The Income Tax Officer, Ward -4, Puducherry V. Kalapet Primary Agricultural Co-operative Bank Ltd. , Pondicherry

ITA 2190/CHNY/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4764 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 07-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS S VIJAYAPRABHA IRS
• Assessee Lawyers: T VASUDEVAN
• Section: 56

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . , !' # $! # % . & , ( * + [ BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ] ./ I.T.A. NOS. 2190, 2191, 2192 & 2193/CHNY/2017 / ASSESSMENT YEARS : 2008-09, 2010-2011, 2013- 14 & 2014-15 THE INCOME TAX OFFICER, WARD 4, PUDUCHERRY 605 003 VS. M/S. KALAPET PRIMARY AGRICULTURAL CO-OPERATIVE BANK LTD, KALAPET POST, PUDUCHERRY 605 014. [PAN AAAAK 1570G] ( ,- / APPELLANT) ( ./,- /RESPONDENT) / APPELLANT BY : MRS. S. VIJAYAPRABHA, IRS, JCIT. /RESPONDENT BY : SHRI. T. VASUDEVAN, ADVOCATE / DATE OF HEARING : 06 - 02 - 2018 ! / DATE OF PRONOUNCEMENT : 06 - 02 - 201 8 0 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER THESE ARE APPEALS FILED BY THE REVENUE DIRECTED AGAINST AN ORDER DATED 28.06.2017 OF LD. COMMISSIONER OF INCOM E TAX (APPEALS)- PUDUCHERRY. 2. GROUNDS TAKEN BY THE REVENUE ARE REPRODUCED HEREUND ER:- 1. IT WAS SEEN FROM THE ASSESSMENT ORDER DT. 31.03.2016 THAT ASSESSING OFFICER TREATED THE ASSES SEE AS CO-OPERATIVE BANK BY VIRTUE OF SECTION 80 P( 4) FOR ITA NOS.2190 TO 2193/2017. :- 2 -: THE ACT. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BY RESTRICTING HIS CONSIDERATION TO CLAUS E (CCIV) OF SECTION 56 OF PART-V OF THE BANKING REGUL ATION ACT, 1949 WHERE SUCH RESTRICTION IS NOT APPARENTLY MANDATED VIDE EXPLANATION (A) TO SECTION 80P(4) OF THE INCOME TAX ACT, 1961. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED BY FAILING TO CONSIDER THE STIPULATIONS VIDE CLAUSE (CCV) OF SECTION 56 OF PART-V TOGETHER WITH SECTION 5(B) OF THE BANKING REGULATION ACT, 1949. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BY FAILING TO TAKE NOTE OF THE ASSESSING OFFICER'S FINDING THAT THE ASSESSEE-SOCIETY IS ENGA GED IN BANKING ACTIVITIES VIZ., BUSINESS OF ACCEPTING, FOR THE PURPOSE OF INVESTMENT, OF DEPOSITS OF MONEY FROM TH E PUBLIC, REPAYABLE ON DEMAND OR OTHERWISE AND WITHDRAWAL BY CHEQUE, DRAFT, ORDER OR OTHERWISE . 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BY FAILING TO CONSIDER THE ASSESSING OFFI CER'S OTHER FINDING THAT THE ASSESSEE-SOCIETY'S PAID-UP S HARE CAPITAL AND RESERVES EXCEEDED ONE LAKH OF RUPEES. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BY FAILING TO CONSIDER THAT THE ASSESSEE IS A PRIMARY CO-OPERATIVE BANK WITH REFERENCE TO CLAUSE (CCV) OF SECTION 56 OF PART-V CONSIDERED TOGETHER W ITH SECTION 5(B) OF BANKING REGULATIONS ACT, 1949. 