The ITO, Kozhikkode V. M/s.Meenangadi Service Co-op Bank Ltd, Wayanad

ITA 488/COCH/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4428 (ITAT-COCHIN)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 29-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Keywords: Question of law; Competent authority
• Section: 56; 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN (SMC) BEFORE SHRI GEORGE GEOR GE K., JM I.T.A. NO. 484/COCH/2017 ASSESSMENT YEAR : 20 13 - 14 THE INCOME T AX OFFICER, WARD-1, KALPETTA. VS. M/S. THE THARIODE SE RVICE CO - OPERATIVE BANK LTD. P.O., KAVUMANNAM, WAYANAD-673 121. [PAN: AADAT 0264H] (REVENUE - APPELLANT) (ASSESSEE - RESPOND ENT) REVENUE BY SHRI A. DHANARAJ, SR. DR ASSESSEE BY SHRI GEORGE THOMAS, CA I.T.A. NO. 486/COCH/2017 ASSESSMENT YEAR : 2013 - 14 THE INCOME TAX OFFICER, WARD-1, KALPETTA. VS. M/S. VYTHIRI SERVICE CO - OPERATIVE BANK LTD. P.O., VYTHIRI, WAYANAD-673 576. [PAN: AAAAV 8077B] (REVENUE - APPELLANT) (ASSESSEE - RESPONDENT) I.T.A. NOS.484,486&488./C/2017 2 I.T.A. NO. 488/COCH/2017 ASSESSMENT YEAR : 2013 - 14 THE INCOME TAX OFFICER, WARD-2, KALPETTA. V S. M/S. MEENANGADID SERVICE CO - OPERATIVE BANK LTD. P.O., MEENANGADI, WAYANAD-673 591. [PAN: AABAM 3681M] (REVENUE - APPELLANT) (ASSESSEE - RESPONDENT) REVENUE BY SHRI A. DHANARAJ, SR. DR ASSESSEE BY NONE DATE OF HEARING 07 /0 3 /2018 DAT E OF PRONOUNCEMENT 07 /03/ 2018 O R D E R PER GEORGE GEORGE K. JUDICIAL MEMBER: THESE THREE APPEALS AT THE INSTANCE OF THE DEPAR TMENT ARE DIRECTED AGAINST THREE SEPARATE ORDERS OF THE CIT(A). THE RELEVANT A SSESSMENT YEAR FOR ALL THE THREE APPEALS IS 2013-14. 2. SINCE COMMON ISSUE IS RAISED IN THESE APPEALS , THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDE R. 3. THE BRIEF FACTS OF THE CASE ARE AS FOLLOWS: I.T.A. NOS.484,486&488./C/2017 3 THE ASSESSEES IN THESE CASES ARE PRIMARY AGRIC ULTURAL CREDIT SOCIETY (PACS) REGISTERED UNDER THE KERALA CO-OPERATIVE SOCIETIES ACT, 1969. FOR THE ASSESSMENT YEAR 2013-14, ASSESSMENTS WERE COMPLETED IN THE CASE OF THESE ASSESSES BY DENYING THE BENEFIT OF DEDUCTION U/S. 8 0P(2) OF THE I.T. ACT. THE ASSESSING OFFICER DENIED THE CLAIM OF DEDUCTION U/S . 80P(2) OF THE ACT FOR THE REASON THAT THE ASSESSEES CANNOT BE CONSIDERED AS P RIMARY AGRICULTURAL CREDIT SOCIETY AS IT WAS ENGAGED IN THE BUSINESS OF BANKIN G AND ONLY NEGLIGIBLE PERCENTAGE OF LOANS DISBURSED BY THE ASSESSEE WAS F OR AGRICULTURAL PURPOSES. 4. AGGRIEVED BY THE DENIAL OF DEDUCTION U/S. 80P( 2) OF THE ACT, THE ASSESSEES PREFERRED APPEALS TO THE FIRST APPELLATE AUTHORITY. THE CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEES BY FOLLOWING THE JUDGMENT O F THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CHIRAKKAL SERVICE CO-OPER ATIVE BANK LTD. VS.CIT REPORTED IN 384 ITR 490. 5. AGGRIEVED BY THE ORDERS OF THE CIT(A), THE REVE NUE HAS FILED THE PRESENT APPEALS BEFORE THE TRIBUNAL. IDENTICAL GROUNDS ARE RAISED IN THESE THREE APPEALS AND THEY READ AS FOLLOWS: 1 IN VIEW OF THE RECENT DECISION OF THE HONBLE S UPREME COURT IN THE CASE OF THE CITIZENS CO-OPERATIVE SOCIETY LIMITED VS. AS SISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-9(1), HYDERABAD DATED 8 TH AUGUST, 2017, IS NOT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(AP PEALS) AGAINST LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE? 2. THE COMMISSIONER OF INCOME TAX(APPEALS) HAD IN THE INSTANT PLACING RELIANCE ON THE DECISION OF THE HONOURABLE HIGH COU RT OF KERALA IN THE CASE I.T.A. NOS.484,486&488./C/2017 4 OF M/S. CHIRAKKAL SERVICE CO-OP BANK LTD. AND OTHER S IN ITA 212 OF 2013, HELD THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/ S. 80P OF THE INCOME TAX ACT SOLELY ON THE BASIS THAT IT HAS BEEN REGISTERED AND CLASSIFIED AS A PRIMARY AGRICULTURAL CREDIT SOCIETY BY THE COMPETEN T AUTHORITY UNDER THE KERALA CO-OPERATIVE SOCIETIES (KCS) ACT. AS AGAINST THIS, THE HONOURABLE SUPREME COURT HAS WHILE DECIDING IN THE CASE OF THE CITIZEN CO-OPERATIVE SOCIETY LIMITED VS. ASSISTANT COMMISSIONER OF INCOM E TAX, CIRCLE-9(1), HYDERABAD TAKEN INTO CONSIDERATION THE ACTIVITIES O F THE ASSESSEE SOCIETY AND NOT RELIED ONLY ON THE CERTIFICATE OF REGISTRAT ION ISSUED BY THE CENTRAL REGISTRAR OF CO-OPERATIVE SOCIETIES. IN VIEW OF TH IS, IS NOT THE DECISION OF THE CIT(A) AGAINST THE PREVAILING POSITIONS OF LAW THAT DIFFERENTIATES BETWEEN DE JURE AND DE FACTO POSITIONS AND WHICH PE RMITS THE PRINCIPLE OF PENETRATION OF THE CORPORATE VEIL TO DETERMINE THE TRUE NATURE OF THE ACTIVITIES OF THE COOPERATIVE SOCIETY? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE COMMISSIONER OF INCOME TAX(APPEALS) IS RIGHT IN LAW IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR CLAIMING DEDUCTION U/S. 80 P ON THE ABOVE LINES, WHEN IN THE RECENT DECISION IN THE CASE OF THE CITI ZEN CO-OPERATIVE SOCIETY, THE HONOURABLE SUPREME COURT HAS, AFTER TAKING INT O ACCOUNT THE ACTIVITIES OF THE APPELLANT CO-OPERATIVE SOCIETY, HELD THAT TH E APPELLANT COULD BE TREATED AS A CO-OPERATIVE SOCIETY MEANT ONLY FOR IT S MEMBERS AND PROVIDING CREDIT FACILITIES ONLY TO ITS MEMBERS. 4. THE HONOURABLE SUPREME COURT HAD IN THE CASE O F THE CITIZEN CO- OPERATIVE SOCIETY LIMITED VS ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE- 9(1), HYDERABAD OBSERVED THAT THE DEPOSITORS AND BO RROWERS IN THE APPELLANT COOPERATIVE SOCIETY ARE DISTINCT AND THER EFORE, IN REALITY, THE ACTIVITIES OF THE APPELLANT ARE THAT OF A FINANCE B USINESS AND CANNOT BE TERMED AS THOSE OF A CO-OPERATIVE SOCIETY. THE FAC TS IN THE PRESENT CASE ALSO FALL WITHIN THE SAME CONTEXTUAL FABRIC. THE C ATEGORIES OF RESIDENT MEMBERS, ORDINARY MEMBERS AND NOMINAL MEMBERS EXIST . THIS INVOKES THE QUESTION OF WHETHER THE INSTANT APPELLANT IS MERELY PROVIDING AGRICULTURAL CREDIT TO ITS MEMBERS THEREBY VALIDATING THE CLAIM OF TAX EXEMPTION U/S. 80P(4) OR PERFORMING ACTIVITIES BEYOND ITS APPROVED FRAMEWORK THAT ENABLES DISALLOWANCE OF SUCH CLAIM. IN VIEW OF THI S, IS NOT THE DECISION OF THE CIT(A) WITHOUT MERITS? 5. THE LEARNED CIT(APPEALS) OUGHT TO HAVE SEEN THAT THE HONOURABLE SUPREME COURT IN THE CASE OF SABARKANTHA ZILLA KHAR ID VECHAN SANGH LTD VS CIT REPORTED IN 203 ITR 1027 (SC) HAD HELD THAT THE ELIGIBLE DEDUCTION UNDER SECTION 80P OF THE INCOME TAX ACT, 1961 IN RE SPECT OF CO-OPERATIVE SOCIETIES/BANKS DOING BOTH AGRICULTURAL AND NON AGR ICULTURAL ACTIVITIES SHOULD NOT BE 100% OF THE GROSS PROFITS OF SUCH SOC IETIES ETC. BUT SHOULD I.T.A. NOS.484,486&488./C/2017 5 BE LIMITED TO THE PROFITS GENERATED FROM AGRICULTUR AL ACTIVITIES ALONE PERFORMED BY SUCH ASSESSES. 6. THE LEARNED CIT(APPEALS) OUGHT TO HAVE SEEN THA T THE ABOVE APEX COURTS DECISION IS IN SHARP CONTRAST TO THE DECISI ON OF THE KERALA HIGH COURT IN THE CASE OF M/S. CHIRAKKAL SERVICE CO-OP ERATIVE BANK & OTHERS IN ITA 212 OF 2013 THAT HELD THAT THE AUTHORITIES UND ER THE INCOME TAX ACT CANNOT PROBE INTO THE QUESTION OF WHETHER THE ASSES SEE CO-OPERATIVE SOCIETY IS A PRIMARY AGRICULTURAL CREDIT SOCIETY ON CE IT IS REGISTERED AND CLASSIFIED AS PRIMARY AGRICULTURAL CREDIT SOCIETY B Y THE COMPETENT AUTHORITIES UNDER THE PROVISIONS OF THE KERALA CO-OPERATIVE SOC IETIES ACT, 1969. 7. THE JUDICIAL RATIOS IN THE CASES OF RODIER MILL EMPLOYEES CO-OP STORES LTD. VS CIT 135 355 (MAD), CIT VS KERALA STATE CO-O PERATIVE MARKETING FEDERATION LTD. (1998) 234 ITR 301 (KER) AND KERALA STATE CO-OPERATIVE AGRICULTURAL RURAL DEVELOPMENT BANK LTD. VS ACIT [I TA NO. 506/COCH/2010 & S.P. NO.67/COCH/2010 HOLD THAT CARTE BLANCHE DEDU CTION U/S. 80P ARE NOT AVAILABLE TO COOPERATIVE SOCIETIES MERELY ON THE BA SIS OF PROFESSED AGRICULTURAL CREDITS ON THE BASIS OF MERE REGISTRAT ION AND CLASSIFICATION. IN VIEW OF THIS, IS NOT THE DECISION OF THE CIT(A) WIT HOUT MERIT? 8. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING, IT IS REQUESTED THAT THE ORDER OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 6. THE LD. DR RELIED ON THE GROUNDS RAISED BY TH E REVENUE. 