Income Tax Officer, Ward-1, Belgaum V. Shri. Brahmanath Co. Op. Credit Souhard Sahakari Niyamit., Belgaum

ITA 225/PAN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79687 (ITAT-PANAJI)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-07-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 29-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: U G AMMANAGI
• Assessee Lawyers: NISHANT K LD
• Keywords: Recovery proceedings; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA , HONBLE JUDICIAL MEMBER ITA NO. 225 / PNJ /201 3 : (ASST. YEAR : 2010 - 1 1 ) INCOME TAX OFFICER , WARD - 1, NIPANI, BELGAUM DISTRICT . (APPELLANT) VS. SHRI BRAHM A NA TH CO - OP CREDIT SOUHARD SAHAKARI NIYAMIT , 185/C, CHIKODI ROAD, NIPANI, DIST. BELGAUM . PAN : AAAAS1063Q (RESPONDENT) ASSESSEE BY : NISHANT K. , LD. DR REVENUE BY : U.G. AMMANAGI, C.A DATE OF HEARING : 02 / 0 7 / 2014 DATE OF PRONOUNCEMENT :04 /0 7 /2014 O R D E R PER P.K. BANSAL THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A), BELGAUM DT D . 2 5 . 6.2013 FOR A.Y. 2010 - 1 1 BY TAKING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: 1. THE LEARNED CIT( APPEALS) ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT THE ASSESSEE IS A CO - OPERATIVE SOCIETY WHICH FULFILS ALL THE THREE CONDITIONS OF BEING HELD A PRIMARY CO - OPERATIVE BANK AS GIVEN IN SECTION 5(CCV) OF THE BANKING REGULATION ACT, 1949. 2. THE LEARNED CIT(APPEALS) ERRED IN RELYING ON THE PROVISIONS OF THE KARNATAKA SOCIETIES ACT, 1959 WHICH GIVES THE DEFINITION OF A CO - OPERATIVE SOCIETY TO MEAN A SOCIETY REGISTERED OR DEEMED TO BE REGISTERED UNDER THAT ACT. THE ABOVE DEFINITION OF CO - OPER ATIVE SOCIETY APPEARS IN THE KARNATAKA CO - OPERATIVE SOCIETIES ACT, 1959 AND THE DEFINITION OF CO - OPERATIVE SOCIETY MEANS A SOCIETY REGISTERED UNDER THAT ACT. 3. THE LEARNED CIT(APPEALS) ERRED IN LAW AND ON FACTS IN RELYING ON THIS DEFINITION WHICH WAS APPL ICABLE TO THE KARNATAKA CO - OPERATIVE SOCIETIES ACT, 1959 ONLY TO DEEM IT TO INCLUDE CO - OPERATIVE SOCIETIES UNDER THE KARNATAKA SOCIETIES REGISTRATION ACT, 1960. THE KARNATAKA SOCIETIES REGISTRATION ACT, 1960 DOES NOT APPLY TO A CO - OPERATIVE SOCIETY BUT ON LY APPLIES TO THE SOCIETIES REGISTERED UNDER THAT ACT. 4. THE LEARNED CIT(APPEALS) ERRED IN LAW AND ON FACTS IN ALLOWING DEDUCTION UNDER SECTION 80P(2)(A)(I) TO THE ASSESSEE IGNORING THE FACT THAT THE ASSESSEE 2 ITA NO.225/PNJ/2013 (ASST. YEAR : 2010 - 11) DOES NOT PERMIT CO - OPERATIVE SOCIETIES TO BECO ME A MEMBER AND AS SUCH, SATISFY CONDITIONS TO BECOME PRIMARY CO - OPERATIVE BANK. 5. THE LEARNED CIT(APPEALS) ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE DEFINITION OF A CO - OPERATIVE BANK WHICH AS PER EXPLANATION BELOW SECTION 80P(4) THE CO - OPERATIVE BANK SHALL HAVE THE MEANING ASSIGNED TO IT IN PART - V OF THE BANKING REGULATION ACT, 1949. 6. THE LEARNED CIT(APPEALS) ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT THE ASSESSEE SOCIETY BEING A CREDIT CO - OPERATIVE SOCIETY ENGAGED IN BANKING BUSINESS IS A PRIMARY CO - OPERATIVE BANK WITHIN THE DEFINITION OF SECTION 5(CCV) OF THE BANKING REGULATION ACT, 1949 AND AS SUCH, NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE I.T. ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASS ESSEE IS A SOUHARDA SAHAKARI REGISTERED UNDER THE KARNATAKA SOUHARDA SAHAKARI CO - OPERATIVE SOCIETIES ACT, 1997. THE ASSESSEE FILED RETURN DECLARING GROSS TOTAL INCOME OF RS. 2,27,37,837 / - AND CLAIMED DEDUCTION U/S 80P(2)(A)(I) AND THEREFORE NET TAXABLE IN COME WAS SHOWN TO BE NIL. THE AO DID NOT ALLOW THE DEDUCTION TO THE ASSESSEE U/S 80P(2)(A)(I) AND THE INCOME WAS ASSESSED AT RS.2 , 27,37,840 / - . THE AO WHILE DENYING THE DEDUCTION TO THE ASSESSEE U/S 80P(2)(A)(I) TOOK THE VIEW THAT THE ASSESSEE IS A PRIMA RY CO - OPERATIVE BANK AND THEREFORE PROVISIONS OF SEC. 80P(4) ARE APPLICABLE IN THE CASE OF THE ASSESSEE. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 2.1 THE LD. DR, VEHEMENTLY CONTENDED THAT THE ASSES SEE IS A CO - OPERATIVE BANK. IN VIEW OF THE DEFINITION OF THE CO - OPERATIVE BANK GIVEN UNDER EXPLANATION TO SEC. 80P(4) THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BANKING. SEC. 80P(4) PUTS AN EMBARGO W.E.F. 1.4.2007 THAT IF A CO - OPERATIVE SOCIETY IS CARRYI NG ON BANKING BUSINESS, THE ASSESSEE WILL NOT BE ENTITLED FOR THE EXEMPTION. RELIANCE WAS PLACED ON THE DECISION OF HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF THE CITIZEN CO - OPERATIVE SOCIETY VS. ADDL. CIT IN ITA NOS. 1003/HYD/2011 & 1004/HYD/2011 DT. 2.7.2012. 3 ITA NO.225/PNJ/2013 (ASST. YEAR : 2010 - 11) 2.2 THE LD. AR BEFORE US VEHEMENTLY CONTENDED THAT THE ISSUE INVOLVED IS DULY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS TRIBUNAL IN ITA NO.154/PNJ/2013 FOR ASSESSMENT YEAR 2009 - 10 DATED 28.3.2014. 2.3 WE HEARD THE RIVAL SUBM ISSIONS AND HAVE ALSO GONE THROUGH THE DECISION OF THIS TRIBUNAL IN ITA NO. 154/PNJ/2013 FOR ASSESSMENT YEAR 2009 - 10 DATED 28.3.2014 IN THE CASE OF THE ASSESSEE. WE NOTED IN THAT CASE THIS TRIBUNAL DISMISSING THE APPEAL OF THE REVENUE HELD AS UNDER : - 3 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONGWITH THE ORDER OF THE TAX AUTHORITIES BELOW AS WELL AS THE DECISIONS AND THE ENTIRE MATERIAL AND CASE LAWS REFERRED TO BEFORE US. THE QUESTION BEFORE US IS WHETHER THE ASSESSEE I S ENTITLED FOR DEDUCTION U/S 80P(2)(A)(I) AND WHETHER THE ASSESSEE IS HIT BY THE PROVISIONS OF SEC. 80P(4) WHICH WAS INTRODUCED IN THE STATUTE BY THE FINANCE ACT, 2006 W.E.F. 1.4.2007. THE RELEVANT PROVISIONS OF BOTH THE SECTIONS ARE RE - PRODUCED FOR OUR R EADY REFERENCE AS UNDER : 80P. (1) WHERE, IN THE CASE OF AN ASSESSEE BEING A CO - OPERATIVE SOCIETY, THE GROSS TOTAL INCOME INCLUDES ANY INCOME REFERRED TO IN SUB - SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THI S SECTION, THE SUMS SPECIFIED IN SUB - SECTION (2), IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. (2) THE SUMS REFERRED TO IN SUB - SECTION (1) SHALL BE THE FOLLOWING, NAMELY : (A) IN THE CASE OF A CO - OPERATIVE SOCIETY ENGAGED IN (I) CARRYING ON THE BUSIN ESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS, OR THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUSINESS ATTRIBUTABLE TO ANY ONE OR MORE OF SUCH ACTIVITIES. 80P(4) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY IN RELATION TO ANY CO - OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT 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 CREDIT SOCIETY' SHA LL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO THEM IN PART V OF THE BANKING REGULATION ACT, 1949 (10 OF 1949); (B) 'PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK' MEANS A SOCIETY HAVING ITS AREA OF OPERATION CONFINED TO A TALUK AND THE PRINCIPAL OBJECT OF WHICH IS TO PROVIDE FOR LONG - TERM CREDIT FOR AGRICULTURAL AND RURAL DEVELOPMENT ACTIVITIES. 3.1 FROM THE PLAIN READING OF SEC. 80P(2)(A)(I) IT IS APPARENT THAT IF THE CO - OPERATIVE SOCIETY IS ENGAGED IN CARRYING OF BUSINESS OF BANKING OR PROVIDING CREDIT 4 ITA NO.225/PNJ/2013 (ASST. YEAR : 2010 - 11) FACILITIES TO ITS MEMBERS, THE CO - OPERATIVE SOCIETY IS ENTITLED FOR DEDUCTION ON WHOLE OF THE INCOME RELATING TO ANY ONE OR MORE OF SUCH BUSINESS. FROM THE READING OF SEC. 80P(4) IT IS APPARENT THAT THIS SECTION DENIES DEDUCTI ON TO A CO - OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. THE PROVISIONS OF SEC. 80P(4) WAS INTRODUCED IN THE STATUTE BY THE FINANCE ACT, 2006 W.E.F. 1.4.2007. THE EXPLANAT ION TO THE SECTION DEFINES THE CO - OPERATIVE BANK AND PRIMARY AGRICULTURAL CREDIT SOCIETY TO HAVE THE SAME MEANING AS ASSIGNED TO THEM IN PART - V OF THE BANKING REGULATION ACT, 1949. IT IS NOT THE CASE OF EITHER OF THE PARTIES THAT THE ASSESSEE IS A PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. IT IS ALSO NOT THE CLAIM OF THE ASSESSEE THAT ASSESSEE IS A PRIMARY AGRICULTURAL CREDIT SOCIETY. IF WE READ BOTH THE SECTIONS, SEC. 80P(2)(A)(I) AND SEC. 80P(4) TOGETHER, WE FIND THAT THE PROVISIONS OF SEC. 80P(4) MANDATES THAT THE PROVISIONS OF SEC. 80P WILL NOT APPLY TO ANY CO - OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK BUT AS PER THE PROVISIONS OF SEC. 80P(2)(A)(I), A CO - OPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS IS ENTITLED FOR DEDUCTION. AFTER THE INSERTION OF SEC. 80P(4), THE PROVISIONS OF SEC. 80P(2)(A)(I) WERE NOT AMENDED, RATHER THE CO - OPERATI VE SOCIETY ENGAGED IN CARRYING ON BUSINESS OF BANKING FACILITIES TO ITS MEMBERS CONTINUED TO BE ENTITLED FOR DEDUCTION U/S 80P(2)(A)(I). THIS PRE - SUPPOSES THAT EVERY CO - OPERATIVE SOCIETY ENGAGED IN CARRYING ON BUSINESS OF BANKING CANNOT BE REGARDED TO BE A CO - OPERATIVE BANK. THE EMBARGO PUT U/S 80P(4) ARE APPLICABLE ONLY TO A CO - OPERATIVE BANK. IN OUR OPINION, IT CANNOT BE SAID THAT A CO - OPERATIVE SOCIETY CANNOT CARRY ON BUSINESS OF BANKING FACILITIES TO ITS MEMBERS EVEN IF IT IS NOT A CO - OPERATIVE BANK. IF WE READ THE PROVISIONS IN THE MANNER THAT EVERY CO - OPERATIVE SOCIETY ENGAGED IN CARRYING ON BUSINESS OF BANKING EVEN FOR ITS MEMBERS IS REGARDED TO BE A CO - OPERATIVE BANK, THEN, THE PROVISIONS OF SEC. 80P(2)(A)(I) WILL BECOME REDUNDANT. THEREFORE, IN OUR OPINION, BEFORE DECIDING THE ISSUE WHETHER THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80P(2)(A)(I), IT IS ESSENTIAL TO DECIDE WHETHER THE ASSESSEE IS A CO - OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO - OPERATIVE AGRICU LTURAL AND RURAL DEVELOPMENT BANK. IN CASE IT IS FOUND THAT THE ASSESSEE IS A CO - OPERATIVE BANK, THE ASSESSEE WILL NOT BE ENTITLED FOR DEDUCTION AS STIPULATED U/S 80P(2)(A)(I) BUT IN CASE THE ASSESSEE IS NOT A CO - OPERATIVE BANK OTHER THAN A PRIMARY AGRICU LTURAL CREDIT SOCIETY OR A PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK, THE PROVISIONS OF SEC. 80P(2)(A)(I) WILL BE APPLICABLE TO THE ASSESSEE PROVIDED THE ASSESSEE IS ENGAGED IN CARRYING ON BUSINESS OF BANKING OR PROVIDING CREDIT FACILITI ES TO ITS MEMBERS. 3.2 IN OUR OPINION, SEC. 80P(2)(A)(I) PROVIDES TWO TYPES OF ACTIVITIES IN WHICH THE CO - OPERATIVE SOCIETY MUST BE ENGAGED TO BE ELIGIBLE FOR DEDUCTION UNDER SUB - CLAUSE (I). THESE TWO ACTIVITIES ARE NOT ALTERNATE ONES BECAUSE THE SECT ION ALLOWS DEDUCTION TO THE CO - OPERATIVE SOCIETY ON THE WHOLE OF PROFITS AND GAINS OF BUSINESS ATTRIBUTABLE TO ANY ONE OR MORE OF SUCH ACTIVITIES. THIS PRE - SUPPOSES THAT ELIGIBLE CO - OPERATIVE SOCIETY CAN CARRY ON EITHER ONE OF THESE TWO BUSINESSES OR CAN CARRY BOTH THESE BUSINESSES FOR THE MEMBERS. IF THE ASSESSEE CO - OPERATIVE SOCIETY CARRIES ON ONE OR BOTH OF THE ACTIVITIES, IT WILL BE ELIGIBLE FOR DEDUCTION. THESE TWO ACTIVITIES ARE (A) CO - OPERATIVE SOCIETY ENGAGED IN CARRYING ON BUSINESS OF BANKING FAC ILITIES TO ITS MEMBERS OR (B) CO - OPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS. BOTH THE ACTIVITIES MUST BE CARRIED ON BY THE CO - OPERATIVE SOCIETY FOR ITS MEMBERS. IF A CO - OPERATIVE SOCIETY IS ENGAGED IN CARRYING ON THESE ACTIVI TIES/FACILITIES 5 ITA NO.225/PNJ/2013 (ASST. YEAR : 2010 - 11) FOR THE PERSONS OTHER THAN ITS MEMBERS, THE CO - OPERATIVE SOCIETY, IN OUR OPINION, WILL NOT BE ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) ON THE INCOME WHICH IT DERIVES FROM CARRYING ON THE ACTIVITIES NOT RELATING TO ITS MEMBERS. THEREFORE, WH ERE A CO - OPERATIVE SOCIETY IS ENGAGED IN CARRYING ON BUSINESS OF BANKING FACILITIES TO ITS MEMBERS AND TO THE PUBLIC OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS OR TO THE PUBLIC, THE INCOME WHICH RELATES TO THE BUSINESS OF BANKING FACILITIES TO ITS MEMBE RS OR PROVIDING CREDIT FACIL I TIES TO ITS MEMBERS WILL ONLY BE ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I). THERE IS NO PROHIBITION U/S 80P NOT TO ALLOW DEDUCTION TO SUCH CO - OPERATIVE SOCIETIES IN RESPECT OF BUSINESS RELATING TO ITS MEMBERS. 