7. THE ITAT IN ITS ORDER IN ITA NO. 634/MDS/2016 AN D 295/MDS/2017 DT: 19.05.2017 HAS REMITTED THE ISSUE BACK TO THE FILE TO THE A.O. FOR FRESH CONSIDERATIO N FOR A.Y. 2009-10 AND THE SAME IS UNDER CONSIDERATION. T HE A.O. HAS BEEN DIRECTED TO CONSIDER BOTH THE ISSUES AFRESH BY THE ITAT. 3. A READING OF THE GROUND TAKEN BY THE REVENUE CLEARL Y INDICATE THAT IT IS AGGRIEVED ON LD. COMMISSIONER OF INCOME TAX (APPEALS) ALLOWING DEDUCTION CLAIMED BY THE ASSESSE E U/S. 80P(2)(A) ITA NOS.2190 TO 2193/2017. :- 3 -: (I) OF THE INCOME TAX ACT, 1961 DESPITE RESTRICTION CONTAINED IN SEC. 80P(4) OF THE ACT. 4. LD. COUNSEL FOR THE REVENUE SUBMITTED THAT LD. COMM ISSIONER OF INCOME TAX (APPEALS) HAD NOT ADDRESSED THE QUEST ION IN A PROPER PROSPECTIVE. AS PER THE LD. DR, SEC. 80P(4) OF THE ACT CLEARLY EXCLUDED CO-OPERATIVE BANKS OTHER THAN PRIMARY AGRICULTURAL CREDIT SOCIETY AND PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELO PMENT BANK FROM THE PURVIEW OF SECTION 80P(2)(A) OF THE ACT. AS PER THE LD. DR, LD. ASSESSING OFFICER HAD GIVEN A CLEAR FINDING THAT AS SESSEE WAS NEITHER AN AGRICULTURAL CREDIT SOCIETY NOR PRIMARY CO-OPER ATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. AS PER THE LD. DR, ASSESSEE WAS ENGAGED IN THE BUSINESS OF BANKING AND HENCE NOT ELIGIBLE FOR DEDUCTION CLAIMED UNDER SECTION 80P(2)(A)(I) OF THE ACT. 5. PER CONTRA, LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT SAME ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSES SEES OWN CASE FOR ASSESSMENT YEAR 2009-2010. AS PER THE LD. AUT HORISED REPRESENTATIVE, THE TRIBUNAL IN ITS ORDER DATED 19. 05.2017 IN ITA NO.634/MDS/2016 AND 295/MDS/2017 HAD REMITTED THE MATTER BACK TO THE LD. ASSESSING OFFICER FOR CONSIDERING THE MATTE R AFRESH. HOWEVER, AS PER THE LD. AUTHORISED REPRESENTATIVE BY VIRTUE OF JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. VEERAKERALAM ITA NOS.2190 TO 2193/2017. :- 4 -: PRIMARY AGRICULTURAL CO-OPERATIVE CREDIT SOCIETY, 388 ITR 492 AND THAT OF HONBLE APEX COURT IN THE CASE OF THE CITIZEN CO-OPERATIVE SOCIETY LTD VS. ACIT, (CIVIL APPEAL NO.10245 OF 2017, DATE D 8.8.2017 ) ASSESSEE COULD NOT BE DENIED DEDUCTION CLAIMED U/S. 80P(2)(A)(I) OF THE ACT. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. LD. COMMISSIONER O F INCOME TAX (APPEALS) HAD FOLLOWED HIS OWN ORDER FOR ASSESSMENT YEAR 2009-2010 WHILE ALLOWING THE APPEAL OF THE ASSESSEE. RELEVANT PARAS 7.1 TO 7.4 OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS REP RODUCED HEREUNDER:- 7.1 I HAVE CONSIDERED THE FACTS OF THE -CASES AS NARRATED BY THE AO IN THE ASSESSMENT ORDER, CLAIMED BY THE ASSESSEE IN THE GROUNDS OF APPEAL AND EXPLAINED BY THE LDAR IN HIS WRITTEN SUBMISSION. 