M/s. Khalsa Credit Coop.Credit Soc.Ltd., Indore V. The ITO, Indore

ITA 463/IND/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2496 (ITAT-INDORE)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 26-10-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 29-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: S S DESHPANDE
• Section: 80HHC; 80P; 250; 251; 80HH

Judgement Text

IN THE INCOME TAX APPELATE TRIBUNAL, SMC-I BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO.463/IND/09 A.Y.2003-04 KHALSA CREDIT CO-OP. SOC. LIMITED INDORE APPELLANT PAN AAAAK-2856K VS INCOMETAX OFFICER 5(1) INDORE RESPONDENT APPELLANT BY SHRI S.S. DESHPANDE, CA RESPONDENT BY SMT. APARNA KARAN, SR. DR O R D E R THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED FIRST APPELLATE AUTHORITY DATED 29.6.2009 ON THE GROUND T HAT THE LEARNED CIT(A) WAS WRONG IN REJECTING THE CLAIM OF DEDUCTION UNDER SEC TION 80P ON INCOME FROM INTEREST ON BANK FIXED DEPOSIT OF RS.2,64,220/-. 2. DURING HEARING OF THIS APPEAL, I HAVE HEARD SHRI S.S. DESHPANDE, LEARNED COUNSEL FOR THE ASSESSEE ANE SMT. APARNA KARAN, LEA RNED SENIOR DR. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT THE ASSESSEE IS A CREDIT COOPERATIVE SOCIETY CARRYING ON THE BUSINESS OF BANKING BY PROV IDING CREDIT FACILITIES TO ITS MEMBERS. IT WAS CLAIMED THAT THE PROVISIONS OF MAD HYA PRADESH COOPERATIVE - 2 - SOCIETIES ACT ARE APPLICABLE TO THE FACTS OF THE PR ESENT ASSESSEE. THE LEARNED COUNSEL PLACED RELIANCE ON THE DECISIONS IN CIT V K ARNATAKA STATE CO-OPERATIVE APEX BANK; 251 ITR 194, CIT V. KRISHAK SAHKARI GAN NA SAMITI LTD.; 258 TR 594, CIT V. CO-OPERATIVE CANE DEVELOPMENT UNION LIM ITED; 118 ITR 770, GUJARAT STATE CO-OPERATIVE BANK LTD. V. CIT; 250 I TR 229, CIT V. SRI RAM SAHAKARI BANK LTD.; 266 ITR 632 AND CIT V. PUNJAB STATE CO-OPERATIVE BANK LTD.; 304 ITR 113. IT WAS PLEADED THAT THE ACTIVIT IES OF THE ASSESSEE ARE AKIN TO BANKING, THEREFORE, EARNING OF INTEREST FROM FIXED DEPOSITS IS A PART OF BUSINESS ACTIVITIES OF THE ASSESSEE. ON THE OTHER HAND, THE LEARNED SR. DR STRONGLY DEFENDED THE IMPUGNED ORDER BY CONTENDING THAT FIRS TLY THE ASSESSEE IS NOT A BANK AND SECONDLY ITS REGISTRATION WITH RBI AS DEFI NED UNDER SECTION 5(B) OF THE BANKING REGULATION ACT, 1941 IS REQUIRED. THEREFOR E, IT WAS RIGHTLY DENIED. RELIANCE WAS PLACED UPON KERALA CO-OPERATIVE CONSUM ERS FEDERATION LIMITED V. CIT; 170 ITR 455 AND CIT V. CORAL MILLS WORKERS CO-OPERATIVE STORES LTD.; 106 ITR 868. IT WAS STRONGLY PLEADED THAT THE INTE REST EARNED ON FDRS MADE WITH THE BANK CANNOT BE SAID TO BE INTEREST EARNED BY PROVIDING OTHER CREDIT FACILITIES TO ITS MEMBERS. CONSEQUENTLY, IT IS NOT EXEMPTED UNDER SECTION 80P(2)(A)(I) OF THE ACT, AS CLAIMED BY THE ASSESSEE . 3. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL AVAILABLE ON RECORD. BRIEF FACTS ARE THAT THE ASSESSEE IS A CREDIT COOPERATIVE SOCIETY - 3 - CLAIMED TO BE CARRYING ON BUSINESS OF BANKING BY PR OVIDING CREDIT FACILITIES TO ITS MEMBERS. ADMITTEDLY, THE ASSESSEE IS NOT REGIS TERED WITH RESERVE BANK OF INDIA FOR BANKING BUSINESS. HOWEVER, THE STAND OF THE ASSESSEE IS THAT NO REGISTRATION WITH RESERVE BANK OF INDIA IS REQUIRED AS IN ITS NORMAL COURSE OF BUSINESS, THE ASSESSEE SOCIETY IS CARRYING ON THE B USINESS OF BANKING TO INVEST MONEY, TO RECEIVE DEPOSITS, TO LEND MONEY, TO ISSUE DEMAND DRAFTS AND TO PROVIDE LOCKER FACILITY TO ITS MEMBERS. DURING ITS DAY TO DAY OPERATION, THE ASSESSEE IS REQUIRED TO MAINTAIN BANK ACCOUNT WITH SCHEDULED BANKS AND KEEP THE MEMBERS DEPOSITS IN THE SAID BANK ACCOUNT FOR SAFE KEEPING. THE ASSESSEE DURING ITS NORMAL BUSINESS ACTIVITY MADE FIXED DEPO SITS WITH THE NATIONALISED BANK TO AVAIL OVERDRAFT FACILITY (SANCTION LETTER O F BANK WAS ENCLOSED DURING THE ASSESSMENT PROCEEDINGS) FOR THE REASON THAT THE CAS H SHOULD BE AVAILABLE TO THE ASSESSEE AS AND WHEN IT WAS NEEDED FOR THE PURPOSE OF ITS BUSINESS. TO PLAN INVESTMENT OF MONEY AND CREDIT FACILITY, THE ASSESS EE MADE FIXED DEPOSITS WITH THE NATIONALISED BANKS AND EARNED INTEREST OF RS.6, 62,869/- BY CLAIMING THAT THE FDRS WITH OTHER BANKS WERE MADE TOWARDS SAFE KEEPIN G OF FUNDS AND EARN INTEREST AS BUSINESS ACTIVITY. THE ONLY REASON ON THE BASIS OF WHICH THE INTEREST WAS DISALLOWED WAS THAT THE ASSESSEE IS NOT REGISTE RED WITH RESERVE BANK OF INDIA AS THE TERM BANKING HAS BEEN DEFINED UNDER SECTION 5(1)(B) OF BANKING REGULATIONS ACT. THE STAND OF THE REVENUE IS THAT THE INTEREST EARNED ON FDRS - 4 - AMOUNTING TO RS.6,62,869/- AND LOCKER RENT OF RS. 2 700/- IS NOT COVERED WITHIN THE PROVISIONS OF SECTION 80P OF THE ACT. IT IS SE EN THAT THE LEARNED FIRST APPELLATE AUTHORITY DELETED THE ADDITION ON ACCOUNT OF LOCKER RENT AND THE INTEREST EARNED ON FDRS WAS HELD TO BE NOT QUALIFYING FOR DE DUCTION UNDER SECTION 80P(2)(A)(I). THE INTEREST EARNED FROM DEPOSITS TO THE TUNE OF RS. 2,64,220/- WAS DENIED. 4. IF THIS ISSUE IS ANALYSED WITH THE RATIO LAID DO WN BY VARIOUS JUDICIAL PRONOUNCEMENTS, I HAVE FOUND THAT THE HONBLE KARNA TAKA HIGH COURT IN THE CASE OF CIT V. SRI RAM SAHAKARI BANK LIMITED (SUPRA ) WHEREIN THE ASSESSEE WAS A REGISTERED COOPERATIVE SOCIETY AND MADE INVESTMEN TS IN NATIONAL SAVINGS CERTIFICATES, INDIRA VIKAS PATRAS, KISAN VIKAS PATR AS, SHORT TERM FIXED DEPOSITS IN BANKS, THE ASSESSEE EARNED INTEREST AND DIVIDEND INCOME OUT OF SUCH INVESTMENTS. IT WAS HELD THAT THE ASSESSEE IS ENTI TLED TO DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. WHILE COMING TO THIS CONC LUSION, THE HONBLE COURT APPLIED THE DECISION OF THE HONBLE APEX COURT IN B IHAR STATE COOPERATIVE BANK LIMITED; 39 ITR 114 AND ALSO CONSIDERED THE DE CISION IN GUJARAT STATE CO- OPERATIVE BANK LIMITED V. CIT; 251 ITR 522(SC). T HE LEARNED ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A) HAVE