The Mahantesh Urben Co. Opp. Cr. Society Ltd., Belgaum V. Income-Tax Officer, Ward- 1,

ITA 319/PAN/2013

• Counselvise Citation: 31924114 RSA 2013
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-08-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 21-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONAL L SONKAVDE LD
• Assessee Lawyers: OMKAR GODBOLEC A
• Section: 263; 2

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. 319/PNJ/2013 : (ASST.YEAR :2010-11) THE MAHANTESH URBAN CO- OPERATIVE CREDIT SOCIETY LTD, M.S. CHULAKI BUILDING, BADAMI ROAD, RAMDURG,TAL:RAMDURG DIST :BELGAUM - 591123. PAN : AAALT0215C (APPELLANT) VS. INCOME TAX OFFICER, WARD1(2), BELGAUM KARNATAKA. (RESPONDENT) APPELLANT BY : SHRI OMKAR GODBOLE,C.A. RESPONDENT BY : SMT SONAL L.SONKAVDE, LD. D.R. DATE OF HEARING :27/08/2014 DATE OF PRONOUNCEMENT :28/08/2014 ORDER PER P.K. BANSAL THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), BELGAUM DTD. 04.09.2013 FOR THE ASSE SSMENT YEAR 2010-11 BY TAKING THE FOLLOWING GROUNDS OF APPEAL :- 1. THE LD. CIT(APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN REJECTING THE CLAIM OF THE APPELLANT IN RESPECT OF GRANT OF DEDUCTION U/S 80P(2)(A)(I). THE APPELLANT PRAYS FOR GRANT OFTHE DEDUCTION AS CLAIMED. 2. THE LD.CIT(APEPALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN APPLYING PROVISIONS OFSECTION 80P(4) TOTHE APPELLANT SOCIETY. 3. THE LD.CIT(APPEALS) ERRED IN LAW AS WELL AS ON FACTS IN MAKING A DISTINCTION BETWEEN A CO-OPERATIVE BANK AND CO-OPERATIVE SOCIETY. 2. THE BRIEF FACTS OF THE CASE FOR THE ASSESSMENT YEAR 2010-11 ARE THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY REGISTERED UNDER THE KARNATAKA STATE CO- OPERATIVE SOCIETIES ACT. THE ASSESSEE FILED RETURN DECLARING GROSS TOTAL INCOME 2ITANO.319/PNJ/2013 (ASST.YEAR:2010 11) OF RS.3,77,931/- AND CLAIMED DEDUCTION U/S 80P(2)(A)(I) AND THEREFORE NET TAXABLE INCOME WAS SHOWN TO BE NIL. T HE AO DID NOT ALLOW THE DEDUCTION TO THE ASSESSEE U/S 80P(2)(A)(I) AND THE INCOME WAS ASSESSED AT RS.3,92,612/-. THE AO WHILE DENYING THE DEDUCTION TO THE AS SESSEE U/S 80P(2)(A)(I) TOOK THE VIEW THAT THE ASSESSEE IS A PRIMARY CO-OPERATIVE BANK AND THEREFORE PROVISIONS OF SEC.80P(4) ARE APPLICABLE IN THE CASE OF THE ASSESSEE. THE ASSESSEE WENT IN APPEAL BEFORE THECIT(A). CIT(A) DI SMISSED THE APPEAL OF THE ASSESSEE. 2.1 THE LD. AR BEFORE US VEHEMENTLY CONTENDED THAT THE PROVISIONS OF SEC. 80P(4) ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE. THE MAIN CONTENTIONS OF THE ASSESSEE ARE THAT A SSESSEE IS NOT A CO-OPERATIVE BANK. THE ASSESSEE IS A CO-OPERATIVE SOCIETY DULY RE GISTERED UNDER THE KARNATAKA STATE CO- OPERATIVE SOCIETIES ACT, 1959.THE PRIMARY OBJECT OF THE ASSESSEE IS TO ENCOURAGE THRIFT, SELF-HELP AND CO-OPERATION AMONG THE MEMBERS. FOR THIS, OUR ATTENTION WAS DRAWN TOWARDS THE BYE-LAWS OF THE ASSESSEE FROM (I) TO (XIII). THE ASSESSEE IS A CREDIT SOCIETY. HE CONTEN DED THAT THE WORD CREDIT IS OF OUTMOST IMPORTANT TO DECIDE THE STATUS OF THE ASSESSEE UNDER THE BANKING REGULATION ACT, 1949. ACCORDING TO HIM THE ASSESSEE IS A CO-OPERATIVE CREDIT SOCIETY BUT WHEN WE QUESTION THAT SECTION 80P DOES NOT TALK OF CO-OPERATIVE CREDIT SOCIETY, HE COULD NOT REPLY THERETO BUT RELIED ON BANKING REGULATION ACT FORGETTING THAT THE SECTION 80P ONLY USES THE WORD CO-OPERATIVE SOCIETY ENGAGED IN-. THE ACTIVITIES OF THE ASSESSEE ARE LIMITED TO ITS MEMBERS. HE ALSO RELIED ON CBDT CIRCULAR NO.133 OF 2007 DATED 9.5.2007 FOR THE PROPOSITION THAT SECTION 80P(4) WILL NOT APPLY TO AN ASSESSEE WHICH IS NOT A COOPERATIVE BANK. THE PAID UP CAPITAL OF THE ASSESSEE, NO DOUBT, IS MORE T HAN RS. 1 LACS. IT WAS CONTENDED THAT THE ISSUE IS DULY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. JAFARI MOMIN VIKAS CO-OP. CREDIT SOCIETY LTD. IN TAX APPEAL NOS. 442 OF 2013, 443 OF 2013 AND 863 OF 2013. ATTENTION WAS ALSO DRAWN TOWARDS THE DECISION OF THE HON'BLE KARNATAKA 3ITANO.319/PNJ/2013 (ASST.YEAR:2010 11) HIGH COURT IN THE CASE OF VYAVASAYA SEVA SAHAKARA SANGHA VS. STATE OF KARNATAKA & ORS. FOR THE PROPOSITION OF LAW BY REFERRING TO PARA 12 THAT MERELY BECAUSE THE CO-OPERATIVE SOCIETY IS REQUIRED TO ADVANCE LOAN TO ITS MEMBERS, IT DOES NOT CEASE TO BE A CO-OPERATIVE SOCIETY GOVERNED BY THE CO-OPERATIVE SOCIETIES ACT NOR CAN THEY BE TREATED AS BANKING COMPANIES. THE ACTIVITIES CARRIED OUT BY THE SOCIETY CANNOT BE REGARDED TO BE BANKING ACTIVITIES AS CONTEMPLATED UNDER THE BANKING RE GULATION ACT, 1949. RELIANCE WAS ALSO PLACED ON THE DECISION OF THE BANGALORE BENCH OF THIS TRIBUNAL IN ITA NO.72/BANG/2013 IN THE CASE OF ITO VS . DIVYAJYOTHI CREDIT CO-OPERATIVE SOCIETY LTD. FOR THE A.Y 2009-10 IN WHICH IT WAS HELD THAT THE PROVISIONS OF SEC. 80P(4) ARE APPLICABLE ONLY TO CREDIT CO-OPERATIVE BANKS AND NOT TO CREDIT CO- OPERATIVE SOCIETY. RELIANCE WAS ALSO PLACED ON THE DECISION OF THE PANAJI 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. RELIANCE WAS ALSO PLACED ON THE DECISION OF PANAJI BENCH IN ITA NO. 229 & 230/PNJ/2013 IN THE CASE OF TARARANI MAHILA CO-OPERATIVE CREDIT SOCIETY, VS ITO. RELIANCE WAS ALSO PLACED IN ACIT VS PALHAWAS PRIMARY AGRICULTURE CO-OPERATIVE SOCIETY LTD, 23 TAXMAN.COM 318 (DELHI), ITO VS JANKALYAN NAGRI SAHAKARI PAT SANSTHA LTD, 24 TAXMAN.COM 127 (PUNE). RELIANCE WAS ALSO PLACED ON THE DECISION OF KARNATAKA HIGH COURT IN THE CASE OF CIT VS SRI BILURU GURUBASAVA PATTANA SAHAKARI SANGH NIYAMITHA DATED 5.2.2014, WHICH RELATES TO AN APPEAL FILED AGAINST THE ORDER PASSED U/S 263 AND THE QUESTION INVOLVED WAS WHETHER THE REVISIONAL AUTHORITY WAS JUSTIFIED IN INVOKING HIS POWER U/S 263 WITHOUT THE FOUNDATIONAL FACT OF THEASSESSEE BEING CO-OPERATIVE BANK. 2.2 THE LD. DR, ON THE OTHER HAND VEHEMENTLY CONTENDED THAT THE ASSESSEE 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- 4ITANO.319/PNJ/2013 (ASST.YEAR:2010 11) OPERATIVE SOCIETY IS CARRYING 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 INITA NOS. 1003/HYD/2011 & 1004/HYD/2011 DT. 2.7.2012. 