7.2 IN RESPECT OF THE DENIAL OF -DEDUCTION UJS.80P, IN THE ASSESSEE'S OWN CASE FOR THE AY 2009-10 ON A SIMILAR SET OF FACTS, VIDE MY ORDERS IN ITA NO.223/CIT(A}- PDY/2013-14 DATED 31/12/2015 HELD THAT THE ASSESSEE IS NOT A 'PRIMARY CO- OPERATIVE AGRICULTURAL BANK' WITHIN THE MEANING AS PROVIDED IN SEC:80P(4)(B) AND FURTHER THAT THE ASSESSEE SATISFIES THE SECOND CONDITION OF S.56(CCI V) OF THE BANKING REGULATION ACT AND THUS HELD THAT AS TH E ASSESSEE IS A PRIMARY AGRICULTURAL CREDIT SOCIETY, IT CONTINUES TO BE ELIGIBLE FOR DEDUCTION U/ S.80P EVEN AFTER THE INSERTION OF SUB-SECTION (4) BY THE FINAN CE ACT, 1967. 7.3 AS REGARDS THE DISALLOWANCE ON ACCOUNT OF NON- DEDUCTION OF TOS ON INTEREST, IN A SIMILAR SET OF FACTS FOR THE AY 2009-10 IN THE ASSESSEE'S OWN CASE VIDE MY ORDERS IN ITA NO.7/CIT{A}-PDY/2015-16 DATED ITA NOS.2190 TO 2193/2017. :- 5 -: 31/12/2015 HELD THAT AS THE ASSESSEE IS HELD TO BE A PRIMARY AGRICULTURAL CREDIT SOCIETY.. THERE IS NO MANDATE TO DEDUCT THE TAX AT SOURCE ON THE INTEREST CREDITED OR PAID BY IT. 7.4 CONSISTENT WITH THE ABOVE VIEW, I HOLD THAT THE ASSESSEE IS ELIGIBLE FOR THE DEDUCTION CLAIMED U/ S.80P AND THAT THE TDS PROVISIONS DO NOT APPLY TO THE FACTS OF THE CASE. REVENUE CAME IN APPEAL BEFORE THE TRIBUNAL FOR ASSE SSMENT YEAR 2009-2010. WHAT WAS HELD BY THE TRIBUNAL IN ITS OR DER DATED 19.05.2017 IN ITA NO.634/MDS/2016 AND 295/MDS/2017 AT PARA NOS. 5 & 6 IS REPRODUCED HEREUNDER:- 5. IN SUMMATION THE ASSESSEE, A CO-OPERATIVE SOCI ETY, CLAIMED DEDUCTION UNDER SECTION 80-P OF THE ACT ON ITS ENTIRE INCOME/PROFIT FOR THE YEAR. SECTION 80P OF THE ACT IS IN RESPECT OF DEDUCTION ON THE INCOMES SPECIFIED THERE-UNDER O F A CO- OPERATIVE SOCIETY. SUB-SECTION (1) SPELLS OUT THE C ONTOURS OF THE DEDUCTION, I.E., TO AN ASSESSEE, BEING A CO-OPE RATIVE SOCIETY, THE GROSS TOTAL INCOME OF WHICH INCLUDES A NY INCOME REFERRED TO IN SUB-SECTION (2), ALLOWING DEDUCTION IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF TH E SAID SECTION. WITH REGARD TO A COOPERATIVE SOCIETY CARRY ING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS, IT IS THE WHOLE AMOUNT OF PROFITS OR GAINS OF THE BUSINESS ATTRIBUTABLE TO SUCH ACTIVITY. SUB-SECTION (4), INSERTED BY FINANCE ACT, 2006 W.E.F. 01.4.2007, PROVIDES THA T THE PROVISIONS OF SEC. 80P SHALL NOT APPLY IN RELATION TO A CO- OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AN D RURAL DEVELOPMENT BANK. WHILE THE FORMER TWO TERMS ARE T O HAVE THE SAME MEANING AS RESPECTIVELY ASSIGNED TO THEM I N PART V OF THE BANK REGULATION ACT, 1949 (BR ACT FOR SHOR T), A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELO PMENT BANK STANDS DEFINED VIDE EXPLANATION (B) THERETO. THE ASSESSEES CLAIM WAS DISALLOWED BY THE AO IN ASSESS MENT ON THE GROUND THAT THE ASSESSEE-SOCIETY IS A PRIMARY C OOPERATIVE BANK, A TERM DEFINED UNDER THE BR ACT, AS A CO-OPER ATIVE- SOCIETY, OTHER THAN A PRIMARY AGRICULTURAL CREDIT S OCIETY, WHOSE PRIMARY