NOT DISP UTED THAT THE ASSESSEE DID NOT UTILISE HIS SURPLUS OR VOLUNTARY RESERVE FUNDS IN T HE COURSE OF ITS ORDINARY BANKING BUSINESS. THE ONLY GROUND FOR DENIAL IS TH AT THE ASSESSEE SOCIETY IS NOT - 5 - REGISTERED WITH RESERVE BANK OF INDIA. I AM OF THE VIEW THAT THE REASONING ON THE FACE OF IT IS CONTRARY TO THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF BIHAR STATE COOPERATIVE BANK LIMITED ( SUPRA) WHEREIN IT WAS HELD AS UNDER :- AS WE HAVE POINTED OUT ABOVE, IT IS A NORMAL MODE OF CARRYING ON BANKING BUSINESS TO INVEST MONEYS IN A MANNER THAT THEY ARE READILY AVAILABLE AND THAT IS JUST AS MUCH A PART OF THE MODE OF CONDUCTING A BANKS BUSINESS AS RECEIVING DEPOSITS OR LENDING MONEYS OR DISCOUNTING HUNDIES OR ISSUING DEMAND DRAFTS. THAT IS HOWEVER THE CIRCULATING CAPITAL IS EMPLOYED AND THA T IS THE NORMAL COURSE OF BUSINESS OF A BANK. THE MONEYS LAID OUT, IN THE FORM OF DEPOSITS AS IN THE INSTANT CASE WOULD NOT CEASE TO BE APART OF THE CIRCULATING CAPI TAL OF THE APPELLANT NOR WOULD THEY CEASE TO FORM PART OF ITS BANKING BUSINESS. THE RETURNS FLOWING FROM THEM WOULD FORM PART OF ITS PROITS FROM ITS BUSINESS. I N A COMMERCIAL SENSE THE DIRECTORS OF THE COMPANY OWE I T TO THE BANK TO MAKE INVESTMENTS WHICH EARN THEM INTEREST OF LETTING MONEYS LIE IDLE. IT CANNOT BE SAID - 6 - THAT THE FUNDS OF THE BANK WHICH WERE NOT LENT TO BORROWERS BUT WERE LAID OUT IN THE FORM OF DEPOSITS IN ANOTHER BANK TO ADD TO THE PROFIT INSTEAD OF LYING IDLE NECESSARILY CEASED TO BE APART OF THE STOCK-IN-TRAD E OF THE BANK, OR THAT THE INTEREST ARISING THEREFROM DI D NOT FORM PART OF ITS BUSINESS PROFITS. THE HONBLE HIGH COURT OF PUNJAB & HARYANA IN THE C ASE OF CIT V. PUNJAB STATE CO-OPERATIVE BANK LIMITED; 304 ITR 113 WHERE IN THE ASSESSEE WAS A COOPERATIVE BANK ENGAGED IN THE BUSINESS OF BANKING , CLAIMED DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. THE ASSESSING OFFI CER TAXED THE INTEREST EARNED FROM INVESTMENTS MADE IN HDFC BONDS TREATING IT AS INCOME FROM OTHER SOURCES WHICH WAS AFFIRMED BY THE LEARNED CIT(A). THE TRIBUNAL HELD THAT THE INCOME EARNED FROM HDFC BONDS WAS ELIGIBLE FOR DEDU CTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. THE STAND OF THE TRIBUNAL WAS AFFIRMED BY THE HONBLE HIGH COURT BY CONSIDERING THE DECISIONS IN CIT V. K ARNATAKA STATE COOPERATIVE APEX BANK; 251 ITR 194(SC); CIT V. NAWANSHAHAR CENT RAL CO-OPERATIVE BANK LIMITED; 263 ITR 320 (P&H) AND MEHSANA DISTRIC T CENTRAL COOPERATIVE BANK LIMITED V.ITO; 251 ITR 522 (SC). HONBLE PUNJ AB & HARYANA HIGH COURT IN THE CASE OF NAWANSHAHAR CENTRAL CO-OPERATI VE BANK LIMITED (SUPRA) WHEREIN THE ASSESSEE SOCIETY MADE INVESTMENTS IN PS EB BONDS IN ACCORDANCE - 7 - WITH THE PROVISIONS OF SECTION 44 OF THE PUNJAB COO PERATIVE SOCIETIES ACT. IT WAS HELD THAT THE INTEREST ON THIS INVESTMENT WAS E LIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. HONBLE APEX COURT IN THE CASE OF CIT V KARNATAKA STATE CO-OPERATIVE APEX BANK (SUPRA) HELD THAT THE INTEREST ARISING FROM THE INVESTMENT MADE OUT OF RESERVE FUND TO ENA BLE IT TO CARRY ON BANKING BUSINESS IS AN INCOME FROM BANKING BUSINESS. CONSE QUENTLY, IT IS ALLOWABLE DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. EV EN IN THE LATER DECISION OF PUNJAB STATE CO-OPERATIVE BANK LTD.