7. THE LD. AR IN THE CASE OF APPEAL IN ITA NO. 4 84/COCH/2017 SUBMITTED THAT THE ISSUE IN QUESTION IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONBLE KERALA HIGH COURT IN THE CA SE OF CHIRAKKAL SERVICE CO- OPERATIVE BANK LTD. VS.CIT REPORTED IN 384 ITR 490. I.T.A. NOS.484,486&488./C/2017 6 8. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. AN IDENTICAL ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN THE CASE OF NANNAMBRA SERVICE CO-OPERATIVE BANK LTD. IN I.T.A. NOS. 436-438/COCH/ 2016 DATED 08/02/2018. THE TRIBUNAL FOLLOWED THE JUDGMENT OF THE HONBLE HIGH COURT OF KERALA IN THE CASE OF CHIRAKKAL SERVICE CO-OPERATIVE BANK LTD. (SUPRA). T HE TRIBUNAL ALSO DISTINGUISHED THE JUDICIAL PRONOUNCEMENTS RELIED ON BY THE REVENU E IN ITS GROUNDS AND ADDITIONAL GROUNDS IN THE CASE OF NANNAMBRA SERVICE CO-OPERATIVE BANK LTD. (SUPRA) AND DECIDED THE ISSUE IN FAVOUR OF THE ASSE SSEE BY FOLLOWING THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CHIRAKKAL SERVICE CO-OPERATIVE BANK LTD. (SUPRA). THE RELEVANT FINDI NG OF THE TRIBUNAL IN THE CASE OF NANNAMBRA SERVICE CO-OPERATIVE BANK LTD. READS A S FOLLOWS: 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL ON RECORD. AN IDENTICAL ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN THE CASE OF EDANAD-KANNUR SERVICE CO-OPERATIVE BANK LTD. AND OTH ERS IN I.T.A. NOS. 431 TO 433/COCH/2017 & OTHERS DATED 10/01/2018. THE TRIBUNAL FOLLOWED THE JUDGMENT OF THE HONBLE HIGH COURT OF KERALA IN THE CASE OF CHIRAKKAL SERVICE CO-OPERATIVE BANK LTD. (SUPRA). THE TRIBUNA L HELD THAT THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF THE CITIZENS CO- OPERATIVE SOCIETY LIMITED VS ASSISTANT COMMISSIONER OF INCOME TAX, REPORTED IN 397 ITR 1 (SC) IS NOT APPLICABLE TO THE FACTS OF THE CASE . THE RELEVANT FINDING OF THE TRIBUNAL DATED 10/01/2018 I S REPRODUCED BELOW: 8. I HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. THE UNDISPUTED FACTS ARE THAT THE ASSESSEES IN THESE CASES ARE ALL PRIMARY AGRICULTURAL CREDIT SOCIETY AND THEY AR E REGISTERED AS SUCH UNDER THE KERALA COOPERATIVE SOCIETIES ACT. THE HON 'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CHIRAKKAL SERVICE CO-OPER ATIVE BANK LIMITED &, ORS. (SUPRA) HAD CATEGORICALLY HELD IN PARA 17 PAGE 14 OF THE JUDGMENT THAT WHEN A PRIMARY AGRICULTURAL CREDIT SOCIETY IS REGISTERED AS SUCH UNDER THE KERALA CO-OPERATIVE SOCIETIES ACT, 1969, SUCH SOCIETY IS I.T.A. NOS.484,486&488./C/2017 7 ENTITLED TO THE BENEFIT OF DEDUCTION U/S 80P(2) OF THE INCOME-TAX ACT. THE HON'BLE HIGH COURT WAS CONSIDERING THE FOLLOWIN G SUBSTANTIAL QUESTION OF LAW: 'A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE UNDER CONSIDERATION/ THE TRIBUNAL IS CORRECT IN LAW IN DE CIDING AGAINST THE ASSESSEE/ THE ISSUE REGARDING ENTITLEMENT FOR EXEMP TION UNDER SECTION 8OP, IGNORING THE FACT THAT THE ASSESSEE IS A PRIMARY AG RICULTURAL CREDIT SOCIETY?' 8.1 IN CONSIDERING THE ABOVE QUESTION OF LAW, THE HON'BLE HIGH COURT RENDERED THE FOLLOWING FINDINGS: '15. APPELLANTS IN THESE DIFFERENT APPEALS ARE INDI SPUTABLY SOCIETIES REGISTERED UNDER THE KERALA COOPERATIVE SOCIETIES A CT 1969, FOR SHORT, KCS ACT AND THE BYE-LAWS OF EACH OF THEM, AS MADE AVAIL ABLE TO THIS COURT AS PART OF THE PAPER BOOKS, CLEARLY SHOW THAT THEY HAV E BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CREDIT SOCIETIES BY THE COMPET ENT AUTHORITY UNDER THE PROVISIONS OF THAT ACT THE PARLIAMENT, HAVING DEFIN ED THE TERM 'CO- OPERATIVE SOCIETY' FOR THE PURPOSES OF THE BR ACT W ITH REFERENCE TO, AMONG OTHER THING THE REGISTRATION OF A SOCIETY UND ER ANY STATE LAW RELATING TO CO-OPERATIVE SOCIETIES FOR THE TIME BEI NG; IT CANNOT BUT BE TAKEN THAT THE PURPOSE OF THE SOCIETIES SO REGISTER ED UNDER THE STATE LAW AND ITS OBJECTS HAVE TO BE UNDERSTOOD AS THOSE WHIC H HAVE BEEN APPROVED BY THE COMPETENT AUTHORITY UNDER SUCH STAT E LAW. THIS, WE VISUALIZE