3. WE HEARD THE RIVAL SUBMISSIONS AN D 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 T OBEFOREUS. THEQUESTIONBEFOREUSIS WHETHER THE ASSESSEE IS 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 FOROUR READY REFERENCE AS UNDER :- 80P.(1) WHERE, IN THE CASE OF AN ASSESSEE BEING A CO-OPERATIVE SOCIETY, THE GROSS TOTAL INCOME INCLUDES ANY INCOME REFERR ED TO IN SUB-SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, THE SUMS SPECIFIED INSUB-SECTION (2), IN COMPUTING THETOTALINCOME OF THEASSESSEE. (2) THE SUMS REFERRED TO INSUB-SECTION (1) SHALL BETHE FOLLOWING, NAMELY : (A) IN THE CASE OFA CO-OPERATIVE SOCIETY ENGAGED IN (I) CARRYING ON THE BUSINESS OF BANKING O R PROVIDING CREDIT FACILITIES TO ITS MEMBERS, OR THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUSINESS ATTRIBUTABLE TO ANY ONEOR MORE OFSUCH 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 RURALDEVELOPMENT BANK. EXPLANATION.FOR THE PURPOSES OF THISSUB-SECTION, (A) 'CO-OPERATIVE BANK' AND 'PRIMARY AGRICULTURAL CREDIT SOCIETY' SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO THEM IN PART V OF THE BANKINGREGULATION ACT, 1949 (10 OF1949); (B) 'PRIMARY CO-OPERATIVE AGRICUL TURAL AND RURAL DEVELOPMENT BANK' MEANS A SOCIETY HAVING ITS AREA OF OPE RATION CONFINED TO A TALUKA AND THE PRINCIPAL OBJECT OF WHICH IS TO PROVIDE FOR LONG-TERM CREDIT FOR AGRICULTURAL AND RURALDEVELOPMENT 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 5ITANO.319/PNJ/2013 (ASST.YEAR:2010 11) CREDIT FACILITIES TO ITS MEMBERS, THE CO-OP ERATIVE 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 DEDUCTION TO A CO- OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR PRIMARY CO- OPERATIVE AGRICULTURAL AND RURAL DEVELOP MENT BANK. THE PROVISIONS OF SEC. 80P(4) WAS INTRODUCED IN THE STATUTE BY THE FI NANCE ACT, 2006 W.E.F. 1.4.2007. THE EXPLANATION 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 PR OVISIONS 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 PR IMARY 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- OPERATIVE 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 SOCIE TY 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-OPERA TIVE 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 REGARDE D TO BE A CO-OPERATIVE BANK, THEN, THE PROVISIONS OF SEC. 80P(2)(A)(I)WILL BECO ME REDUNDANT. THEREFO RE, IN OUR OPINION, 6ITANO.319/PNJ/2013 (ASST.YEAR:2010 11) 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 AGRICULTURAL 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 AGRICULTURAL 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 FACILITIES TO ITS MEMBERS. THIS SECTION NOWHERE STATES CO-OPERATIVE CREDIT SOCIETY EXCEP T MENTIONED UNDER PROVISO 2 TO SECTION 80P WHICH IS RELEVANT FOR SUB-CLAUSE 6 OR 7. IT HAS NOTHING TO DO WITH SECTION 80P(2)(A)(I). 