(SUPRA) THE HON BLE COURT CONSIDERED VARIOUS JUDICIAL PRONOUNCEMENTS INCLUDING CIT V. KA RNATAKA STATE COOPERATIVE APEX BANK; 251 ITR 194, CIT V. NAWANSHAHAR CENTRAL COOPERATIVE BANK LIMITED; 263 ITR 320 AND MEHSANA DISTRICT CENTRAL C OOPERATIVE BANK LIMITED; 251 ITR 522 AND HELD THAT THE INVESTMENTS IN HDFC BANK BONDS ARE ENTITLED FOR SPECIAL DEDUCTION UNDER SECTION 80P(2) (A)(I) OF THE ACT. AS FAR AS THE RELIANCE OF THE LEARNED SENIOR DR UPON THE DECI SION IN THE CASE OF CIT V. CORAL MILLS WORKERS COOPERATIVE STORES LIMITED; 10 6 ITR 868 (MAD) IS CONCERNED, THE ISSUE BEFORE THE HONBLE COURT WAS M EANING OF COOPERATIVE SOCIETY WHO WAS SELLING GOODS ON CREDIT, THEREFORE, IT WAS A DIFFERENT ISSUE. ANOTHER CASE RELIED UPON BY THE LD. SENIOR DR IS KE RALA COOPERATIVE CONSUMERS LIMITED V. CIT; 170 ITR 455 WHEREIN THE A SSESSEE SOCIETY WAS PROVIDING CREDIT FACILITY TO ITS MEMBERS AND WAS SE LLING GOODS TO ITS MEMBERS. - 8 - IT WAS HELD THAT IT DOES NOT AMOUNT TO PROVISIONS O F CREDIT FACILITIES. IT WAS HELD THAT THE WORDS SHOULD BE UNDERSTOOD IN THEIR COGNAT E SENSE. 5. SECTION 80P WHICH DESCRIBES DEDUCTION IN RESPECT OF INCOME OF COOPERATIVE SOCIETIES IS REPRODUCED HEREUNDER :- 80P. (1) WHERE, IN THE CASE OF AN ASSESSEE BEING A CO-O PERATIVE SOCIETY, THE GROSS TOTAL INCOME INCLUDES ANY INCOME REFERRED TO IN SUB-SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE WITH AND SUBJECT T O THE PROVISIONS OF THIS 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 B E THE FOLLOWING, NAMELY : ( A ) IN THE CASE OF A CO-OPERATIVE SOCIETY ENGAGED IN ( I ) CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS, OR ( II ) A COTTAGE INDUSTRY, OR [( III ) THE MARKETING OF AGRICULTURAL PRODUCE GROWN BY IT S MEMBERS, OR] ( IV ) THE PURCHASE OF AGRICULTURAL IMPLEMENTS, SEEDS, L IVESTOCK OR OTHER ARTICLES INTENDED FOR AGRICULTURE FOR THE PURPOSE O F SUPPLYING THEM TO ITS MEMBERS, OR ( V ) THE PROCESSING, WITHOUT THE AID OF POWER, OF THE AGRICULTURAL PRODUCE OF ITS MEMBERS, [OR] [( VI ) THE COLLECTIVE DISPOSAL OF THE LABOUR OF ITS MEMB ERS, OR ( VII ) FISHING OR ALLIED ACTIVITIES, THAT IS TO SAY, THE CATCHING, CURING, PROCESSING, PRESERVING, STORING OR MARKETING OF FIS H OR THE PURCHASE OF MATERIALS AND EQUIPMENT IN CONNECTION THEREWITH FOR THE PURPOSE OF SUPPLYING THEM TO ITS MEMBERS,] THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUSINESS ATTRIBUTABLE TO ANY ONE OR MORE OF SUCH ACTIVITIES : [ PROVIDED THAT IN