AS DUE RECIPROCATIVE LEGISLATIVE EXERCISE BY THE PARLIAMENT RECOGNIZING THE PREDOMINANCE OF DECISIONS RENDERED UNDER THE RELEVANT STATE LAW. IN THIS VIEW OF THE MATTER, ALL THE APPE LLANTS HAVING BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CREDIT SOCIETIES BY THE COMPETENT AUTHORITY UNDER THE KCS ACT IT HAS NECESSARILY TO B E HELD THAT THE PRINCIPAL OBJECT OF SUCH SOCIETIES IS TO UNDERTAKE AGRICULTUR AL CREDIT ACTIVITIES AND TO PROVIDE LOANS AND ADVANCES FOR AGRICULTURAL PURPOSE S; THE RATE OF INTEREST ON SUCH LOANS AND ADVANCES TO BE AT THE RATE FIXED BY THE REGISTRAR OF CO- OPERATIVE SOCIETIES UNDER THE KCS ACT AND HAVING IT S AREA OF OPERATION CONFINED TO A VILLAGE, PANCHAYAT OR A MUNICIPALITY. THIS IS THE CONSEQUENCE OF THE DEFINITION CLAUSE IN SECTION 2(O AA) OF THE KCS ACT. THE AUTHORITIES UNDER THE IT ACT CANNOT PROBE INTO ANY ISSUE OR SUCH MATTER RELATING TO SUCH APPLICANTS. 16. THE POSITION OF LAW BEING AS ABOVE WITH REFERE NCE TO THE STATUTORY PROVISIONS, THE APPELLANTS HAD SHOWN TO THE AUTHORI TIES AND THE TRIBUNAL THAT THEY ARE PRIMARY AGRICULTURAL CREDIT SOCIETIES IN TERMS OF CLAUSE (CCIV) OF SECTION 5 OF THE BR ACT HAVING REGARD TO THE PRI MARY OBJECT OR PRINCIPAL BUSINESS OF EACH OF THE APPELLANTS. IT IS ALSO CLEA R FROM THE MATERIALS ON RECORD THAT THE BYE-LAWS OF EACH OF THE APPELLANTS DO NOT PERMIT ADMISSION OF ANY OTHER CO-OPERATIVE SOCIETY AS MEMB ER, EXCEPT MAY BE, IN ACCORDANCE WITH THE PROVISO TO SUB-CLAUSE 2 OF S ECTION 5(CCIV) OF THE BR ACT. THE DIFFERENT ORDERS OF THE TRIBUNAL WHICH ARE IMPEACHED IN THESE I.T.A. NOS.484,486&488./C/2017 8 APPEALS DO NOT CONTAIN ANY FINDING OF FACT TO THE E FFECT THAT THE BYE- LAWS OF ANY OF THE APPELLANT OR ITS CLASSIFICATION BY TH E COMPETENT AUTHORITY UNDER THE KCS ACT IS ANYTHING DIFFERENT FROM WHAT W E HAVE STATED HEREIN ABOVE. FOR THIS REASON, IT CANNOT BUT BE HELD THAT THE APPELLANTS ARE ENTITLED TO EXEMPTION FROM THE PROVISIONS OF SECTIO N 8OP OF THE IT ACT BY VIRTUE OF SUBSECTION 4 OF THAT SECT; ON. IN THIS VI EW OF THE MATTER, THE APPEALS SUCCEED. 17. IN THE LIGHT OF THE AFORESAID, WE ANSWER SUBSTA NTIAL QUESTION: A IN FAVOUR OF THE APPELLANTS AND HOLD THAT THE TRIBUNAL ERRED IN LAW IN DECIDING THE ISSUE REGARDING THE ENTITLEMENT OF EXE MPTION UNDER SECTION 8OP AGAINST THE APPELLANTS. WE HOLD THAT THE PRIMAR Y AGRICULTURAL CREDIT SOCIETIES, REGISTERED AS SUCH UNDER THE KCS ACT; AN D CLASSIFIED SO, UNDER THAT ACT INCLUDING THE APPELLANTS ARE ENTITLED TO S UCH EXEMPTION.' 8.2 IN THE INSTANT CASE, THE ASSESSEE'S ARE ALL PR IMARY AGRICULTURAL CREDIT SOCIETY REGISTERED UNDER THE KERALA COOPERATIVE SOC IETIES ACT, 1969. THE CERTIFICATE HAS BEEN ISSUED BY THE REGISTRAR OF COO PERATIVE SOCIETIES TO THE ABOVE SAID EFFECT AND THE SAME IS ON RECORD. TH E HONBLE HIGH COURT, IN THE CASE CITED SUPRA, HAD HELD THAT PRIMA RY AGRICULTURAL CREDIT SOCIETY, REGISTERED UNDER THE KERALA COOPERATIVE SO CIETIES ACT, 1969, IS ENTITLED TO THE BENEFIT OF DEDUCTION U/S 80P(2). SI NCE THERE IS A CERTIFICATE ISSUED BY THE REGISTRAR OF COOPERATIVE SOCIETIES, STATING THAT THE ASSESSEE IS A PRIMARY AGRICULTURAL CREDIT SOCIE TY, GOING BY THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT, ASSESSEE IS ENTITLED TO DEDUCTION U/S 80P(2). HOWEVER, THE REVENUE'S CONTEN TION IS THAT THE HONBLE APEX COURT IN THE CASE OF CITIZENS COOPERAT IVE SOCIETY LTD. (SUPRA) CATEGORICALLY DECIDED WHEN DEPOSITS ARE REC EIVED FROM GENERAL PUBLIC / NOMINAL MEMBERS OR LOANS ARE DISBURSED TO GENERAL PUBLIC / NOMINAL MEMBERS, THE ASSESSEE WOULD BE DOING THE BU SINESS OF BANKING AND THEREFORE, WOULD NOT BE ENTITLED TO DEDUCTION U /S 80P(2) OF THE INCOME-TAX ACT. IN THE CONTEXT OF THE SUBMISSION MA DE BY THE REVENUE LET ME EXAMINE WHETHER THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF CITIZENS CO-OPERATIVE SOCIETY LTD. (SUPRA) HAS APPLICATION TO THE FACTS OF THE PRESENT CASE. 9. THE HON'BLE APEX COURT JUDGMENT IN THE CASE