4. 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 SECTION ALLOWS DEDUCTION TO THE CO-OPERA TIVE 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 SOC IETY CAN CARRY ON EITHER ONE OF THESE TWO BUSINESSES OR CAN CARRY BOTH THESE BUSIN ESSES 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 FACILITIES TO ITS MEMBERS OR (B) CO-OPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS. BOTH THE ACTIVITIES CAN BE CARRIED ON BY THE CO-OPERATIVE SOCIETY FO R ITS MEMBERS. IF A CO-OPERATIVE SOCIETY IS ENGAGED IN CARRYING ON THESE ACTIVITIES/FACILITIES 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 7ITANO.319/PNJ/2013 (ASST.YEAR:2010 11) ACTIVITIES NOT RELATING TO ITS MEMBERS. TH EREFORE, WHERE 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 MEMBERS OR PROVIDING CREDIT FACILITIES 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 OFBUSINESS RELATING TO ITSMEMBERS. 4.1 NOW, THE QUESTION 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: 5. 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 ISA PRIMARY CO-OPERATIVE BANK. 6. THE PRIMARY CO-OPERATIVE BANK IS DEFINED UNDER SECTION 5 CLAUSE (CCV) OF BANKING REGULATION ACT 1949 AS UNDER:- (CCV) PRIMARY CO-OPERATIVE BANK MEANS A CO-OPERATIVE SOCIETY, OTHER THAN A PRIMARY AGRICULTURA L CREDIT SOCIETY- (1) THE PRIMARY OBJECT OR PRINCIPAL BUS INESS OF WHICH IS 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 PERM IT 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-OPERATIVE BANK SUBSCRIBING TO THE SHARE CAPITAL OF SUCH CO-OPERATIVE SOCIETY OUT OF FUNDS PR OVIDED BY THE STATE GOVERNMENT FOR THE PURPOSE. 8ITANO.319/PNJ/2013 (ASST.YEAR:2010 11) 7. 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 RESERVE 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 FULFILL ANY OF THE CONDITIONS, IT CANNOT BE REGARDED TO BE A PRIMARY CO-OPERATIVE BANK. THEREF ORE, 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 W ITH ALL THE THREE CONDITIONS. IN CASE, IT DOES NOT COMPLY WITH ALL THE THREE COND ITIONS, IT CANNOT BE REGARDED TO BE A CO- OPERATIVE BANK AND THE PROVISIONS OF SEC. 80P(4), IN OUR OPINION, WILL NOT BE APPLICABLE IN THE CASE OF THE ASSESSEE. ONCE, THE ASSESSEE WILL NOT FALL WITHIN 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 TOITSMEMBERS. 8. 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 :- I) TO ENCOURAGE THRIFT, SELF-HELP AND CO-OPERATION AMONG THEMEMBERS. II) TO MOBILIZE FUNDS FOR ECONOMIC DEVELOPMENT OF MEMBERS UNDER FINANCIAL SCHEMES. III) TO TRANSACT TOADVANCE LOANS TO MEMBERS. IV) TO IMPART FINANCIAL ASS ISTANCE TO MEMBERS FOR AGRO-BASED INDUSTRIES AND SUCH SIMILAR INDUSTRIES. V) TO PREPARE AND FINANCE SCHEMES TO IMPROVE THE ECONOM IC AND EDUCATIONAL CONDITION AND DEVELOPMENT OF MEMBERS AND TO ENCOURAGE THEIR ADVANCEMENT. VI) TO PREPARE SCHEMES TO IMPROVE THE ECONOMIC CONDITION OF THE WEAKER SECTIONS OFSOCIETY. VII) TO PURCHASE SITES SUITABLE TO THE MEMBERS AND CONSTRUCT APPROPRIATE BUILDINGS THEREON. 