4. NOW, THE QUEST ION BEFORE US IS WHETHER THE ASSESSEE IS A CO - OPERATIVE BANK OR NOT. CO - OPERATIVE BANK IS DEFINED IN PART V OF THE BANKING REGULATIONS ACT, 1949 AS UNDER : CO - OPERATIVE BANK MEANS A STATE CO - OPERATIVE BANK, A CENTRAL CO - OPERATIVE BANK AND A PRIMARY CO - OPERATIVE BANK: 4.1 FROM THE DEFINITION OF CO - OPERATIVE BANK IT IS APPARENT THAT CO - OPERATIVE BANK MEANS STATE CO - OPERATIVE BANK, A CENTRAL CO - OPERATIVE BANK AND A PRIMARY CO - OPERATIVE BANK. IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE IS A STATE CO - OPERATIVE BANK OR CENTRAL CO - OPERATIVE BANK. WE HAVE THEREFORE TO FIND WHETHER THE ASSESSEE IS A PRIMARY CO - OPERATIVE BANK. 4.2 THE PRIMARY CO - OPERATIVE BANK IS DEFINED UNDER SECTION 5 CLAUSE (CCV) OF BANKING REGULATION ACT 1949 AS UNDER: - (CCV) P RIMARY CO - OPERATIVE BANK MEANS A CO - OPERATIVE SOCIETY, OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY - (1) THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF WHICH IS TRANSACTION OF BANKING BUSINESS: (2) THE PAID - UP SHARE CAPITAL AND RESERVES OF WHICH ARE NO T 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 THE ADMISSION OF A CO - OPERATIVE BANK AS A MEMBER BY REASON OF SUCH CO - O PERATIVE BANK SUBSCRIBING TO THE SHARE CAPITAL OF SUCH CO - OPERATIVE SOCIETY OUT OF FUNDS PROVIDED BY THE STATE GOVERNMENT FOR THE PURPOSE . 4.3 FROM THE AFORESAID DEFINITION, IT IS APPARENT THAT IF THE CO - OPERATIVE SOCIETY COMPLIED WITH ALL THE THREE CONDITIONS; FIRSTLY THAT THE PRIMARY OBJECT OR PRINCIPLE BUSINESS TRANSACTED BY IT IS A BANKING BUSINESS, SECONDLY, THE PAID UP SHARE CAPITAL AND RES ERVE OF WHICH ARE 1 LAKH OR MORE AND THIRDLY, BY LAWS OF THE CO - OPERATIVE SOCIETY DO NOT PERMIT ADMISSION OF ANY OTHER CO - OPERATIVE SOCIETY AS A MEMBER, IT WILL BE REGARDED TO BE PRIMARY CO - OPERATIVE BANK. IF CO - OPERATIVE SOCIETY DOES NOT FULFIL ANY OF TH E CONDITIONS, IT CANNOT BE REGARDED TO BE A PRIMARY CO - OPERATIVE BANK. THEREFORE, IN THE CASE OF THE ASSESSEE WE HAVE TO EXAMINE ON THE BASIS OF THE FACTS AND MATERIALS ON RECORD WHETHER THE ASSESSEE CO - OPERATIVE SOCIETY COMPLIES WITH ALL THE THREE CONDIT IONS. IN CASE, IT DOES NOT COMPLY WITH ALL THE THREE CONDITIONS, IT CANNOT BE REGARDED TO BE A CO - OPERATIVE BANK AND THE PROVISIONS OF SEC. 80P(4), IN OUR OPINION, 6 ITA NO.225/PNJ/2013 (ASST. YEAR : 2010 - 11) WILL NOT BE APPLICABLE IN THE CASE OF THE ASSESSEE. ONCE, THE ASSESSEE WILL NOT FALL WITHI N THE PROVISIONS OF SEC. 80P(4), THE ASSESSEE, IN OUR OPINION, WILL BE ELIGIBLE TO GET DEDUCTION U/S 80P(2)(A)(I) IN RESPECT OF WHOLE OF THE INCOME WHICH THE ASSESSEE DERIVES FROM CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS ME MBERS. 5. WHETHER CONDITION NO. 1 IS APPLICABLE IN THE CASE OF THE ASSESSEE, FOR THIS WE HAVE TO LOOK INTO THE BYE - LAWS OF THE ASSESSEE. THE OBJECTS OF THE ASSESSEE IN THIS CASE ARE ENUMERATED AS UNDER : - 1) TO ENCOURAGE SELF - HELP, THRIFT, SAVINGS AND COOPERATION AMONGST MEMBERS AND DEPOSITORS OF SAHAKARI. 2) TO PROVIDE SERVICES TO ENCOURAGE SAVINGS SCHEME OF INCOME TAX DEPARTMENT AND OTHER GOVERNMENT PROGRAMMES AND TO PROVIDE SERVICES TO IMPLEMENT THEM. 3) TO PURCHASE S ECURITY BONDS ON BEHALF OF MEMBERS, TO SELL THEM AND TO COLLECT. 4) TO EXECUTE AGREEMENTS WITH OTHER INSTITUTIONS WHO ADVANCE FINANCIAL ASSISTANCE TO SAHAKARI TO CARRY OUT THE SAHAKARIS TRANSACTIONS. 5) TO COLLECT FUNDS AND SECURITY BONDS ON BEHALF OF ME MBERS OF TO DISPOSE THEM. 6) TO POSSESS SITES, BUILDINGS, TO ACQUIRE LANDS, TO CONSTRUCT BUILDINGS, TRANSFER THEM AND DO ANY OTHER SUCH RELEVANT ACTIVITIES FOR THE NEED OF BUSINESS TRANSACTIONS OF SAHAKARI. 7) TO EXTEND OR ADVANCE THE FINANCIAL ASSISTANCE THROUGH HYPOTHECATION LOAN TO THE MEMBERS DESIRING TO PURCHASE THE MOTOR VEHICLES IN ACCORDANCE WITH THE PROVISIONS LAID DOWN IN THE MOTOR VEHICLE ACT BY HYPOTHECATING THE VEHICLE. 8) TO OPEN BRANCHES, SUB - BRANCHES, RECEIPT COUNTERS OF SAHAKARI WHEREVER N ECESSARY WITH DUE PERMISSION OF GENERAL MEETING AND TO FRAME THE RULES TO CONDUCT THE BUSINESS OF THESE OFFICES CALLED BY ANY OTHER NAME AS ABOVE. 9) TO INVEST THE ADDITIONAL ASSETS OF SAHAKARI AS PER THE PROVISIONS LAID DOWN U/S 18. 10) TO CREATE FUNDS T O PROMOTE CO - OPERATIVE EDUCATION. 