THE CASE OF A CO-OPERATIVE SOCIETY FALLING UNDER SUB-CLAUSE ( VI ), OR SUB-CLAUSE ( VII ), THE RULES AND BYE-LAWS OF THE SOCIETY RESTRICT T HE VOTING RIGHTS TO THE FOLLOWING CLASSES OF ITS MEMBERS, NAM ELY: ( 1 ) THE INDIVIDUALS WHO CONTRIBUTE THEIR LABOUR OR, A S THE CASE MAY BE, CARRY ON THE FISHING OR ALLIED ACTIVITIES; ( 2 ) THE CO-OPERATIVE CREDIT SOCIETIES WHICH PROVIDE F INANCIAL ASSISTANCE TO THE SOCIETY; ( 3 ) THE STATE GOVERNMENT;] - 9 - - [( B ) IN THE CASE OF A CO-OPERATIVE SOCIETY, BEING A PR IMARY SOCIETY ENGAGED IN SUPPLYING MILK, OILSEEDS, FRUITS OR VEGETABLES R AISED OR GROWN BY ITS MEMBERS TO ( I ) A FEDERAL CO-OPERATIVE SOCIETY, BEING A SOCIETY E NGAGED IN THE BUSINESS OF SUPPLYING MILK, OILSEEDS, FRUITS, OR VEGETABLES, AS THE CASE MAY BE; OR ( II ) THE GOVERNMENT OR A LOCAL AUTHORITY; OR ( III ) A GOVERNMENT COMPANY AS DEFINED IN SECTION 617 OF THE COMPANIES ACT, 1956 (1 OF 1956), OR A CORPORATION ESTABLISHED BY OR UNDER A CENTRAL, STATE OR PROVINCIAL ACT (BEING A COMPANY OR CORPORATION E NGAGED IN SUPPLYING MILK, OILSEEDS, FRUITS OR VEGETABLES, AS THE CASE MAY BE, TO THE PUBLIC), THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF SUCH BUSINESS;] ( C ) IN THE CASE OF A CO-OPERATIVE SOCIETY ENGAGED IN ACTIVITIES OTHER THAN THOSE SPECIFIED IN CLAUSE ( A ) OR CLAUSE ( B ) (EITHER INDEPENDENTLY OF, OR IN ADDITION TO, ALL OR ANY OF THE ACTIVITIES SO SPECIF IED), SO MUCH OF ITS PROFITS AND GAINS ATTRIBUTABLE TO SUCH ACTIVITIES AS [DOES NOT EXCEED, ( I ) WHERE SUCH CO-OPERATIVE SOCIETY IS A CONSUMERS C O-OPERATIVE SOCIETY, [ONE HUNDRED] THOUSAND RUPEES; AND ( II ) IN ANY OTHER CASE, [FIFTY] THOUSAND RUPEES. EXPLANATION. IN THIS CLAUSE, CONSUMERS CO-OPERATIVE SOCIETY MEANS A SOCIETY FOR THE BENEFIT OF THE CONSUMERS;] ( D ) IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DI VIDENDS DERIVED BY THE CO-OPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANY OTHER CO-OPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME; ( E ) IN RESPECT OF ANY INCOME DERIVED BY THE CO-OPERAT IVE SOCIETY FROM THE LETTING OF GODOWNS OR WAREHOUSES FOR STORAGE, PROCE SSING OR FACILITATING THE MARKETING OF COMMODITIES, THE WHOLE OF SUCH INCOME; ( F ) IN THE CASE OF A CO-OPERATIVE SOCIETY, NOT BEING A HOUSING SOCIETY OR AN URBAN CONSUMERS SOCIETY OR A SOCIETY CARRYING ON T RANSPORT BUSINESS OR A SOCIETY ENGAGED IN THE PERFORMANCE OF ANY MANUFACTU RING OPERATIONS WITH THE AID OF POWER, WHERE THE GROSS TOTAL INCOME DOES NOT EXCEED TWENTY THOUSAND RUPEES, THE AMOUNT OF ANY INCOME BY WAY OF INTEREST ON SECURITIES [***] OR ANY INCOME FROM HOUSE PROPERTY CHARGEABLE UNDER SECTION 22 . EXPLANATION. FOR THE PURPOSES OF THIS SECTION, AN URBAN CONSUM ERS CO- OPERATIVE SOCIETY MEANS A SOCIETY FOR THE BENEFIT OF THE CONSUMERS WITHIN THE LIMITS OF A MUNICIPAL CORPORATION, MUNICIPALITY, MU NICIPAL COMMITTEE, NOTIFIED AREA COMMITTEE, TOWN AREA OR CANTONMENT. (3) IN A CASE WHERE THE ASSESSEE IS ENTITLED ALSO T O THE DEDUCTION UNDER [***] [ SECTION 80HH ] [OR SECTION 80HHA ] [OR SECTION 80HHB ] [OR SECTION 80HHC ] [OR SECTION 80HHD ] [OR SECTION 80-I ] [OR SECTION 80-IA ] OR SECTION 80J [***] [***], THE DEDUCTION UNDER SUB-SECTION (1) OF THIS SECTION, IN RELATION TO THE SUMS SPECIFIED IN CLAUSE ( A ) OR CLAUSE ( B ) OR CLAUSE ( C ) OF SUB-SECTION (2), SHALL BE ALLOWED WITH REFERENCE TO THE INCOME, IF ANY, AS REFERRED TO IN THOSE CLAUSES INCLUDED IN THE GROSS TOTAL INCOME AS REDUCED BY TH E DEDUCTIONS UNDER [***] [ SECTION 80HH ,] [ SECTION 80HHA ,] [ SECTION 80HHB ,] [ SECTION 80HHC ,] - 10 - [ SECTION 80HHD ,] [ SECTION 80-I ,] [ SECTION 80-IA ,] [ [ SECTION 80J AND SECTION 80JJ ]].] [(4) THE PROVISIONS OF THIS SECTION SHALL NOT APPL Y 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 CRE DIT SOCIETY SHALL 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 DEVE LOPMENT 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.] IF THE AFORESAID SECTION AND THE LANGUAGE CONTAINED THEREIN IS ANALYSED, IT MERELY SAYS THAT THE ASSESSEE BEING A COOPERATIVE S OCIETY, ENGAGED IN CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACI LITIES TO ITS MEMBERSIT NOWHERE SAYS THAT IT NECESSARILY HAS TO BE REGISTERED WITH RESERVE BANK OF INDIA. IN THE PRESENT CASE, EVEN T HE REVENUE HAS NOT DISPUTED THAT THE ASSESSEE IS NOT A COOPERATIVE SOCIETY. TH EREFORE, I AM SUPPOSED TO ANALYSE THE ISSUE WITH THE LANGUAGE IN THE SAID SEC TION. ANOTHER PLEA WAS RAISED BY THE LEARNED SR. DR THAT THE ASSESSEE SOCI ETY IS NOT A BANK. HOWEVER, IN EXPLANATION TO SUB-CLAUSE (4) TO SECTION 80P THE COOPERATIVE BANK AND PRIMARY AGRICULTURAL SOCIETY HAVE BEEN EXPLAINED. AS PER SUB-CLAUSE (B) PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPM ENT BANK MEANS A SOCIETY HAVING ITS AREA OF OPERATION CONFINED TO A TALUKA A ND THE PRINCIPAL OBJECT OF WHICH IS TO PROVIDE FOR LONG TERM CREDIT FOR AGRICU LTURAL AND RURAL DEVELOPMENT - 11 - ACTIVITIES MEANING THEREBY NO DISTINCTION HAS BEEN MADE BY THE ACTS ITSELF BETWEEN THE BANK AND THE SOCIETY FOR THE SAID PURPO SE. EVEN IN THE CASE OF PUNJAB COOPERATIVE BANKS LIMITED (SUPRA) THE ISSUE HAS BEEN ANALYSED WITH THE ANGLE OF COOPERATIVE SOCIETY. IN THE PRESENT A PPEAL, THE ASSESSEE SOCIETY MADE FDRS WITH BANKS AND EARNED INTEREST THEREFROM DURING ITS BANKING BUSINESS, THEREFORE, IT IS CLEARLY A BANKING ACTIVI TY, THEREFORE, EARNING OF INTEREST ON FDRS IS CLEARLY WITHIN THE BANKING BUSINESS OF T HE ASSESSEE SOCIETY, THEREFORE, IT HAS TO BE ALLOWED UNDER SECTION 80P(2 )(A)(I) OF THE ACT. IN VIEW OF THESE FACTS AND JUDICIAL PRONOUNCEMENTS, THIS APPEA L OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 8 TH DECEMBER, 2009. SD (JOGINDER SINGH) JUDICIAL MEMBER DECEMBER 8 TH , 2009 COPY TO APPELLANT, RESPONDENT, CIT, CIT(A), DR *DN/-