9ITANO.319/PNJ/2013 (ASST.YEAR:2010 11) VIII) TO UNDERTAKE SCHEMES FOR SPECIAL ECONOMIC ADVANCEMENT OF MEMBERS BELONGING TO THE SCHEDULED CASTE/ SC HEDULED TRIBE AND WOMEN MEMBERS. IX) TO LENDMONEY TOMEMBERS TOPURCHASE M ACHINERIES AND MOTOR VEHICLES ETC. X) TO GRANTLOANS TOMEMBERS ON GOLD-SILVER ORNAMENTS. XI) TO GRANT LOANS TO INDUSTRIAL AND COMMERCIAL PRODUCTS BELONGING TO COMMERCIAL UNDERTAKINGS AND SECURED TO THESOCIETY. XII) TO PROVIDE FINANCIAL AND TECHNICA L ASSISTANCE TOT HE SELF EMPLOYED FOR ESTABLISHMENT OFTHEIR OWN INDUSTRY. XIII) TO UNDERTAKE ALL SUCH FINANCIAL ACTIV ITIES AS ARE INCIDENTAL, REQUIRED AND CONDUCIVE TO ACHIEVE FULFILLMENT OF THE OBJECTS ENUNCIATED UNDER THE BYE LAWS WITH PRIORPERMISSION OFTHE REGISTRAR. 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 BUSINESS HAS BEEN DEFINED U/S 5(B) OF THE BANKING REGULATION ACT IN THE FOLLOWING MANNER :- ' BANKING' MEANS THE ACCEPTING, FOR THE PURPOS E OF LENDING OR INVESTMENT, OF DEPOSITS OF MONEY FROM THE PUBLIC , REPAYABLE ON DEMAND OR OTHERWISE, AND WITHDRAWABLE BY CHEQUE, DRAFT, ORDER OR OTHERWISE . 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 CHEQU E, DRAFT, ORDER OR OTHERWISE AND THESE DEPOSITS ARE ACCEPTED FOR THE PURPOSE 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 ASSESSEE HAS CATEGORICA LLY ACCEPTED BEFORE THE AUTHORITIES BELOW THAT THE ASSESSEE WAS ACCEPTING DEPOSITS OFMONEY FROM MEMBERS ONLY. 9. THE DEPOSITS SO ACCEPTED ARE US ED BY THE ASSESSEE CO-OPERATIVE SOCIETY FOR LENDING OR INVESTMENT. 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 OPINION, CONDITION NO.1 DOES NOT STAND SATISFIED AND IT CANNOT BE SAID TH AT THE ASSESSEE SOCIETY WAS CARRYING ON 10ITANO.319/PNJ/2013 (ASST.YEAR:2010 11) BANKING BUSINESS AS IT WAS NOT ACCEPTING DEPOSITS FROM THE PERSONS WHO WERE NOTMEMBERS. 10. THE AUTHORISED REPRESENTATIVE TOOK THE PLEA THAT THE ASSESSEE HAS NOT OBTAINED BANKING LICENCE. IN OUR OPINION IT IS NOT NECESSARY THAT THE CO- OPERATIVE SOCIETY SHOULD HAVE A BANKING LICENCE AS PER THE DEFINITION UNDER THE INCOME TAX ACT FOR CARRYING ON BANKING BUSINESS. IF LICENCE IS NOT OBTAINED IT MAY BE AN ILLEGAL BANKING BUSINESS UNDER THE OTHER STATUTE. WHAT WE HAVE TO SEE WHETHER THE NATURE OF THE BUSINESS CARRYING ON BY THE ASSESSEE IS A BANKING BUSINESS OR NOT. THE INCOME TAX IN OUR OPINION IS NOT CONCERNED WHETHER THE BANKING BUSINESS CARRIED ON BY THE ASSESSEE IS LEGAL OR ILLEGAL. THE INCOME HAS TO BE ASSESSED U/S 14 OF THE INCOME TAX ACT UNDER THE SAME HEAD EVEN IF THE NATURE OF THE BUSINESS IS ILLEGAL. IF WE LOOK INTO THE BYE-LAWS WHICH CONSISTS OF FUND OF THE SOCIETY, WE NOTED THAT THE TYPES OF THE DEPOSITS WHICH THE ASSESSEE HAS ACCEPTED AS PER BYE-LAWS ARE THE SAME AS ARE BEING ACCEPTED DURING THE COURSE OFTHE CARRYING OUTTHE BANKING ACTIVITIES. 