11) TO CREATE FUNDS OUT OF NET PROFIT FOR THE WELFARE OF STAFF OR MEMBERS OR EXTENT FINANCIAL ASSISTANCE AS PER THE RULES FRAMED IN ACCORDANCE WITH THE BYELAWS BY THE BOARD OF MANAGEMENT DULY APPROVED BY THE GENERAL BODY MEETING. 12) TO CREATE FUNDS TO ENCOURAGE EDUCATION AS PER THE RULES FRAMED IN ACCORDANCE WITH THE BYELAWS BY THE BOARD OF MANAGEMENT DULY APPROVED BY THE GENERAL BODY MEETING. 13) TO ARRANGE TO EXTEND FINANCIAL ASSISTANCE. 14) TO MAINTAIN AND TO DISPOSE T HE PROPERTIES ACQUIRED PARTLY OR FULLY AGAINST THE LOAN RECOVERY PROCEEDINGS BY THE SAHAKARI. 15) TO PERFORM THE ACTIVITIES RELATED TO MEMBERS AND INCIDENTAL PUBLIC WELFARE INTEREST AND TO DO SUCH ANY OTHER ACTIVITIES. 16) TO IMPLEMENT ALL SUCH MEANS AS TO DEVELOP THE SAHAKARI AND TO STRENGTHEN IT FROM ALL QUARTERS. TO ADOPT ALL THE MODERN TECHNOLOGY INCLUDING INTERNET FACILITY AS TO PROVIDE BETTER SERVICE. 17) TO CONSTITUTE A UNION SAHAKARI FOR FULFILMENT OF THE AIMS OF THE SAHAKARI UNDER THE PROVISIONS OF SOUHARD SAHAKARI ACT. TO ESTABLISH SISTER CONCERN, PARTNERSHIP FIRM AND PRO - INSTITUTION. ON THE BASIS OF THESE OBJECTS WHETHER IT CAN BE SAID THAT THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF THE ASSESSEE IS TRANSACTION OF BANKING BUSINESS? BANKING 7 ITA NO.225/PNJ/2013 (ASST. YEAR : 2010 - 11) BUSIN ESS HAS BEEN DEFINED U/S 5(B) OF THE BANKING REGULATION ACT IN THE FOLLOWING MANNER : ' BANKING' MEANS THE ACCEPTING, FOR THE PURPOSE OF LENDING OR INVESTMENT, OF DEPOSITS OF MONEY FROM THE PUBLIC, REPAYABLE ON DEMAND OR OTHERWISE, AND WITHDRAWABLE BY CHEQUE, DRAFT, ORDER OR OTHERWISE. 5.1 FROM THE SAID DEFINITION IT IS CLEAR THAT BANKING MEANS ACCEPTING DEPOSIT OF MONEY FROM THE PUBLIC WHICH IS REPAYABLE ON DEMAND OR OTHERWISE AND WITHDRAWAL OF THESE DEPOSITS BY CHEQUE, DRAFT, ORDER OR OTHERWISE AND THESE DEPOSITS ARE ACCEPTED FOR THE PURPO SE OF LENDING OR INVESTMENT. THESE DEPOSITS MUST BE ACCEPTED FROM THE PUBLIC, NOT ONLY FROM THE MEMBERS. THESE DEPOSITS MUST BE REPAYABLE ON DEMAND OR OTHERWISE AND COULD BE WITHDRAWN BY THE DEPOSITOR BY CHEQUE, DRAFT OR OTHERWISE. WE NOTED THAT THE CIT (A) ON THE BASIS OF THE REMAND REPORT OF THE AO DT. 13.2.2013 HAS GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE HAS ACCEPTED DEPOSITS FROM THE GENERAL PUBLIC WHO WERE NOT MEMBERS. THE RELEVANT PORTION OF THE REMAND REPORT READS AS UNDER : - WE ACCEPTS DE POSITS MEMBERS AS WELL AS FROM NON - MEMBERS. BUT WE GRANT LOANS & ADVANCES TO MEMBERS ONLY. WE DO NOT GRANT TO NON - MEMBERS BECAUSE IT IS NOT ALLOWED BY OUR BYE - LAW. 5.2 THIS FACT HAS NOT BEEN DENIED BY THE ASSESSEE. THE DEPOSITS SO ACCEPTED ARE USED BY THE ASSESSEE CO - OPERATIVE SOCIETY FOR LENDING OR INVESTMENT. THIS FACT HAS NOT BEEN DENIED. EVEN OUT OF THE DEPOSITS SO RECEIVED, THE LOANS HAVE BEEN GIVEN TO THE MEMBERS OF THE SOCIETY IN ACCORDANCE WITH THE OBJECTS AS ENUMERATED ABOVE. THUS, IN OUR OPI NION, CONDITION NO. 1 STANDS SATISFIED AND IT CANNOT BE SAID THAT THE ASSESSEE SOCIETY WAS NOT CARRYING ON BANKING BUSINESS AS IT WAS ACCEPTING DEPOSITS FROM THE PERSONS WHO WERE NOT MEMBERS. SO FAR AS THE SECOND CONDITION IS CONCERNED, THERE IS NO DISPUT E THAT THE PAID UP SHARE CAPITAL AND RESERVES IN THE CASE OF THE ASSESSEE IS MORE THAN RS. 1 LAC. THEREFORE, THE ASSESSEE SATISFIES THE SECOND CONDITION. 6. SO FAR AS THE THIRD CONDITION IS CONCERNED, WE NOTED THAT SEC. 20 OF THE KARNATAKA SOUHARDA SAHA KARI ACT, 1997 PERMITS ADMISSION OF ANY OTHER CO - OPERATIVE SOCIETY AS A MEMBER. THE PROVISIONS OF SEC. 20 ARE LAID DOWN AS UNDER : - 20. PERSONS WHO MAY BE ADMITTED OR CONTINUED AS MEMBERS : - (1) SUBJECT TO THE PROVISIONS OF THIS ACT, NO PERSON SHALL BE ADMITTED AS A MEMBER OF A CO - OPERATIVE, - A) UNLESS HE NEEDS THE SERVICES OF THE CO - OPERATIVE AND ACCEPTS THE RESPONSIBILITY OF MEMBERSHIP AND IS COMPETENT TO CONTRACT UNDER THE CONTRACT ACT, 1872 (CENTRAL ACT IX OF 1872); B) IF HE CONDUCTS ANY BUSINESS, SU CH BUSINESS BEING IN CONFLICT OR COMPETITION WITH THE BUSINESS OF THE CO - OPERATIVE AS SPECIFIED IN THE BYE - LAWS; AND C) UNLESS HE FULFILS SUCH OTHER CONDITIONS AS MAY BE SPECIFIED IN THE BYE - LAWS OF THE CO - OPERATIVE: PROVIDED THAT AFTER THE REGISTRATION O F A CO - OPERATIVE, THE MEMBERS SHALL BE ADMITTED ONLY BY THE ELECTED BOARD. (2) NO PERSON SHALL BE ELIGIBLE TO CONTINUE AS A MEMBER IF SUCH PERSON , - A) HAS NOT USED THE SERVICES OF THE CO - OPERATIVE FOR TWO CONSECUTIVE YEARS TO THE MINIMUM LEVEL SPECIFIED I N THE BYE - LAWS; OR B) HAS NOT ATTENDED THREE CONSECUTIVE GENERAL MEETINGS OF THE CO - OPERATIVE AND SUCH ABSENCE HAS NOT RECEIVED THE CONSENT OF THE GENERAL BODY; OR C) IS IN DEFAULT REGARDING ANY PAYMENT TO BE MADE TO THE CO - OPERATIVE EXCEEDING AN AMOUNT AN D FOR A PERIOD SPECIFIED IN THE BYE - LAWS. 8 ITA NO.225/PNJ/2013 (ASST. YEAR : 2010 - 11) (3) IF A QUESTION ARISES AS TO THE ELIGIBILITY OR OTHERWISE OF A PERSON TO BECOME A MEMBER OR TO CONTINUE AS A MEMBER, THE BOARD SHALL DECIDE THE QUESTION AFTER GIVING SUCH PERSON AN OPPORTUNITY OF BEING HEARD. TH E DECISION OF THE BOARD SHALL BE FINAL. 21. REMOVAL OF MEMBERSHIP. - (1) THE BOARD MAY, BY A RESOLUTION PASSED BY A MAJORITY OF NOT LESS THAN TWO THIRDS OF THE MEMBERS PRESENT AND VOTING, REMOVE THE MEMBERSHIP OF A PERSON IN THE CO - OPERATIVE FOR ACTS OR OM ISSIONS WHICH ARE DETRIMENTAL TO THE INTEREST OF THE CO - OPERATIVE: PROVIDED THAT A MEMBER SHALL NOT BE REMOVED UNLESS A REASONABLE OPPORTUNITY OF MAKING - REPRESENTATION IN THIS REGARD HAS BEEN PROVIDED TO HIM. (2) WHERE A MEMBER HAS BEEN REMOVED BY THE BOA RD, AN APPEAL SHALL LIE TO THE GENERAL BODY AND THE DECISION OF THE GENERAL BODY SHALL BE FINAL. (3)A PERSON WHOSE MEMBERSHIP HAS BEEN REMOVED SHALL, SUBJECT TO THE PROVISIONS OF THIS ACT, RULES AND BYE - LAWS, BE INELIGIBLE FOR RE - ADMISSION AS A MEMBER OF T HAT CO - OPERATIVE FOR A PERIOD OF ONE YEAR AFTER THE DATE OF SUCH REMOVAL. [(4) NOTWITHSTANDING SUCH REMOVAL, A PAST MEMBER SHALL BE LIABLE TO BE PROCEEDED AGAINST, UNDER THIS ACT OR THE RULES OR THE BYE - LAWS FOR HIS ACTS OF COMMISSION OR OMISSION AS SUCH MEMBER] [21.A NOMINAL AND ASSOCIATE MEMBERS (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 20, A CO - OPERATIVE MAY ADMIT, A) ANY INDIVIDUAL B) ANY FIRM, COMPANY, CO - OPERATIVE SOCIETY, CO - OPERATIVE OR ANYBODY OR CORPORATION CONSTITUTED BY OR UNDER ANY LAW FOR THE TIME BEING IN FORCE: - AS A NOMINAL OR ASSOCIATE MEMBER FOR ANY SPECIFIC PURPOSE FOR ANY SPECIFIC PERIOD AS MAY BE MENTIONED IN THE BYE - LAWS. (2) A NOMINAL MEMBERS SHALL NOT BE ENTITLED TO ANY SHARE IN ANY FORM WHATSOEVER IN THE ASSETS OR PROFITS OF THE CO - OPERATIVE AND SHALL NOT BE ENTITLED TO BECOME AN OFFICE - BEARER OF THE CO - OPERATIVE. (3) AN ASSOCIATE MEMBER MAY HOLD SHARES BUT SHALL NOT BE ENTITLED TO BECOME AN OFFICER - BEARER OF THE CO - OPERATIVE. (4) A NOMINAL OR ASSOCIATE MEMBER SH ALL NOT HAVE THE RIGHT TO PARTICIPATE IN THE MANAGEMENT AND TO VOTE AT ANY MEETINGS OF THE CO - OPERATIVE INCLUDING THE ELECTION TO THE BOARD OF THE CO - OPERATIVE. (5) SAVE AS PROVIDED IN THIS SECTION, A NOMINAL OR ASSOCIATE MEMBER SHALL HAVE SUCH PRIVILEGE S AND RIGHTS OF A MEMBER AND BE SUBJECT TO SUCH LIABILITIES OF A MEMBER AS MAY BE SPECIFIED IN THE BYE - LAWS OF THE CO - OPERATIVE. 6.1 THE AFORESAID PROVISION OF SEC. 20 TO 21A MANDATES ADMISSION OF ANY OTHER CO - OPERATIVE SOCIETY AS A MEMBER OF THE CO - OPERATIVE SOCIETY. THE WORD USED IN SEC.21A IS MAY. SECTION 21A FURTHER STATES THAT THE CO - OPERATIVE SOCIETY CAN BE ADMITTED AS NOMINAL OR ASSOCIATE MEMBER FOR ANY SPECIFIC PURPOSE FOR ANY SPECIFIC PERIOD AS MAY BE MENTIONED IN THE BYE - LAWS. THIS CLEARLY PROVES THAT IN CASE THE RULES AND BYE - LAWS OF THE OTHER CO - OPERATIVE 9 ITA NO.225/PNJ/2013 (ASST. YEAR : 2010 - 11) SOCIETY PROVIDES OTHERWISE, THE CO - OPERATIVE SOCIETY MAY NOT BE ADM ITTED AS A MEMBER OF THE CO - OPERATIVE SOCIETY. 