OBJECT OR PRINCIPAL BUSINESS IS THE T RANSACTION OF BANKING BUSINESS. FURTHER QUALIFICATIONS (FOR IT TO BE SO ITA NOS.2190 TO 2193/2017. :- 6 -: REGARDED), AND WHICH ARE SATISFIED IN THE PRESENT C ASE, IS THAT ITS PAID-UP CAPITAL IS NOT LESS THAN ONE LAKH OF R UPEES AND, FURTHER, THAT ITS BYE-LAWS DO NOT PERMIT ADMISSION OF ANY OTHER CO-OPERATIVE SOCIETY AS A MEMBER. AT THIS STAGE, IT MAY BE CLARIFIED THAT IN VIEW OF THE BANKING LAWS (APPLICA TION TO COOPERATIVE SOCIETIES) ACT, 1965, THE BR ACT, TO TH E EXTENT SPECIFIED THERE-UNDER, APPLIES TO CO-OPERATIVE SOCI ETIES. SEC. 56 (FALLING UNDER PART-V) OF THE BR ACT, IS RELEVAN T IN THIS REGARD AND IS EXTRACTED AS UNDER IN ITS RELEVANT PA RT: PART V OF BANKING REGULATION ACT, 1949: APPLICATION OF THE ACT TO CO-OPERATIVE BANKS ACT TO APPLY TO CO-OPERATIVE SOCIETIES SUBJECT T O MODIFICATION 56. THE PROVISIONS OF THIS ACT, AS IN FORCE FOR TH E TIME BEING, SHALL APPLY TO, OR IN RELATION TO, CO- OPERATIVE SOCIETIES AS THEY APPLY TO, OR IN RELATIO N TO, BANKING COMPANIES SUBJECT TO THE FOLLOWING MODIFICATIONS, NAMELY : (A) THROUGHOUT THIS ACT, UNLESS THE CONTEXT OTHERWISE REQUIRES, (I) REFERENCES TO A BANKING COMPANY OR THE COMPANY OR SUCH COMPANY SHALL BE CONSTRUED AS REFERENCES TO A CO-OPERATIVE BANK, (II) REFERENCES TO COMMENCEMENT OF THIS ACT SHALL BE CONSTRUED AS REFERENCES TO COMMENCEMENT OF THE BANKING LAWS (APPLICATION TO COOPERATIVE SOCIETIES) ACT, 1965 (23 OF 1965) ; (B) IN SECTION 2, THE WORDS AND FIGURES THE COMPANIES ACT, 1956 (1 OF 1956), AND SHALL BE OMITTED ; (C) IN SECTION 5, (I) AFTER CLAUSE (CC), THE FOLLOWING CLAUSES SHALL BE INSERTED, NAMELY:- (CCI) CO-OPERATIVE BANK MEANS A STATE CO- OPERATIVE BANK, A CENTRAL COOPERATIVE BANK AND A PRIMARY CO-OPERATIVE BANK; (CCII) ; (CCIIA) CO-OPERATIVE SOCIETY MEANS A SOCIETY REGISTERED OR DEEMED TO HAVE BEEN REGISTERED UNDER ANY CENTRAL ACT FOR THE TIME BEING IN FORCE RELATING TO THE MULTI-STATE CO-OPERATIVE SOCIETIES, OR ANY OTHER CENTRAL OR STATE LAW RELATING TO COOPERATIVE SOCIETIES FOR THE TIME BEING IN FORCE; (CCIV) (EXTRACTED EARLIER) (CCV) PRIMARY CO-OPERATIVE BANK MEANS A CO- OPERATIVE SOCIETY, OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY, ITA NOS.2190 TO 2193/2017. :- 7 -: (1) THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF WHICH IS 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 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 COOPERATIVE BANK SUBSCRIBING TO THE SHARE CAPITAL OF SUCH COOPERATIVE SOCIETY OUT OF FUNDS PROVIDED BY THE STATE GOVERNMENT FOR THE PURPOSE; (CCVI) PRIMARY CREDIT SOCIETY MEANS A CO-OPERATIVE SOCIETY, OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY,- IN APPEAL, THE ASSESSEE CLAIMED TO BE A PRIMARY CO- OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK, A SPECIES OF A