11. SO FAR AS THE SECOND CONDITION IS CONCERNED, THERE IS NO DISPUTE THAT THE PAID UP SHARE CAPITAL AND RESERVES IN THE CASE OF THE ASSESSEE IS MORE THAN RS. 1 LAC. THEREFORE, THEASSESSEE SATISFIES THE SECOND CONDITION. 12. SO FAR AS THE THIRD CONDITION IS CONCERNED, WE NOTED THAT SEC. 16 OF THE KARNATAKA STATE CO-OPERATIVE SOCIETIES ACT, 1959 PERMITS ADMISSION OF ANY OTHER CO-OPERATIVE SOCIETY AS A MEMBER. THE PROVISIONS OF SEC. 16 ARE LAID DOWN AS UNDER : 16. PERSONS WHO MAY BECOME MEMBERS - [(1) SUBJECT TO THE PROVISIONS OF SECTION 17, NO PERSON SHALL BE ADMITTED AS A MEMBER OF A CO-OPERATIVE SOCIETY EXCEPT THE FOLLOWING, NAMELY:-- [(A) AN INDIVIDUAL WHO NEEDS THE SERVICES OF SUCH CO-OPERATIVE SOCIETY [AND IS RESIDING IN THE AREA OF THE OPERATION OF THE SOCIETY] AND IS COMPETENT TO 11ITANO.319/PNJ/2013 (ASST.YEAR:2010 11) ENTER INTO CONTRACT UNDER THE CONTRACT ACT, 1872 (CENTRAL ACT IX OF 1872);] [(A-1) A DEPOSITOR;] (B) ANY OTHERCO-OPERATIVE SOCIETY; (C) THE STATE GOVERNMENT ORTHE CENTRAL GOVERNMENT; (D) THE LIFE INSURANCE CORPORATION OF I NDIA, STATE WAREHOUSING CORPORATION AND SUCH OTHER INSTITUTIONS ASMAY BE APPROVED BY THE STATE GOVERNMENT; (E) A FIRM, A COMPANY OR ANY OTHER BODY CORPORATE CONSTITUTED UNDER ANY LAW FOR THE TIME BEING IN FORCE INCL UDING A SOCIETY REGISTERED UNDER THE KARNATAKA SOCIETIES REGISTRATI ON ACT, 1960 (KARNATAKA ACT 17 OF1960); (F) A MARKET COMMITTEE ESTABLISHED UNDER THE KARNATAKA AGRICULTURAL PRODUCE MARKETING (REGULATION) ACT, 1966 (KARNATAKA ACT27 OF 1966); (G) A LOCALAUTHORITY. EXPLANATION.-FOR THE PURPOSE OF THIS CL AUSE, LOCAL AUTHORITY MEANS, A MUNICIPAL CORPORATION, MUNICIPAL COUNCIL, TO WN PANCHAYAT, ZILLA PANCHAYAT, TALUK PANCHAYAT OR GRAMA PANCHAYAT CONSTITUTED UNDER ANY LAW FOR THE TIME BEING IN FORCE] (2) NO CO-OPERATIVE SOCIETY SHALL, WITHOUT SUFFICIENT CAUSE, REFUSE ADMISSION TO MEMBERSHIP TO ANY PERSON DULY QUALIFIED THER EFORE UNDER THE PROVISIONS OF THIS [ACT, RULES AND BYE-LAWS]. THE AFORESAID PROVISION OF SEC.16 MANDATES ADMISSION OF ANY OTHER CO- OPERATIVE SOCIETY AS A MEMBER OF THE CO-OPERATIVE SOCIETY. THE WORD USED IN SEC. 16(1) IS SHALL. THIS FACT IS CLARIFIED FURTHER BY SUB-SECTION (2) AS RE- PRODUCED HEREINABOVE THAT NO CO-OPERATIV E SOCIETY SHALL REFUSE ADMISSION TO THE MEMBERSHIP, WITHOUT SUFFICIENT REASON, TO ANY PERSON WHO IS QUALIFIED TO BECOME MEMBER UNDER THE PROVISIONS OF THIS ACT, RULES AND BYE-LAWS. THIS CLEARLY PROVES THAT IN CASE THE RULES AND BYE-LAWS OF THE OTHER CO-OPERATIVE SOCIETY PROVIDES OTHERWISE, THE CO-OPERATIVE SOCIETY MAY NOT BE ADMITTED AS A MEMBER OF THE CO-OPERATIVE SOCIETY. THE PERSON, AS PER SUB-SECTION (2), MUST BE QUALIFIED FOR BECOMING MEMBER NOT ONLY U/S 16(1) BUT ALSO AS PER THE RULES AND BYE-LAWS OF THE CO-OPERATIVE SOCIETY. WE CANNOT READ SUB-SECTION (2) IN THE MANNER THAT THE RULES AND BYE-LAWS CANNOT PERMIT THE ADMISSION OF ANY OTHER CO- OPERATIVE SOCIETY AS A MEMBER OF THE CO-OPERATIVE SOCIETY. HAD THAT BEEN THE INTENTION OF THE LEGISLATURE, THEY WOULD HAVE NOT USED THE WORDS THIS ACT, RULES ANDBYE-LAWSINSUB-SECTION (2). 