7. WE HAVE GONE THROUGH THE BYE - LAWS WHICH CONTAINS THE MEMBERSHIP WHICH IS BYE - LAWS NO.6. IT STATES AS UNDER : - 6. ADMISSION FOR MEMBERSHIP: HE SHALL HAVE THE FOLLOWING ELIGIBILITY CRITERIA TO BE A MEMBER OF THE SAHAKARI : HE IS COMPETENT TO CONTRACT UNDER SECTION 11 OF THE INDIAN CONTRACT ACT 1872 AND ANY PERSON UNDER THE PROVISIONS OF THIS BYELAW 2(19). PARTNERSHIP FIRMS OR THE SOCIETIES REGISTERED UNDER THE PROVISIONS OF KARNATAKA SAHAKARI SOCIETIES A CT 1960 ( AS PER THE PROVISION OF RULE 17). AN INDIVIDUAL OR SELF HELP GROUPS UNDER THE PROVISIONS OF THIS BYE - LAW2(19). 7.1 FROM THIS, IT IS APPARENT THAT THE BYE - LAWS OF SOCIETY PERMITS THE ADMISSION OF ANY OTHER CO - OPERATIVE SOCIETY AS MEMB ER. THUS THE THIRD CONDITION FOR BECOMING PRIMARY CO - OPERATIVE BANK IS NOT COMPLIED WITH. SINCE THE ASSESSEE SOCIETY DOES NOT COMPLY WITH ALL THE THREE CONDITIONS, THEREFORE, IN OUR OPINION THE ASSESSEE SOCIETY DOES NOT BECOME A PRIMARY CO - OPERATIVE BANK AND IN VIEW OF EXPLANATION (A) OF SECTION 80P(4) IT HAS NOT TO BE REGARDED AS A CO - OPERATIVE BANK AND IS NOT HIT BY SECTION 80P(4). 7.2 WE HAVE GONE THROUGH THE DECISION OF THE HYDERABAD BENCH OF THIS TRIBUNAL IN THE CASE OF THE CITIZEN COOPERATIVE SOCIETY VS. ADDL. CIT (SUPRA). WE NOTED THAT THIS DECISION IS NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US. IN THIS DECISION, UNDER PARA 23 THE TRIBUNAL HAS GIVEN A FINDING THAT THE ASSESSEE IS CARRYING ON BANKING BUSINESS AND FOR ALL PRACTICAL PURPOSES IT ACTS LIKE A CO - OPERATIVE BANK. THE SOCIETY IS GOVERNED BY THE BANKING REGULATIONS ACT. THEREFORE, THE SOCIETY BEING A CO - OPERATIVE BA NK PROVIDING BANKING FACILITIES TO MEMBERS IS NOT ELIGIBLE TO CLAIM DEDUCTION U/S 80P(2)(A)(I) AFTER THE INTRODUCTION OF SUB - SECTION (4) TO SECTION 80P. IN VIEW OF THIS FINDING, THE ASSESSEE WAS DENIED DEDUCTION U/S 80P(2)(A)(I). WE HAVE ALSO GONE THROUG H THE DECISION OF THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. DIVYAJYOTHI CREDIT CO - OPERATIVE SOCIETY LTD. (SUPRA) IN ITA NO. 72/BANG/2013. IN THIS CASE, WE NOTED THAT THE HON'BLE TRIBUNAL CONFIRMED THE ORDER OF CIT(A) FOLLOWING THE DECISIO N OF THE TRIBUNAL IN THE CASE OF ACIT, CIRCLE 3(1), BANGALORE VS. M/S. BANGALORE COMMERCIAL TRANSPORT CREDIT CO - OPERATIVE SOCIETY LTD. IN ITA NO. 1069/BANG/2010 HOLDING THAT SEC. 80P(2)(A)(I) IS APPLICABLE ONLY TO CREDIT CO - OPERATIVE SOCIETY A AND NOT TO C O - OPERATIVE BANK. WITH DUE REGARDS TO THE BENCH, WE ARE UNABLE TO FIND ANY TERM CREDIT CO - OPERATIVE SOCIETY U/S 80P(2)(A)(I) OR U/S 80P(4), THEREFORE, THIS DECISION CANNOT ASSIST US. WE NOTED THAT THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. J AFARI MOMIN VIKAS CO - OP. CREDIT SOCIETY LTD. IN TAX APPEALS NO. 442 OF 2013, 443 OF 2013 AND 863 OF 2013 (SUPRA) VIDE ORDER DT. 15.1.2014 TOOK THE VIEW THAT SEC. 80P(4) WILL NOT APPLY TO A SOCIETY WHICH IS NOT A CO - OPERATIVE BANK. IN THE CASE OF VYAVASAYA SEVA SAHAKARA SANGHA VS. STATE OF KARNATAKA & ORS. (SUPRA) WE NOTED THAT THE ISSUE BEFORE THE HON'BLE HIGH COURT IN THE WRIT PETITION FILED BY THE PETITIONER RELATED TO THE LEGISLATIVE COMPETENCE OF THE STATE LEGISLATURE FOR ISSUING A CIRCULAR. THE ISSUE DOES NOT RELATE TO THE CLAIM OF DEDUCTION U/S 80P(2)(A)(I). WHILE DEALING WITH THIS ISSUE, THE HON'BLE HIGH COURT UNDER PARA 12 OBSERVED AS UNDER : - 10 ITA NO.225/PNJ/2013 (ASST. YEAR : 2010 - 11) 12. IT IS NOT POSSIBLE TO ACCEPT THIS CONTENTION. THE PETITIONERS ARE NOT THE BANKING INSTITUTIONS COM ING UNDER THE PURVIEW OF THE BANKING REGULATION ACT. THEY ARE THE CO - OPERATIVE SOCIETIES REGISTERED UNDER THE ACT, AND AS SUCH THEY ARE GOVERNED BY THE PROVISIONS OF THE ACT PASSED BY THE STATE LEGISLATURE. CONSEQUENTLY, THE STATE GOVERNMENT HAS CONTROL OVER THEM TO THE EXTENT THE ACT PERMITS. MAJOR ACTIVITIES OF THE PETITIONERS ARE TO FINANCE ITS MEMBERS. FOR THE PURPOSE OF FINANCING ITS MEMBERS, THEY BORROW MONEY FROM THE FINANCING AGENCIES AND REPAY THE SAME. MERELY BECAUSE THE PETITIONERS - THE CO - OP ERATIVE SOCIETIES IN QUESTION - ARE REQUIRED TO ADVANCE LOANS TO THEIR MEMBERS, THEY DO NOT CEASE TO BE CO - OPERATIVE SOCIETIES GOVERNED BY THE ACT NOR CAN THEY BE TREATED AS BANKING COMPANIES. IT IS ALSO NOT POSSIBLE TO HOLD THAT THESE ACTIVITIES OF THE PET ITIONERS AMOUNT TO BANKING AS CONTEMPLATED UNDER THE BANKING REGULATION ACT, 1949, INASMUCH AS THESE CO - OPERATIVE SOCIETIES ARE NOT ESTABLISHED FOR THE PURPOSE OF DOING BANKING AS DEFINED IN SECTION 5(B) OF THE BANKING REGULATION ACT, 1949. 