PRIMARY CO-OPERATIVE BANK, DEFINED IN SECTION 80-P, WHICH E XCEPTS SUCH A BANK FROM THE OPERATION OF SECTION 80- P(4), WHICH SUB-SECTION, INSERTED BY FINANCE ACT, 2006, W.E.F. 01.4.2007, EX CLUDES A CO- OPERATIVE BANK FROM THE PURVIEW OF SECTION 80-P(1). REFERENCE HERE MAY ALSO BE DRAWN TO S. 2(24)(VIIA), ALSO INSE RTED ALONG WITH, INCLUDING THE PROFITS AND GAINS OF ANY BUSINESS OF BANKING, OR PROVISION OF CREDIT FACILITIES TO ITS MEMBERS, BY A CO-OPERATIVE SOCIETY, IN THE DEFINITION OF INCOME, INCLUSIVELY D EFINED U/S. 2(24). THE LD. CIT(A), WITH REFERENCE TO THE ASSESSEES BY E-LAWS, FOUND IT TO BE NOT SO IN-AS-MUCH AS THE ASSESSEE IS ENGAGED IN, AMONG OTHERS, PROVIDING SHORT-TERM AND MEDIUM-TERM CREDIT FOR AGRICULTURAL PURPOSES. THE ASSESSEE, HOWEVER, WAS F OUND BY HIM TO BE A PRIMARY AGRICULTURAL CREDIT SOCIETY, I.E., A C O-OPERATIVE SOCIETY WHOSE PRIMARY OBJECT OR PRINCIPAL BUSINESS IS TO PROVIDE FINANCIAL ACCOMMODATION TO ITS MEMBERS FOR AGRICULT URAL AND ALLIED PURPOSES, EXCEPTED U/S. 80-P(4). IN FURTHER APPEAL BY THE REVENUE, WHILE IT CHALLENGES THE FINDING ON THE BAS IS OF WHICH THE ASSESSEE STANDS ALLOWED RELIEF, THE ASSESSEE SUPPOR TS THE IMPUGNED ORDER. WITHOUT DOUBT, UPON AMENDMENT BY FINANCE ACT , 2006, A CO-OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF BAN KING OR PROVISION OF CREDIT FACILITIES TO ITS MEMBERS, WHIC H (BUSINESSES) ARE THUS REGARDED AT PAR (ALSO REFER S. 2(24)(VIIA)), O NLY SOCIETIES EXCEPTED U/S. 80-P(4) WOULD QUALIFY FOR DEDUCTION U /S. 80-P(1). THE LAW IN THE MATTER IS AMPLY CLEAR, WITH THE HON BLE JURISDICTIONAL HIGH COURT IN CIT V. MADRAS AUTORICK SHAW DRIVERS COOPERATIVE SOCIETY LTD. [1983] 143 ITR 981 (MAD) ( AFFIRMED IN [2001] 249 ITR 330 (SC)), CLARIFYING THAT DEDUCTION U/S. 80-P IS ASSESSEE SPECIFIC, SO THAT THE SAME SHALL EXTEND TO ELIGIBLE SOCIETIES ONLY. TAXING STATUTES, IT IS WELL SETTLED, ARE TO B E STRICTLY CONSTRUED ITA NOS.2190 TO 2193/2017. :- 8 -: (VIZ. UOI VS. BOMBAY ELPHINSTONE SPINNING & WEAVING CO. LTD. & ORS. 2001(1) SC 536;); MORE SO AN EXEMPTION PROVISI ON, CAST AS IT DOES AN EXCEPTION FROM THE GENERAL RULE AND NATURAL TENOR OF THE STATUTE (ORISSA STATE WAREHOUSING CORPN. VS. CIT [1 999] 237 ITR 589 (SC); NOVAPAN INDIA LTD. V. CCE 1994 (73) ELT 7 69 (SC)), AND IS ACCORDINGLY TO BE INTERPRETED ONLY IN TERMS OF THE LANGUAGE USED BY THE STATUE (BOMBAY ELPHINSTONE SPINNING & W EAVING CO. LTD. (SUPRA); IPCA LABORATORY LTD. V. DY. CIT [2004 ] 266 ITR 521 (SC)). NOT TO DO SO, I.E., TO TAKE COGNIZANCE O F THE SAME, INTERPRETING IT BY APPLYING THE RECOGNIZED INTERPRE TATIVE PROCESSES, AMOUNTS TO LEGISLATING, WHICH THE COURTS OF LAW, CA NNOT, EVEN AS CLARIFIED BY THE APEX COURT TIME AND AGAIN, FURTHER CLARIFYING IN CBI VS. KESHUB MAHINDRA & OTHERS [IN CURATIVE PETIT ION NOS. 39- 42 OF 