBER S BECAUSE THERE WAS NO INCOME FROM THE SAME ACTIVITIES AS THE ASSESSEE ACC EPTED ONLY DEPOSITS FROM NON- MEMBERS ON WHICH THE ASSESSEE BANK WAS UNDER OBLIGA TION TO PAY INTEREST, THEREFORE, THESE DEPOSITS FROM NON-MEMBERS, IN ANY WAY, NEVER BROUGHT ANY INCOME TO THE ASSESSEE. ACCORDINGLY, THE COMMISSION ER (APPEALS) RIGHTLY ALLOWED THE DEDUCTION AND ACCEPTED THE APPEALS OF ASSESSEE SOCIETIES AND THERE WAS NO REASON TO INTERFERE WITH THE IMPUGNED ORDERS. 3. SIKAR SAHAKARI BHOOMI VIKAS BANK LTD. VS. ITO, ( 2016) 69 TAXMANN.COM 356 (JAIPUR-TRIB.), WHEREIN, THE TRIBUN AL HELD AS UNDER :- 22.2 THE CO-OPERATIVE BANKS ARE FUNCTIONING AT PAR WITH OTHER COMMERCIAL BANKS, WHICH DO NOT ENJOY ANY TAX BENEFIT. THEREFOR E, SECTION 80P HAS BEEN AMENDED AND A NEW SUB SECTION (4) HAS BEEN INSERTED TO PROVIDE THAT THE PROVISIONS OF THE SAID SECTION SHALL NOT APPLY IN R ELATING TO ANY CO-OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. THE EXPRES SIONS 'CO-OPERATIVE BANK', 'PRIMARY AGRICULTURAL CREDIT SOCIETY' AND PRIMARY C O-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANKI' HAVE ALSO BEEN DEFINED TO LEND CLARITY TO THEM. THE ASSESSEE IS NOT A COOPERATIVE BANK AS PER BANKI NG REGULATIONS ACT. COOPERATIVE BANK MEANS 'A STATE COOPERATIVE BANK, A CENTRAL COOPERATIVE BANK AND A PRIMARY COOPERATIVE BANK.' PRIMARY COOPERATIV E BANK AS PER BANKING REGULATIONS ACT IS AS UNDER :- '(CCV) 'PRIMARY CO-OPERATIVE BANK' MEANS A CO-OPERA TIVE SOCIETY, OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY. 14 ITA NO.1794/DEL/2015 AS PER THIS BOARD'S CIRCULAR THIS AMENDMENT WAS APP LICABLE FROM A.Y. 2007-08. IN ASSESSMENT YEAR 2007-08, THE AO HAD ALLOWED THE BENEFIT UNDER SECTION 80P(2)(A)(I) OF THE ACT IN THE CASE OF ASSESSEE. TH IS ISSUE HAS BEEN CONSIDERED BY THE VARIOUS HIGH COURTS AS WELL AS ITATS PARTICULAR LY IN CASE OF ACIT VS. M/S. BANGALORE COMMERCIAL TRANSPORT CREDIT COOPERATIVE S OCIETY LTD. IN ITA NO. 1069/BANG/2010 DATED 8.4.2011. THE OPERATIVE PORTIO N IS REPRODUCED AS UNDER :- '9.3. IF THE INTENTION OF THE LEGISLATURE WAS NOT T O GRANT DEDUCTION U/S 80P(2)(A)(I) TO CO-OPERATIVE SOCIETIES CARRYING ON THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS, THEN, T HIS SECTION WOULD HAVE BEEN DELETED. THE NEW PROVISO TO SECTION 80P(4) WHI CH IS BROUGHT INTO STATUTE IS APPLICABLE ONLY TO CO-OPERATIVE BANKS AN D NOT TO CREDIT CO- OPERATIVE SOCIETIES. THE INTENTION OF THE LEGISLATU RE OF BRING IN CO- OPERATIVE BANKS INTO THE TAXATION STRUCTURE WAS MAI NLY TO BRING IN PAR WITH COMMERCIAL BANKS. SINCE THE ASSESSEE IS A CO-O PERATIVE SOCIETY AND NOT A CO-OPERATIVE BANK, THE PROVISIONS OF SECTION 80P(4) WILL NOT HAVE APPLICATION IN THE ASSESSEE'S CASE AND, THEREFORE, IT IS ENTITLED TO DEDUCTION U/S 80P(2)(A)(I) OF THE ACT ............'