12ITANO.319/PNJ/2013 (ASST.YEAR:2010 11) 13. WE HAVE GONE THROUGH THE BYE-LAWS WHICH CONTAINS THE MEMBERSHIP CLAUSE. BYE-LAW S NO.17 STATES AS UNDER :- 17. QUALIFICATION OF MEMBERS : A PERSON WHO IS RESIDENT IN THE AREA OF OPERATION OFTHESOCIETY, WHO HAS ATTAINED 18 YEARS OF AGE, IS CARRYING ON ANY LEGAL TRADE,MANAGEMENT, BUSINESS, INDUSTRY OR HANDICRAFT AND ISCOMPETENT TO CONTRACT UNDER THE INDIAN CONTRACT ACT 1872 (ACT NO:II OF 1872) SHALL BEELIGIBLE FOR ADMISSION AS MEMBER OFTHE SOCIETY. FROM CLAUSE 17, IT IS APPARENT THAT THE BYE-LAWS OF SOCIETY DOES NOT PERMIT THE ADMISSION OF ANY OTHER CO-OPERATIVE SOCIETY AS MEMBER. MEMBERSHIP IS PERMITTED ONLY TO INDIVIDUALS. THUS THE TH IRD CONDITION FOR BECOMING PRIMARY CO-OPERATIVE BANK IS 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 BAN K 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). 14. 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 BANK PROVIDING BANKING FACILITIES TO MEMBERS IS NOT ELIGIBLE TO CLAI M 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 THROUGH 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 DECISION OF THE TRIBUNAL IN THE CASE OF ACIT, CIRCLE 3(1), 13ITANO.319/PNJ/2013 (ASST.YEAR:2010 11) BANGALORE VS. M/S. BANGALORE COMMERC IAL 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-OPERATIV E SOCIETY A AND NOT TO CO-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. JAFARI 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 N OT 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 :- 12. IT IS NOT POSSIBLE TO ACCEPT THIS CONTENTION. THE PETITIONERS ARE NOT THE BANKING INSTITUTIONS COMING UNDER THE PURVIEW OF THE BANKING REGULATION ACT. THEY ARE THE CO-OPERATIVE SOCIETIES REGISTERED UNDER T HE ACT, AND AS SUCH THEY ARE GOVERNED BY THE PROVISIONS OF THE ACT PASSED BY THE STATE L EGISLATURE. CONSEQUENTLY, THE STATE GOVERNMENT HAS CONTROL OVER THEM TO THE EXT ENT THE ACT PERMITS. MAJOR ACTIVITIES OF THE PETITIONERS ARE TOFINANCE 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-OPERATIV E 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 TRE ATED AS BANKING COMPANIES. IT IS ALSO NOT POSSIBLE TO HOLD THAT THESE ACTIVITIES O F THE PETITIONERS AMOUNT TO BANKING AS CONTEMPLATED UNDER THE BANKING REGULATION ACT, 1949, INASMUCH AS THESE CO- OPERATIVE SOCIETIES ARE NOT ESTABLISHE D FOR THE PURPOSE OF DOING BANKING AS DEFINED INSECTION 5(B) OFTHE BANKING REGULATION ACT, 1949. THIS 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 