2010 IN CRIMINAL APPEAL NOS. 1672 1675 OF 199 6] THAT NO COURT, INCLUDING ITSELF, COULD READ THE LAW IN A MA NNER SO AS TO NULLIFY THE EXPRESS PROVISIONS OF AN ACT OR CODE (P ARA 4 OF THE DECISION). COMING BACK TO THE FACTS OF THE CASE, WE OBSERVE THAT WHILE THE FINDING OF THE ASSESSEE BEING A PRIMARY C O-OPERATIVE BANK, I.E., BY THE ASSESSING AUTHORITY, HAS NOT BEE N DISPUTED, THE FINDING AS TO IT BEING A PRIMARY AGRICULTURAL CREDI T SOCIETY CANNOT BE SAID TO BE CORRECT ON FACTS ON RECORD, AS ITS B YE-LAWS CLEARLY PROVIDE, AND IN NO SMALL MEASURE, FOR EXTENSION OF CREDIT TO ITS MEMBERS BY THE ASSESSEE FOR NON-AGRICULTURAL PURPOS ES. IN-AS- MUCH AS, HOWEVER, THE ASSESSEES PRINCIPAL BUSINESS , IN PURSUANCE TO SOME OF ITS OBJECTS, COULD YET BE TO FINANCE AG RICULTURAL AND ALLIED ACTIVITIES, IT, NEVERTHELESS AND DESPITE ITS OBJECTS, MAY BE A PRIMARY AGRICULTURAL CREDIT SOCIETY, ELIGIBLE FOR D EDUCTION U/S. 80- P(1) R/W S. 80-P(4); IT ADMITTEDLY BEING NOT A PRIM ARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. IN OTHER W ORDS, IT BEING A PRIMARY CO-OPERATIVE BANK, ONE OF THE THREE COOPE RATIVE BANKS, SHALL NOT BE A LIMITING FACTOR, OR SHALL BECOME AN IRRELEVANT CONSIDERATION WHERE THE ASSESSEE IS SHOWN TO BE A P RIMARY AGRICULTURAL CREDIT SOCIETY; RATHER, THE DEFINITION OF THE FORMER EXCLUDES THE LATTER (S.5(CCV) OF THE BR ACT). THE O NLY OPTION AVAILABLE FOR THE ASSESSEE IS OF ITS CLAIM BEING E XAMINED ON THIS ASPECT, AND THE ISSUE DETERMINED ON THE BASIS OF A FINDING IN THE MATTER, A QUESTION OF FACT, ALLOWING IT AN OPPORTUN ITY TO EXHIBIT ITS CASE IN THE MATTER, WITH REFERENCE TO ITS PRINCIPAL OR DOMINANT BUSINESS. WE ARE CONSCIOUS THAT THE ASSESSEE HAS AT NO STAGE CLAIMED TO BE SO, I.E., TO BE A PRIMARY AGRICULTURA L CREDIT SOCIETY; RATHER, STATING OF ITS CLAIM TO HAVE BEEN ERRONEOU SLY SO REGARDED BY THE AO (REFER STATEMENT OF FACTS FORMING PART OF THE MEMO OF APPEAL BEFORE THE LD. CIT(A)). AND, FURTHER, OF THE CLAIM BY ITS COUNSEL BEFORE US AS WITHOUT REFERENCE TO AND DE HO RS ANY MATERIAL ON RECORD; NAY, CONTRARY THERETO. THE QUESTION, HOW EVER, IS ONE OF FACT, ON WHICH WE FIND NO EXAMINATION AT ANY STAGE, SO THAT THE ITA NOS.2190 TO 2193/2017. :- 9 -: CLAIM MAY WELL BE TRUE AND, IN ANY CASE, REMAINS TO BE DETERMINED. IT NEEDS TO BE APPRECIATED THAT IT IS T HE CORRECT LEGAL POSITION THAT IS RELEVANT, AND NOT THE VIEW THAT TH E PARTIES MAY TAKE OF THEIR RIGHTS IN THE MATTER (CIT V. C. PARAKH & C O. (INDIA ) LTD. [1956] 29 ITR 661 (SC); KEDARNATH JUTE MFG. CO. LTD . V. CIT [1971] 82 ITR 363 (SC)). FINALLY, EVEN WHERE THE AS SESSEE SUCCEEDS, IT BEING ONLY ON THE BASIS OF ITS PRINC IPAL BUSINESS, WHICH, COULD VARY IN ITS COMPOSITION FROM YEAR TO YEAR, I.E., IN RESPONSE TO THE MARKET (SUPPLY AND DEMAND) FORCES, THE ASSESSEE- BANKS CLAIM