OF CITIZEN CO-OPERATIVE SOCIETY (SUPRA) LTD. WAS RENDERED IN THE CONTEXT OF ELIGIBILITY OF A CREDIT CO-OPERATIVE SOCIETY FOR DEDUCTION UNDER SECTION 80 P OF THE ACT. THE APEX COURT, REFERRING TO THE SPECIFIC FACTS OF THE CASE HELD THAT THE ASSESSEE THEREIN IS NOT ENTITLED FOR DEDUCTION UNDE R SECTION 8OP OF THE INCOME-TAX ACT. IN THE AFORESAID CASE, THE HON'BLE APEX COURT WAS NOT DEALING WITH A CASE OF ELIGIBILITY OF A PRIMARY AGR ICULTURAL CREDIT SOCIETY FOR DEDUCTION UNDER SECTION 80P OF THE INCOME-TAX A CT. THE HON'BLE SUPREME COURT AT PARA 23 OF THE AFORESAID JUDGMENT HAD EMPHASIZED I.T.A. NOS.484,486&488./C/2017 9 THAT EVEN AFTER THE AMENDMENT MADE TO THE PROVISION S OF SECTION 80 P OF THE ACT BY INSERTION OF SECTION 80P(4) OF THE IN COME-TAX ACT, THE PRIMARY AGRICULTURAL CREDIT SOCIETY IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80 P OF THE ACT. 9.1 THE ASSESSEE SOCIETY IN THE CASE CONSIDERED BY THE HON'BLE SUPREME COURT WAS ESTABLISHED ON 31-5-1997 AND WAS REGISTERED UNDER SECTION 5 OF THE ANDHRA PRADESH MUTUALLY AIDED CO-O PERATIVE SOCIETIES ACT, 1995. THEREAFTER AS THE OPERATIONS OF THE ASSE SSEE HAD INCREASED MANIFOLD AND SPREAD OVER STATES OF ERSTWHILE, ANDHRA PRADESH, MAHARASHTRA AND KARNATAKA, THE ASSESSEE-SOCIETY GOT ITSELF REGISTERED ON 26.07.2005 UNDER THE MULTI STATE CO-OPERATIVE SOCIE TIES ACT, 2002 (MACSA) 9.2 THE HONBLE APEX COURT IN THE AFOREMENTIONED CASE SPECIFICALLY TOOK NOTE OF THE FACTUAL FINDINGS OF THE ASSESSING OFFICER (WHICH WAS STATED IN PARA 15 OF THE JUDGMENT) REFERRING TO THE BYE LAWS AND THE PROVISIONS OF MUTUALLY AIDED COOPERATIVE SOCIETIES ACT, 1995. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE THEREIN CANNOT ADMIT 'NOMINAL MEMBERS' AND MOST OF THE DEPOSITS WERE TAK EN FROM SUCH CATEGORY OF PERSON (AS THEY WERE NOT MEMBERS AS PER THE PROVISIONS REFERRED). THE APEX COURT IN PARA 25 OF THE JUDGMEN T HAS POINTED OUT THAT THE MAIN REASON FOR DISENTITLING THE ASSESSEE FROM GETTING THE DEDUCTION PROVIDED UNDER SECTION 80 P OF THE ACT IS NOT SUB-SECTION (4) OF THE ACT. ON THE CONTRARY, THE HON'BLE APEX COURT HELD THAT THE CREDIT CO-OPERATIVE SOCIETY WAS NOT ENTITLED FOR DEDUCTION U/S 8OP OF THE ACT FOR THE REASON OF CATEGORICAL FINDING OF THE A.O. T HAT THE ACTIVITIES OF THE ASSESSEE ARE IN VIOLATION OF THE PROVISIONS OF THE MACSA UNDER WHICH IT IS FORMED AS THE SUBSTANTIAL DEPOSITS WERE FROM 'NO MINAL MEMBERS' WHO ARE ACTUALLY NON-MEMBERS AS PER THE PROVISIONS OF L AW REFERRED. THE HONBLE APEX COURT SPECIFICALLY TOOK NOTE OF THE FA CT THAT THE ASSESSEE THEREIN HAS CARVED OUT A CATEGORY OF 'NOMINAL MEMBE RS' WHO ARE INFACT NOT THE MEMBERS IN THE REAL-SENSE. THEREFORE THE DE POSITS RECEIVED FROM THE CARVED OUT CATEGORY VIZ NOMINAL MEMBERS WHO ARE NOT THE MEMBERS AS PER THE PROVISIONS OF THE LAW REFERRED TO THEREI N AND WITHOUT THE PERMISSION OF THE REGISTRAR OF SOCIETIES WAS HELD T O BE VIOLATIVE OF THE PROVISIONS AND WERE TREATED/ PROCEEDED WITH AS DEPO SITS FROM THE PUBLIC. IN OTHER WORDS, IN THE CASE BEFORE THE HONBLE SUPR EME COURT, THE FINDING ON THE PRINCIPLE OF MUTUALITY WAS ARRIVED A T INTERALIA; ON THE FACTUAL FINDING THAT THE ASSESSEE WAS RECEIVING DEP OSITS MOSTLY FROM A CARVED OUT CATEGORY OF MEMBER VIZ 'NOMINAL MEMBER' WHO ARE NOT I.T.A. NOS.484,486&488./C/2017 10 MEMBERS AS PER THE PROVISIONS OF LAW REFERRED,, AND THAT MOST OF THE BUSINESS OF THE ASSESSEE THEREIN WAS WITH THIS CARV ED OUT CATEGORY OF PERSON AND ALSO GRANTING LOANS TO PUBLIC AND WITHOU T THE APPROVAL FROM THE REGISTRAR OF THE SOCIETIES. 