. THE FACT S BEING SIMILAR, THE DECISION SQUARELY APPLIES.' THE HON'BLE GUJARAT HIGH COURT ALSO CONSIDERED THIS ISSUE IN THE CASE OF CIT VS. SURAT VANKAR SAHAKARI SANGH LTD. IN TAX APPEAL NO.1 150 OF 2013 DATED 17.01.2014. THE OPERATIVE PORTION IS REPRODUCED AS UNDER :- AFTER CONSIDERING THE AIMS AND OBJECTS OF THE ASSES SEE, IT IS HELD THAT ASSESSEE IS NOT A COOPERATIVE BANK IN TERMS OF BANKING REGULATI ONS ACT. THE CASE LAWS RELIED UPON BY THE CIT (A) ARE NOT SQUARELY APPLICABLE ON THE CASE OF THE ASSESSEE. THEREFORE, WE REVERSE THE ORDER OF LD. CIT(A). ASSE SSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE IT ACT. 10. LD. COUNSEL FURTHER SUBMITTED THAT IN EARLIER YEAR REVENUE HAS ALLOWED DEDUCTION 80P AND, THEREFORE, FOLLOWING THE RULE OF CONSISTING ALSO, THE ASSESSEE SHOULD NOT HAVE BEEN DENIED DEDUCTION U/S 80P. IN THIS REGARD, HE REFERRED TO THE ASSESSMENT ORDER FOR ASSESSMENT YEA R 2009-10 CONTAINED AT PAGE 109 OF PAPER BOOK, WHEREIN, DEDUCTION U/S 80P HAD BEEN ALLOWED TO ASSESSEE. 15 ITA NO.1794/DEL/2015 11. LD. DR SUBMITTED THAT ASSESSEE WAS CARRYING ON BANKING ACTIVITY AS IT WAS RECEIVING DEPOSITS AND PROVIDING CREDIT FACILIT IES TO ITS MEMBERS. HE REFERRED TO LD. CIT(A)S ORDER AND POINTED OUT THAT IT WAS EVIDENT FROM THE CONDUCT OF ASSESSEE OF CHARGING INTEREST @ 12% FROM ITS EMPLOYEES THAT IT WAS PRIMARILY CARRYING ON BANKING TRANSACTIONS. HE SUBMITTED THAT THE CASE RELIED UPON BY ASSESSEE ARE WITH REFERENCE TO BANKI NG LICENCE WHICH IS TO BE DECIDED BY RBI. 12. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE RECORD OF THE CASE. THERE IS NO DISPUTE ABOUT THE NATURE OF ACTIVITY CARRIED ON BY ASSESSEE VIZ. PROVIDING CREDIT FACILITIES TO ITS MEMBERS ONLY AND NOT TO GENERAL PUBLIC. NO DEPOSITS HAD BEEN RECEIVED FROM GENERAL PUBLIC. THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80P(2)(A)(I), HO WEVER, THE ASSESSING OFFICER INVOKED SECTION 80P(4) HOLDING THE ASSESSEE AS A CO-OPERATIVE BANK. THEREFORE, THE MAIN ISSUE TO BE DECIDED IS AS TO WH ETHER ASSESSEE FALLS U/S 80P(2)(A)(I) OR U/S 80P(4). THE ASSESSEE SOCIETY H AD BEEN FORMED FOR THE BENEFIT OF EMPLOYEES OF M/S SRI RAM PISTONS AND RIN GS LTD. AND WAS EXTENDING CREDIT FACILITIES TO ITS MEMBERS/EMPLOYEE S ON THE BASIS OF COOPERATIVE PRINCIPLES. THIS WAS PRIMARILY FOR THE BENEFIT OF ITS MEMBERS ONLY. BEFORE COMING TO ANY CONCLUSION, IT WOULD BE USEFUL TO CONSIDER SECTION 80P(2)(A)(I) AND SECTION 80P(4), WHICH READ S AS UNDER :- 16 ITA NO.1794/DEL/2015 80P (2) THE SUMS REFERRED TO IN SUB-SECTION (1) SHALL B E THE FOLLOWING, NAMELY : (A) IN THE CASE OF A CO-OPERATIVE SOCIETY ENGAGED IN (I) CARRYING ON THE BUSINESS OF BANKING OR PROVIDI NG CREDIT FACILITIES TO ITS MEMBERS .......... 