7.3 T HIS DECISION, IN OUR OPINION, IS NOT APPLICABLE TO THE CASE BEFORE US BECAUSE THE PROVISIONS OF SEC. 80P(2)(A)(I), AS WE HAVE ALREADY HELD IN THE PRECEDING PARAGRAPHS, ARE APPLICABLE TO A CO - OPERATIVE SOCIETY WHICH IS ENGAGED IN CARRYING ON BANKING BUSINES S FACILITIES TO ITS MEMBERS IF IT IS NOT A CO - OPERATIVE BANK. WE HAVE ALSO GONE THROUGH THE DECISION OF THIS BENCH IN THE CASE OF DCIT VS. JAYALAKSHMI MAHILA VIVIDODESHAGALA SOUHARDA SAHAKARI LTD. IN ITA NO. 1 TO 3/PNJ/2012 DT. 30.3.2012 (SUPRA), FOR WHI CH THE UNDERSIGNED IS THE AUTHOR. WHILE DISCUSSING THIS ISSUE, AFTER ANALYSING THE AIMS AND OBJECTS OF THE CO - OPERATIVE SOCIETY UNDER PARA 12 OF ITS ORDER, THIS TRIBUNAL HAS HELD AS UNDER : - 12. FROM THE AFORESAID OBJECTS, IT IS APPARENT THAT NONE OF THE AIMS AND OBJECTS ALLOWS THE ASSESSEE COOPERATIVE SOCIETY TO ACCEPT DEPOSITS OF MONEY FROM PUBLIC FOR THE PURPOSE OF LENDING OR INVESTMENT. IN OUR OPINION UNTIL AND UNLESS THAT CONDITION IS SATISFIED, IT CANNOT BE SAID THAT THE PRIME OBJECT OR PRINCIPAL B USINESS OF THE ASSESSEE IS BANKING BUSINESS. THEREFORE, THE ASSESSEE WILL NOT COMPLY WITH THE FIRST CONDITION AS LAID DOWN IN THE DEFINITION AS GIVEN U/S. 5(CCV) OF THE BANKING REGULATION ACT, 1959 FOR BECOMING PRIMARY COOPERATIVE BANK. THE ASSESSEE, THE REFORE, CANNOT BE REGARDED TO BE PRIMARY COOPERATIVE BANK AND IN CONSEQUENCE THEREOF, IT CANNOT BE A CO - OPERATIVE BANK AS DEFINED UNDER PART V OF THE BANKING REGULATION ACT 1949. ACCORDINGLY, IN OUR OPINION THE PROVISIONS OF SECTION 80P (4) READ WITH EXPLA NATION THERE UNDER WILL NOT BE APPLICABLE IN THE CASE OF THE ASSESSEE. THE ASSESSEE, THEREFORE, IN OUR OPINION WILL BE ENTITLED FOR THE DEDUCTION U/S 80P(2)(A)(I). WE ACCORDINGLY CONFIRM THE ORDER OF CIT(A) ALLOWING DEDUCTION TO THE ASSESSEE. 7.4 WE H AVE ALSO GONE THROUGH THE DECISION OF ACIT VS PALHAWAS PRIMARY AGRICULTURE CO - OPERATIVE SOCIETY LTD, 23 TAXMAN.COM 318 (DELHI). SECTION 80P(4) CLEARLY EXCLUDES PRIMARY AGRICULTURE CREDIT SOCIETY FROM ITS DOMAIN. THEREFORE THIS DECISION WILL NOT ASSIST TH E ASSESSEE. WE HAVE ALSO GONE THROUGH THE DECISION OF PUNE BENCH IN THE CASE OF ITO VS JANKALYAN NAGRI SAHAKARI PAD SANSTHA LTD, 24 TAXMAN.COM 127 PUNE. THIS WE HAVE ALREADY STATED THAT SECTION 80P(2)(A)(I) NOWHERE TALKS OF CO - OPERATIVE CREDIT SOCIETY AN D THEREFORE THE DISTINCTION MADE UNDER THE BANKING REGULATION ACT CANNOT BE IMPORTED U/S 80P(2)(A)(I). THIS DECISION IN OUR OPINIO N WILL NOT ASSIST THE 11 ITA NO.225/PNJ/2013 (ASST. YEAR : 2010 - 11) ASSESSEE. WE HAVE ALSO GONE THROUGH THE DECISION OF TARA RA NI MAHILA CO - OPERATIVE CREDIT SOCIETY LTD TO WH ICH THE UNDERSIGNED IS THE AUTHOR SIMILAR FINDING AS HAS BEEN GIVEN IN THIS ARE GIVEN IN THAT CASE ALSO. 8. IN VIEW OF THE AFORESAID DISCUSSION WE HOLD THAT THE ASSESSEE IS NOT A PRIMARY CO - OPERATIVE BANK AND THEREFORE THE ASSESSEE IS ENTITLED FOR DEDUCT ION U/S 80P (4) ON THE INCOME GENERATED FOR PROVIDING BANKING OR CREDIT FACILITIES TO ITS MEMBERS. WE ACCORDINGLY, CONFIRM THE ORDER OF THE CIT(A) TO THAT EXTENT. 3 . RESPECTFULLY FOLLOWING THE AFORESAID ORDER, WE CONFIRM THE ORDER OF THE CIT(A) AND HOLD THAT ASSESSEE IS NOT A PRIMARY CO - OPERATIVE BANK AND THEREFORE THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80P (4) ON THE INCOME GENERATED FOR PROVIDING BANKING OR CREDIT FACILITIES TO ITS MEMBERS. WE ACCORDINGLY, CONFIRM THE ORDER OF THE CIT(A) TO THA T EXTENT . 4. IN THE RESULT, APPEAL FILED BY THE REVENUE STANDS DISMISSED. 5 . ORDER PRO N OUNCED IN THE OPEN COURT ON 04 .07 .2014. SD/ - SD/ - (D.T.GARASIA) JUDICIAL M EMBER (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI / GOA DATED : 04 .07 . 201 4 *A* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) CIT(A) CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER SR. PRIVATE SECRETARY ITAT, PANAJI, GOA