BUSINESS FACILITIES TO ITS MEMBERS IF IT IS NOT A CO- 14ITANO.319/PNJ/2013 (ASST.YEAR:2010 11) OPERATIVE BANK. WE HAVE ALSO GONE THROUGH THE DECISION OF THIS BENCH IN THE CASE OF DCIT VS. JAYALAKSHMI MAHILA VIVI DODESHAGALA SOUHARDA SAHAKARI LTD. IN ITA NO. 1 TO 3/PNJ/2012 DT. 30.3.2012 ( SUPRA), FOR WHICH 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 T O 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 BUSINESS OF THE ASSESSEE IS BANKING BUSINESS. THEREFORE, TH E 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, THEREFORE, CANNOT BE REGARDED TO BE PRIMA RY 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 EXPLANATION 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. 15. WE HAVE ALSO GONE THROUGH THE DECISION OF ACIT VS PALHAWAS PRIMARY AGRICULTURE CO-OPERATIVE SOC IETY LTD, 23 TAXMAN.COM 318 (DELHI). SECTION 80P(4) CLEARLY EXCLUDES PRIMARY AGRICULTURE CREDIT SOCIETY FROM ITS DOMAIN. THEREFORE THIS DECISION WILL NOT ASSIST THE 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 TA LKS OF CO-OPERATIVE CREDIT SOCIETY AND THEREFORE THE DISTINCTION MADE UNDER T HE BANKING REGULATION ACT CANNOT BE IMPORTED U/S 80P(2)(A)(I). THIS DECISION IN OUR OPINION WILL NOT ASSIST THE ASSESSEE. WE HAVE ALSO GONE THROUGH TH E DECISION OF TARARANI MAHILA CO- OPERATIVE CREDIT SOCIETY LTD TO WHICH THE UNDERSIGNED IS THE AUTHOR SIMILAR FINDING AS HAS BEEN GIVEN IN THIS ARE GIVEN IN THAT CASE ALSO. THE DECISION OF KARNATAKA HIGH COURT IN THE CASE OF CIT VS SRI BILURU GURUBASAVA PATTANA 15ITANO.319/PNJ/2013 (ASST.YEAR:2010 11) SAHAKARI SANGH NIYAMITHA DATED 5.2.2014, RELATES TO AN APPEAL FILED AGAINST THE ORDER PASSED U/S 263 AND THE QUESTION INVOLVED WAS WHETHER THE REVISIONAL AUTHORITY WAS JUSTIFIED IN INVOKING HIS POWER U/S 263 WITHOUT THE FOUNDATIONAL FACT OF THE ASSESSEE BEING CO-OPERATIVE B ANK. THEREFORE, THIS DECISION IS NOT APPLICABLE. 16. WE, THEREFORE, IN VIEW OF OUR AFORESAID DISCUSSION HOLD THAT THE ASSESSEE HAS NOT TO BE REGARDED TO BE A PRIMARY CO-OPERATIVE BANK AS ALL THE THREE BASIC CONDITIONS ARE NOT COMPLIED WITH, THEREFORE, IT IS NOT A CO-OPERATIVE BANK AND THE PROVISIONS OF SEC. 80P(4) ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE AND ASSESSEE IS ENTITLED FOR DEDUC TION U/S 80P(2)(A)(I). WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION TO THE ASSESSEE U/S 80P(2)(A)(I) ON THE INC OME GENERATED FOR PROVIDING BANKING OR CREDIT FACILITIES TO ITSMEMBERS. 17. IN THE RESULT, THEAPPEAL FILED BY THE ASSESSEE ISALLOWED. 18. ORDE R PRONOUNCE D INTHEOPEN COURT ON 28.08.2014. SD/- SD/- (D.T.GARASIA) JUDICIAL MEMBER (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI /GOA DATED : 28.08.2014 *A* COPYTO: (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) CIT(A) CONCERNED (5) D.R (6) GUAR D FILE TRUE COPY, BY ORDER ASSISTANT REGISTRAR ITAT, PANAJI, GOA