9.3 AS FAR AS THE KERALA CO-OPERATIVE SOCIETIES A CT WHICH IS APPLICABLE TO THE PRESENT CASES ARE CONCERNED, THE DEFINITION OF A 'MEMBER' AS PROVIDED IN SECTION 2(1) OF THE KERALA COOPERATIVE SOCIETIES ACT INCLUDES A NOMINAL MEMBER. SECTION 2 (1) OF THE SAID ACT IS AS FOLLOWS: 'MEMBER' MEANS A PERSON JOINING IN THE APPLICATION FOR THE REGISTRATION OF A CO-OPERATIVE SOCIETY OR A PERSON ADMITTED TO MEMBER SHIP AFTER SUCH REGISTRATION IN ACCORDANCE WITH THIS ACT, THE RULES AND THE BYE LAW AND INCLUDES A NOMINAL OR ASSOCIATE MEMBER' 9.4 THE 'NOMINAL MEMBER' IS DEFINED UNDER 2(M) OF THE KERALA CO- OPERATIVE SOCIETIES ACT, 1969, WHICH READS AS FOLLO W: - '(M) NOMINAL OR ASSOCIATE MEMBER' MEANS A MEMBER WH O POSSESSES ONLY SUCH PRIVILEGES AND RIGHTS OF A MEMBER AND WHO IS S UBJECT ONLY TO SUCH LIABILITIES OF A MEMBER AS MAY BE SPECIFIED IN THE BYE-LAWS;' 9.5 THEREFORE, IN THE PRESENT CASES, THE NOMINAL M EMBERS ARE MEMBERS AS PROVIDED IN LAW AND DEPOSITS FROM SUCH NOMINAL M EMBERS CANNOT BE CONSIDERED OR TREATED AS FROM THE NON-MEMBERS OR FR OM PUBLIC AS WAS NOTED BY THE APEX COURT JUDGMENT CITED SUPRA. 9.6 IN THIS CONTEXT, IT IS RELEVANT TO MENTION THA T THE HONBLE SUPREME COURT IN THE CASE OF U.P. CO-OPERATIVE CANE UNION V . COMMISSIONER OF INCOME-TAX (1999) 237 ITR 574 (SC)-PARA 8 OF THE JU DGMENT HAS OBSERVED AS UNDER:- '8. THE EXPRESSION 'MEMBERS' IS NOT DEFINED IN THE ACT. SINCE A CO- OPERATIVE SOCIETY HAS TO BE ESTABLISHED UNDER THE P ROVISIONS OF THE LAW MADE BY THE STATE LEGISLATURE IN THAT REGARD, THE E XPRESSION 'MEMBERS' IN SECTION 80P(2)(A)(I) MUST, THEREFORE, BE CONSTRUED IN THE CONTEXT OF THE PROVISIONS OF THE LAW ENACTED BY THE STATE LEGISLAT URE UNDER WHICH THE CO- OPERATIVE SOCIETY CLAIMING EXEMPTION, HAS BEEN FORM ED. IT IS, THEREFORE, NECESSARY TO CONSTRUE THE EXPRESSION 'MEMBERS' IN S ECTION 80P(2)(A)(I) OF THE ACT IN THE LIGHT OF THE DEFINITION OF THAT EXPR ESSION AS CONTAINED IN SECTION 2(N) OF THE CO-OPERATIVE SOCIETIES ACT.' 9.7 THE BOMBAY HIGH COURT IN JALGAON DISTRICT CENT RAL V. UOI (2004) 265 ITR 423 (BOM) IN THE LIGHT OF THE ABOVE SUPREME COURT JUDGMENT HAD HELD THAT NOMINAL MEMBER IS ALSO MEMBER UNDER T HE MAHARASHTRA I.T.A. NOS.484,486&488./C/2017 11 CO-OPERATIVE SOCIETIES ACT AND ENTITLED FOR BENEFIT S UNDER SECTION 8OP. [PARA 17 TO 20 OF THE JUDGMENT], AS UNDER:- '17. IN CASE OF M/S U. P. CO-OP. CANE UNION FEDERAT ION LTD., LUCKNOW (CITED SUPRA), THE SUPREME COURT HAS HELD T HAT THE EXPRESSION 'MEMBER' IS NOT DEFINED IN THE INCOME TA X ACT. SINCE THE CO-OPERATIVE SOCIETY HAS TO BE ESTABLISHED UNDE R THE PROVISIONS OF LAW MADE BY THE STATE LEGISLATURE IN THAT REGARD , THE EXPRESSION 'MEMBER' IN SECTION 80P(2)(A)(I) MUST, THEREFORE, B E CONSTRUED IN THE CONTEXT OF THE PROVISIONS OF LAW ENACTED BY THE STATE LEGISLATURE UNDER WHICH THE CO-OPERATIVE SOCIETY CL AIMING EXEMPTION HAS BEEN FORMED. THE SUPREME COURT HAS FU RTHER OBSERVED THAT IT IS NECESSARY TO CONSTRUE THE EXPRE SSION 'MEMBER' IN SECTION 80P(2)(A)(I) OF THE ACT IN THE LIGHT OF THE DEFINITION OF 'MEMBER' GIVEN UNDER SECTION 2(N) OF THE U.P. CO-OP ERATIVE SOCIETIES ACT, 1965. 18. THE DEFINITION OF 'MEMBER' GIVEN IN SECTION 2(1 9) OF THE MAHARASHTRA CO-OPERATIVE SOCIETIES ACT, 1960 TAKES WITHIN ITS SWEEP EVEN A NOMINAL MEMBER, ASSOCIATE MEMBER AND S YMPATHIZER MEMBER. THERE IS NO DISTINCTION MADE BETWEEN DULY R EGISTERED MEMBER AND NOMINAL, ASSOCIATE AND SYMPATHIZER MEMBE R. 19. IN THE CASE OF K.K.ADHIKARI (CITED SUPRA), DIVI SION BENCH OF THIS COURT HAS HELD THAT THE DEFINITION OF A MEMBER UNDE R SECTION 2(19) OF THE MAHARASHTRA CO-OPERATIVE SOCIETIES ACT, 1960 INCLUDES A NOMINAL MEMBER OR A SYMPATHIZER MEMBER. IT IS FURTH ER HELD THAT NOTWITHSTANDING THE FACT THAT A NOMINAL MEMBER DOES NOT ENJOY ALL THE RIGHTS AND PRIVILEGES WHICH ARE AVAILABLE TO AN ORDINARY MEMBER, HIS STATUS IS THAT OF A MEMBER AS DEFINED I N SECTION 2(19) OF THE ACT. 20. DIVISION BENCH OF THIS COURT IN THE CASE OF THE COMMISSIONER OF INCOME TAX, NASIK (CITED SUPRA) HAS ALSO TAKEN A SI MILAR VIEW THAT THE DEFINITION OF 'MEMBER' UNDER SECTION 2(19)(A) O F THE MAHARASHTRA CO-OPERATIVE SOCIETIES ACT, 1960 INCLUD ES A NOMINAL MEMBER. IT IS FURTHER HELD BY THE DIVISION BENCH TH AT THERE IS NOTHING IN SECTION 80P(2)(III) OF THE INCOME TAX AC T TO THE CONTRARY.' 