80P (4) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY IN RELATION TO ANY CO- OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CR EDIT SOCIETY OR A PRIMARY CO- OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. EXPLANATION.FOR THE PURPOSES OF THIS SUB-SECTION, (A) 'CO-OPERATIVE BANK' AND 'PRIMARY AGRICULTURAL C REDIT SOCIETY' SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO TH EM IN PART V OF THE BANKING REGULATION ACT, 1949 (10 OF 1949); (B) 'PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DE VELOPMENT BANK' MEANS A SOCIETY HAVING ITS AREA OF OPERATION CONFIN ED TO A TALUK AND THE PRINCIPAL OBJECT OF WHICH IS TO PROVIDE FOR LONG-TE RM CREDIT FOR AGRICULTURAL AND RURAL DEVELOPMENT ACTIVITIES. 13. A BARE READING OF AFOREMENTIONED SECTION MAKES IT CLEAR THAT SECTION 80P(2)(A)(I) USES THE TERM CARRYING ON THE BUSINES S OF BANKING WHEREAS SECTION 80P(4) USES THE TERM CO-OPERATIVE BANK. EXPLANATION TO SECTION 80P(4) DEFINES CO-OPERATIVE BANK AS MEANING ASSIGNE D TO THEM IN PART V OF THE BANKING REGULATIONS ACT. THIS TAKES ME TO SECT ION 3 OF BRA WHICH RESTRICTS ITS APPLICABILITY TO CO-OPERATIVE SOCIETI ES AS UNDER :- (A) A PRIMARY AGRICULTURAL CREDIT SOCIETY; (B) A CO-OPERATIVE LAND MORTAGE BANK; AND (C) ANY OTHER CO-OPERATIVE SOCIETY, EXCEPT IN THE MANNER AND TO THE EXTENT SPECIFIED IN PART V OF BRA. THUS, IT IS EVIDENT TH AT TO A VERY LIMITED EXTENT THE BRA HAS BEEN MADE APPLICABLE TO CO-OPERATIVE SOCIET IES. THEREFORE, VERY STRICT INTERPRETATION IS TO BE MADE. 17 ITA NO.1794/DEL/2015 14. NOW COMING TO SECTION 5 OF THE BRA. THIS READS AS UNDER :- 5. INTERPRETATION (IN THIS ACT) UNLESS THERE IS A NYTHING REPUGNANT IN THE SUBJECT OR CONTEXT 15. THIS IMPLIES THAT THE TERMS DEFINED IN SECTION 5 SHALL HAVE SAME MEANING THROUGHOUT THE ACT UNLESS THE CONTEXT OTHER WISE REQUIRES. THEREFORE, THE TERM BANKING AS DEFINED IN SECTION 5(B) CANNOT BE UNDERSTOOD IN ANY OTHER MANNER THROUGHOUT THE ACT O THER THAN AS DEFINED IN SECTION 5(B), WHICH READS AS UNDER :- 5(B) 'BANKING' MEANS THE ACCEPTING, FOR THE PURPOS E OF LENDING OR INVESTMENT, OF DEPOSITS OF MONEY FROM THE PUBLIC, REPAYABLE ON DEM AND OR OTHERWISE, AND WITHDRAWAL BY CHEQUE, DRAFT, ORDER OR OTHERWISE; 16. ADMITTEDLY, THIS CONDITION AND ALSO OTHER ASPEC TS, AS NOTED ABOVE, IN LD. COUNSELS ARGUMENT HAVE NOT BEEN FULFILLED IN T HE CASE OF ASSESSEE AND, THEREFORE, AT THE VERY THRESHOLD IT CAN BE CONCLUDE D THAT THE ASSESSEE DOES NOT COME WITHIN THE AMBIT OF TERM BANKING. FOR A CO-OPERATIVE SOCIETY TO COME WITHIN THE AMBIT OF SECTION 80P(4), IT IS NECE SSARY THAT IT SHOULD COME WITHIN THE