WOULD NECESSARILY REQUIRE BEING REVIEW ED ON A YEAR TO YEAR BASIS, AND DECIDED ON THE BASIS OF FACTS FO UND. TWO, THE DEDUCTION U/S. 80P(1) SHALL BE NECESSARILY RESTRICT ED TO THE INCOME FROM THE ACTIVITIES, AS WELL AS THE INCOME/S, SPECI FIED U/S. 80P(2). THE MATTER, ACCORDINGLY, IS RESTORED TO THE FILE OF THE AO TO DETERMINE THE ASSESSEES CLAIM AS MADE BEFORE US, I .E., OF ITS PRINCIPAL BUSINESS BEING TO PROVIDE FINANCIAL ACCOM MODATION TO ITS MEMBERS FOR AGRICULTURAL (AND ALLIED) ACTIVITIES. T HE WORD PRINCIPAL, A WORD OF COMMON USAGE, IS WELL UNDERS TOOD BOTH IN LAW AND IN COMMON PARLANCE. ITS USE, IN CONJUNCTION WITH THE WORDS PRIMARY OBJECT, AS EXPLAINED IN MADRAS AUTO RICKSHAW DRIVERS COOPERATIVE SOCIETY LTD. (SUPRA), IS TO AS CERTAIN THE CHARACTER OF THE BUSINESS BEING ACTUALLY CARRIED OU T BY THE SOCIETY IN TERMS OF ITS OBJECTS. THE MAINTAINABILITY OF SE CTION 194A(3)(VIIA), ON THE BASIS OF WHICH RELIEF STANDS ALLOWED TO THE ASSESSEE BY THE LD. CIT(A) IN THE REVENUES SECOND APPEAL, IS CONSEQUENTIAL, THOUGH THE ASSESSEE, A CO-OPERATIVE SOCIETY IN THE BUSINESS OF BANKING, IS AT LIBERTY TO ADVANCE ITS CASE, I.E., AS TO THE NON-APPLICATION OF SECTION 194A(1), ALTERNATIVELY, ON ANY OTHER GROUND/BASIS IN THE SET-ASIDE PROCEEDINGS. THE AO S HALL DECIDE PER A SPEAKING ORDER, ALLOWING THE ASSESSEE A REASO NABLE OPPORTUNITY TO STATE AND PRESENT ITS CASE BEFORE H IM. THE ONUS TO ESTABLISH ITS CLAIM/S, WE MAY THOUGH CLARIFY, WOULD BE STRICTLY ON THE ASSESSEE. WE DECIDE ACCORDINGLY. 6. IN THE RESULT, THE REVENUES APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. FOLLOWING THE ABOVE DECISION OF CO-ORDINATE BENCH , WE SET ASIDE THE ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) FOR THE IMPUGNED ASSESSMENT YEARS ALSO AND REMIT THE ISSUE BACK TO LD. ASSESSING OFFICER FOR CONSIDERATION AFRESH. WE MAY HASTEN TO ADD THAT LD. ASSESSING OFFICER HAS TO CONSIDER THE JUDGMENT OF HONBLE ITA NOS.2190 TO 2193/2017. :- 10 -: JURISDICTIONAL HIGH COURT IN THE CASE OF VEERAKERALAM PRIMARY AGRICULTURAL CO-OPERATIVE CREDIT SOCIETY (SUPRA) A S WELL AS THAT HONBLE APEX COURT IN THE CASE OF THE CITIZEN CO-OPERATIVE SOCIETY LTD VS. ACIT, (CIVIL APPEAL NO.10245 OF 2017, DATED 8.8.20 17 ) WHILE DECIDING THE ISSUE AFRESH. ASSESSEE SHALL BE GIVEN PROPER O PPORTUNITY TO EXPLAIN ITS ELIGIBILITY FOR CLAIMING DEDUCTION U/S.80P(2)(A ) (I) OF THE ACT. 7. IN THE RESULT, THE APPEALS OF THE REVENUE STAND ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 6 TH FEBRUARY, 2018, 2018, AT CHENNAI. SD/- SD/- ( # $! # % . & ) ( DUVVURU RL REDDY ) ( / JUDICIAL MEMBER ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER '# / CHENNAI $% / DATED:6 TH FEBRUARY, 2018. KV %& '()( / COPY TO: 1 . / APPELLANT 3. *+, / CIT(A) 5. (-. / / DR 2. / RESPONDENT 4. * / CIT 6. .01 / GF