9.8 AS PER SECTION 3 OF THE BANKING REGULATION ACT , 1949 THE PROVISIONS OF BANKING REGULATION ACT SHALL NOT APPLY TO PRIMAR Y AGRICULTURAL CREDIT SOCIETIES. THE EXPLANATION TO SECTION 80P(4) STATES THAT 'PRIMARY AGRICULTURAL CREDIT SOCIETY' AND 'CO-OPERATIVE BANK ' WILL HAVE THE SAME I.T.A. NOS.484,486&488./C/2017 12 MEANING AS PROVIDED IN PART V OF THE BANKING REGULA TION ACT, 1949. THE EXPLANATION PROVIDED AFTER CLAUSE (CCVI) OF SECTION 5 R.W.S 56 OF THE BANKING REGULATION ACT SPECIFICALLY PROVIDES THAT I F ANY DISPUTE ARISES AS TO THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF ANY CO-OPERATIVE SOCIETY REFERRED TO IN CLAUSES (CCIV), (CCV) AND (CCVI), A DETERMINATION THEREOF BY THE RESERVE BANK SHALL BE FINAL. THE RESERVE BANK O F INDIA, WHICH IS THE COMPETENT AUTHORITY AS PER THE BANKING REGULATION A CT, TREATS ASSESSEE SOCIETY AND SIMILAR SOCIETIES AS ONLY 'PRIMARY AGRI CULTURAL CREDIT SOCIETY' NOT FALLING WITHIN THE AMBIT OF BANKING REGULATION ACT. THE RESERVE BANK OF INDIA HAS GIVEN LETTERS TO THE SOCIETIES SIMILAR TO ASSESSEE STATING THAT THEY ARE PRIMARY AGRICULTURAL CREDIT SOCIETIES AND THEREFORE IN TERMS OF SECTION 3 OF THE BANKING REGULATION ACT ARE NOT ENT ITLED FOR BANKING LICENSE; (COPIES OF SUCH LETTER FROM RBI ARE PLACED ON RECORD). 9.9 THAT BEING THE CASE, THE ASSESSING OFFICER WAS NOT COMPETENT AND DID NOT POSSESS THE JURISDICTION TO RESOLVE / DECID E THE ISSUE AS TO WHETHER THE ASSESSEE WAS A 'PRIMARY AGRICULTURAL CR EDIT SOCIETY' OR A 'CO-OPERATIVE BANK', WITHIN THE MEANING ASSIGNED TO IT UNDER THE PROVISIONS OF THE BANKING REGULATION ACT AND TO TAK E A CONTRARY VIEW ESPECIALLY IN VIEW OF THE EXPLANATION PROVIDED AFTER THE CLAUSE (CCVI) OF SECTION 5 R.W.S SECTION 56 OF THE BANKING REGULATIO N ACT. 9.10 IN VIEW OF THE AFORESAID REASONING, I HOLD TH AT THE JUDGMENT OF THE HONBLE APEX COURT IN CITIZEN CO-OPERATIVE SOCIETY LTD. IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. ACCORDING TO ME, THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IS IDENTICAL TO T HE FACTS OF THE PRESENT CASES AND IS SQUARELY APPLICABLE. THEREFORE, I HOLD THAT THE CIT(A) HAS CORRECTLY ALLOWED THE CLAIM OF DEDUCTION IN THE ABO VE CASES AND I UPHOLD THE ORDERS OF THE CIT(A). IT IS ORDERED ACCORDINGLY . 10. IN THE RESULT, THESE APPEALS FILED BY THE REVE NUE ARE DISMISSED. 7.1 THE FACTS OF THE INSTANT CASES ARE IDENTICAL TO THE FACTS CONSIDERED BY THE TRIBUNAL IN THE ABOVE CASES. FOLLOWING THE ORD ER OF THE TRIBUNAL IN THE ABOVE MENTIONED CASES, WE HOLD THAT THE CIT(A) IS J USTIFIED IN DIRECTING THE ASSESSING OFFICER TO GRANT DEDUCTION U/S. 80P(2) OF THE ACT. 7.2 BEFORE CONCLUDING, IT HAS TO BE MENTIONED THA T THE CASE LAW RELIED ON BY THE REVENUE IN THE GROUNDS, ADDITIONAL GROUNDS A RE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. UNDISPUTEDLY, THE ASSESS EE IS A PRIMARY AGRICULTURAL CREDIT SOCIETY AND IS PROVIDING CREDI T FACILITIES TO ITS MEMBERS FOR AGRICULTURE AND AGRICULTURE ALLIED ACTIVITIES. THE COMPETENT AUTHORITY OF CO- OPERATIVE DEPARTMENT OF GOVERNMENT OF KERALA HAVING BEEN SATISFIED WITH I.T.A. NOS.484,486&488./C/2017 13 THE ACTIVITIES OF THE ASSESSEE, HAS CLASSIFIED THE ASSESSEE AS PACS (PRIMARY AGRICULTURAL CREDIT SOCIETY). THE HONBLE KERALA H IGH COURT IN THE CASE OF CHIRAKKAL SERVICE CO-OPERATIVE BANK LIMITED &, ORS. (SUPRA) HAS ELABORATELY CONSIDERED THE ISSUE AND HAS CATEGORICALLY HELD THA T THE CERTIFICATE ISSUED BY THE COMPETENT AUTHORITY IN THIS REGARD IS BINDING A ND THE INCOME TAX AUTHORITIES HAVE NO RIGHT TO PROBE FURTHER. 7.3. IN GROUND NOS. 4, 5 & 6 OF THE MEMORANDUM OF APPEAL, IT IS MENTIONED THAT THE CIT(A) HAS ERRED IN NOT PLACING RELIANCE ON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF M/S. PERINTHALMANA SERVICE CO-OPERATIVE BANK LTD. VS. CI T REPORTED IN 363 ITR 268. THE HONBLE HIGH COURT IN THE ABOVE MENTIONED CASE WAS DISPOSING OF THE APPEAL FILED BY THE ASSESSEE, CHALLENGING THE O RDER PASSED BY THE ITAT UPHOLDING THE VALIDITY OF THE ORDER PASSED BY THE C OMMISSIONER U/S 263 OF THE ACT. IN THE SAID JUDGMENT, THE HONBLE HIGH CO URT UPHELD THE ORDER OF THE ITAT, AFTER DIRECTING THE ASSESSING OFFICER TO PASS A FRESH ASSESSMENT ORDER UNTRAMMELED BY ANY OF THE VIEWS EXPRESSED BY THE REVISIONARY AUTHORITY. WHEREAS THE JUDGMENT OF THE HONBLE JURI SDICTIONAL HIGH COURT IN THE CASE OF CHIRAKKAL SERVICE CO-OPERATIVE BANK LTD . (SUPRA) WAS IN RESPECT OF THE ASSESSMENT ORDER PASSED BY THE ASSESSING OF FICER DENYING THE DEDUCTION U/S. 80P AND IS IDENTICAL TO THE FACTS OF THE PRESENT CASE. 7.4 FURTHER THE RESERVE BANK OF INDIA, WHICH IS TH E AUTHORITY UNDER THE BANKING REGULATIONS ACT TO DECIDE AS TO WHETHER A C O-OPERATIVE SOCIETY IS A PRIMARY AGRICULTURAL CREDIT SOCIETY OR NOT, HAS VID E LETTER UBD(T) NO. 438/12-01-008/2013-14 DATED 25/10/2013 INFORMED THE SECRETARY, THE MADAI CO-OPERATIVE RURAL BANK LTD. NO. F.1233, HEAD OFFICE, PAYANGADI KANNUR-670303 AND VIDE LETTER NO. UBD(T) NO.440/12- 01-008/2013-14 DATED 25/10/2013, THE KADIRUR SERVICE CO-OPERATIVE BANK LTD. NO.F 1262 HO KADIRUR, KANNUR-670 642 THAT AN INSTITUTION RE GISTERED AS A PRIMARY AGRICULTURAL CREDIT SOCIETY (PACS) IS NOT ENTITLED TO OBTAINING A BANKING LICENSE, WHICH IMPLIES THAT AN ENTITY WHICH IS REGI STERED AS A PRIMARY AGRICULTURAL CREDIT SOCIETY CANNOT BE A BANK. A CO PY OF SAID LETTER IS ON RECORD. 7.5 IN THE ADDITIONAL GROUNDS OF APPEAL, THE REVE NUE HAS PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE APEX COURT IN THE CA SE OF SABARKANTHA ZILLA KHARID VECHAN SANGH LTD. VS. CIT REPORTED IN 203 IT R 1027 (SC). IN THE CASE OF SABARKANTHA ZILLA KHARID VECHAN SANGH LTD . (SUPRA), THE ASSESSEE- SOCIETY WAS EFFECTING SALES OF AGRICULTURAL INPUTS OF BOTH MEMBERS AS WELL AS NON MEMBERS. THE ASSESSEE CLAIMED SHARE OF THE GROS S PROFIT OUT OF THE TRANSACTIONS WITH MEMBERS AS A DEDUCTION FROM THE C OMBINED NET PROFIT. I.T.A. NOS.484,486&488./C/2017 14 ON THE CONTRARY, IN THE INSTANT CASE, THE ASSESSEE HAD EXTENDED CREDIT FACILITIES ONLY TO THE MEMBERS. THE REVENUE DOES NO T HAVE A CASE THAT SUCH CREDIT FACILITIES ARE EXTENDED TO THE OUTSIDERS. T HEREFORE THE INCOME GENERATED IN THE INSTANT CASE IS ONLY OUT OF THE TR ANSACTION WITH THE MEMBERS. DEDUCTION U/S. 80P IS ALLOWED ONLY FOR TH E SAID INCOME. THE ASSESSEE HAD CLAIMED DEDUCTION U/S. 80P ONLY IN RES PECT OF NET INCOME WHICH IS DERIVED BY EXTENDING CREDIT FACILITIES TO THE MEMBERS. FOR THE AFORESAID REASONS, THE JUDICIAL PRONOUNCEMENTS RELI ED ON BY THE REVENUE IN THE GROUNDS AND THE ADDITIONAL GROUNDS DOES NOT HAV E APPLICATION TO THE INSTANT CASE. THEREFORE, WE HOLD THAT CIT(A)S ORD ER IS CORRECT AND IN ACCORDANCE WITH LAW. IT IS ORDERED ACCORDINGLY. 8.1 IN VIEW OF THE ABOVE FINDING OF THE TRIBUNAL WHICH HAD ELABORATELY CONSIDERED THE JUDICIAL PRONOUNCEMENTS ON THE SAID ISSUE AND HAD FOLLOWED THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CHIRAKKAL SERVICE CO-OPERATIVE BANK LTD. (SUPRA), WE HOLD THAT THE CI T(A) IS JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO GRANT DEDUCTION U/S. 80P(2 ) OF THE I.T. ACT. IT IS ORDERED ACCORDINGLY. 9. IN THE RESULT, THE APPEALS FILED BY THE REVENU E ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 7 TH MARCH, 2018. SD/- ( GEORGE GEORGE K.) JUDICIAL MEMBER PLACE : KOCHI DATED: 7 TH MARCH, 2018 GJ COPY TO: 1. M/S. THE THARIODE SERVICE CO-OPERATIVE BANK LTD. P.O., KAVUMANNAM, WAYANAD-673 121. 2. M/S. VYTHIRI SERVICE CO-OPERATIVE BANK LTD. P.O ., VYTHIRI, WAYANAD-673 576. 3. M/S. MEENANGADID SERVICE CO-OPERATIVE BANK LTD. P.O., MEENANGADI, I.T.A. NOS.484,486&488./C/2017 15 WAYANAD-673 591. 4. THE INCOME TAX OFFICER, WARD-1, KALPETTA 5. THE INCOME TAX OFFICER, WARD-2, KALPETTA.. 6. THE COMMISSIONER OF INCOME-TAX(APPEALS), KOZHIKO DE. 7. THE PR. COMMISSIONER OF INCOME-TAX, KOZHIKODE. 8. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 9. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COC HIN