TERM BANKING AS MANDATED UNDER BRA. O N EXAMINATION OF THE PROVISIONS OF SECTION 80P(2)(A)(I), I FIND THAT THE SAID SECTION HAS TWO LIMBS (A) COOPERATIVE SOCIETY SHOULD BE ENGAGED IN CARRYI NG ON THE BUSINESS OF BANKING; AND, (B) PROVIDING CREDIT FACILITIES TO IT S MEMBERS. THUS, IT IS CLEAR 18 ITA NO.1794/DEL/2015 THAT EVERY KIND OF BANKING ACTIVITY, OTHER THAN THE ONE TO BE CARRIED ON BY CO-OPERATIVE BANK AS DEFINED IN PART V OF BRA, WILL COME WITHIN SECTION 80P(2)(A)(I). HAD THE INTENTION OF LEGISLATURE BEE N TO DENY THE BENEFIT OF ALL KINDS OF BANKING ACTIVITY, IT WOULD NOT HAVE RETAIN ED SECTION 80P(2)(A)(I) AFTER INTRODUCING SECTION 80P(4). 17. FROM THE ABOVE, IT IS EVIDENT THAT MERELY BECAU SE A CO-OPERATIVE SOCIETY IS CARRYING ON THE BUSINESS OF BANKING, THE DEDUCTION U/S 80P COULD NOT BE DENIED UNLESS IT COMES WITHIN THE AMBIT OF C OOPERATIVE BANK AS CONTEMPLATED U/S 80P(4). THEREFORE, EVEN IF, IT IS HELD THAT ASSESSEE WAS CARRYING ON ACTIVITY OF BANKING STILL SINCE, IT DID NOT ANSWER THE DESCRIPTION OF BANKING AS CONTEMPLATED UNDER THE BANKING REGU LATIONS ACT, 1949, IT CANNOT BE HELD TO BE COOPERATIVE BANK. LD. CIT(A) HAS REFERRED TO THE PROVISIONS OF SECTION 56(CCV) OF BANKING REGULATION S ACT, 1949 FOR CONCLUDING THE ASSESSEE AS PRIMARY COOPERATIVE BAN K. IN THIS REGARD, IT IS NECESSARY TO EXAMINE AS TO WHAT IS THE PRIMARY OBJE CT OR PRINCIPAL BUSINESS OF ASSESSEE. FROM THE FORGOING DISCUSSION, IT IS C LEAR THAT THERE CANNOT BE ANY DISPUTE THAT IF THE PRIMARY OBJECT OR PRINCIPAL BUSINESS IS BANKING AS CONTEMPLATED UNDER BRA THEN ONLY THE COOPERATIVE SO CIETY WILL COME WITHIN THE AMBIT OF PRIMARY COOPERATIVE BANK. NOW WHAT IS BANKING HAS BEEN DEFINED IN SECTION 5(B) OF THE BANKING REGULAT IONS ACT, 1949 AND 19 ITA NO.1794/DEL/2015 SECTION 56, NOWHERE STATES THAT THE CONTEXT IN WHIC H PRIMARY COOPERATIVE BANK HAS BEEN DEFINED IS IN CONTEXT DIFFERENT FROM THAT AS CONTEMPLATED U/S 5(B) OF THE BANKING REGULATIONS ACT, 1949. THEREFO RE, ONLY THOSE TRANSACTIONS OF BANKING BUSINESS COME WITHIN THE AM BIT OF CLAUSE (CCV) OF SECTION 56 WHICH MEET THE MANDATE OF SECTION 5(B) O F THE BANKING REGULATIONS ACT, 1949. I FIND THAT HONBLE KARNATA KA HIGH COURT IN THE CASE OF SHRI LAXMI CREDIT SOUHARD SAHAKARI LTD. (SU PRA) HAS UPHELD THE CLAIM OF ASSESSEE UNDER IDENTICAL CIRCUMSTANCES AND , THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE KARNATAKA HIGH CO URT, THE ASSESSEES CLAIM IS ALLOWED. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF FEBRUARY, 2017. SD/- (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED : 17-02-2017. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A)- 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI