KEKRI SAHAKARI BHUMI VIKAS BANK LTD., Ajmer V. ITO, Ajmer

ITA 938/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99327 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 02-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DHK
• Assessee Lawyers: SANJIV JAIN; RAKESH SETHI
• Keywords: Fair market value

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE:SHRI T.R. MEENA,AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 938/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 M/S. KEKRI SAHAKARI BHUMI VIKAS BANK LTD. OPP. COURT, POST. KEKRI, AJMER CUKE VS. THE ITO WARD- 2 BEAWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAATK 3393 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SANJIV JAIN & SHRI RAKESH SETHI, C.A. JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJ MEHRA, JCIT LQUOKBZ DH RKJH[K@ DATE OF HEARING : 09/09/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 24/09/2015 VKNS'K@ ORDER PER LALIET KUMAR, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), AJMER DATED 09-09-2013 FOR THE ASSESSMENT YEAR 2007-08 WHEREIN THE ASSESSEE HAS RAISED SOLITARY GROUND AS UNDER:- THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FAC TS OF THE CASE BY DISALLOWING THE CLAIM OF RS. 70,49,499/- FO R DEDUCTION U/S 80P(2)(A)(I) OF THE I.T. ACT, 1961. ITA NO.938//JP/2013 KEKRI SAHAKARI BHUMI VIKAS BANK LTD. VS. ITO, WARD- 2, BEAWAR 2 2.1 THE PRESENT APPEAL IS IN SECOND ROUND OF THE LI TIGATION OF THE ASSESSEE BEFORE US. IN THE FIRST ROUND OF LITIGATIO N, THE TRIBUNAL VIDE ITS ORDER DATED 23-03-2012 IN ITA NO. 764/JP/2011 HAD R ESTORED THE MATTER TO THE FILE OF THE AO WITH FOLLOWING DIRECTIONS. NEXT, WE CONSIDER THE ASSESSEES CASE FROM THE STA ND POINT OF IT FALLING WITHIN THE TWO EXCEPTED CATEGORIES AS SPECI FIED IN SECTION 80P(4). FOR THIS, WE REPRODUCE HERE-IN-BELOW APPEAL ITS MAIN OBJECTS (REFER PARA 3, PAGE 2 OF THE APPELLATE ORDER): `2. THE OBJECTS FOR WHICH THE SOCIETY IS FORMED ARE AS UNDER: A) TO PROVIDE FINANCE TO ITS MEMBERS AGAINST IMMOVABLE PROPERTY, AGRICULTURAL LAND, RESIDENTIAL HOUSE AND PLOT, LIQUID ASSETS (NSC, KVP AND FDR OF BHUMI V IKAS BANK) AND TAKING GUARANTEE OF TWO PERSONS, AGAINST S ALARY INCOME FOR THE OBJECTIVES MENTIONED IN SECTION 67 O F THE RAJASTHAN COOPERATIVE SOCIETIES ACT, 2001, TO FINAN CE WITHOUT ANY SECURITIES TO THE MEMBERS UNDER VARIOUS PLANS OF STATE GOVT. / CENTRAL GOVT. B) TO RECEIVE DEPOSIT FROM MEMBERS AND OTHERS AFTER GETTING APPROVAL FROM NABARD /RBI. C) TO FULFIL THE OBJECTS, SOCIETY SHALL BECOME MEMB ER OF THE RAJASTHAN STATE COOPERATIVE LAND DEVELOPMENT BANK AND SHALL FOLLOW THE POLICIES LAID BY RAJASTHAN STATE COOPERATIVE LAND DEVELOPMENT BANK. IN THE LIGHT OF THE FOREGOING, WE FIND NOTHING IN I TS OBJECT CLAUSE TO SUGGEST THAT ITS PRIMARY OBJECT IS PROVIDING FIN ANCIAL ACCOMMODATION TO ITS MEMBERS FOR AGRICULTURAL PURPOSES OR FOR PUR POSES CONNECTED WITH AGRICULTURAL ACTIVITIES (INCLUDING MARKETING OF CROP S), AS STIPULATED PER SECTION 5 (CCIV) OF THE B.R. ACT, SO AS TO QUALIFY AS A `PRIMARY AGRICULTURAL CREDIT SOCIETY (PACS). THE ONLY OBJECT WHICH ENABL ES IT TO PROVIDE FINANCIAL ACCOMMODATION IS ITS OBJECT CLAUSE 2(A). THE SAME ONLY SPECIFIES THE ASSETS ON THE SECURITY OF WHICH THE A SSESSE-SOCIETY MAY PROVIDE FINANCE TO ITS MEMBERS. THE SECURITIZATION OF A LOAN OR ADVANCE IS A DIFFERENT ASPECT OF THE MATTER, AND COMPLETELY DIFFERENT FROM THE ITA NO.938//JP/2013 KEKRI SAHAKARI BHUMI VIKAS BANK LTD. VS. ITO, WARD- 2, BEAWAR 3 PURPOSE OR THE ACTIVITY FOR WHICH FINANCE IS BEING PROVIDED, AND WHICH IS BEING THUS FINANCED. THE ASSESSEE CLAIMS THE DECISI ON IN THE CASE OF MADRAS AUTO RICKSHAW DRIVERS CO-OPERATIVE SOCIETY V S. CIT (SUPRA) AS NOT APPLICABLE THERETO, AS WHILE IN THAT CASE THE O BJECT CLAUSE WAS THE PROMOTION OF ECONOMIC INTERESTS OF ITS MEMBERS BY P URCHASING AUTO RICKSHAW VEHICLES AND SELLING THE SAME TO THEM ON HI RE PURCHASE TERMS, AND NOT PROVIDING CREDIT FACILITIES TO ITS MEMBERS, IN THE PRESENT CASE, IT IS EXPRESSLY SO. WE AGREE. HOWEVER, THAT BY ITSELF IS NOT SUFFICIENT, AND IT IS TO BE IN ADDITION EXPRESSED TO BE FOR AGRICULTUR AL PURPOSES OR FOR PURPOSES CONNECTED WITH AGRICULTURAL ACTIVITIES, AN D ON WHICH ITS OBJECT CLAUSE, AS ALSO THE ASSESSEE, IS SILENT. SO HOWEVER , WE ARE NOT INCLINED TO OUST THE ASSESSEES CASE ON THAT BASIS. THIS IS AS THERE IS ANOTHER WINDOW AVAILABLE TO IT IN LAW, I.E., WHERE THE PRIN CIPAL BUSINESS IS FINANCING THE AGRICULTURAL OR CONNECTED ACTIVITIES OF ITS MEMBERS (SECTION 5 (CCIV) READ WITH SECTION 56(C) OF THE B.R. ACT). THOUGH IT COULD BE ARGUED THAT SUCH PRINCIPAL BUSINESS COULD BE TAKEN T HE COGNIZANCE OF WHERE IT FINDS REFLECTION IN THE ASSESSEE'S CHARTER /OBJECT CLAUSE, WE DO NOT THINK IT TO BE SO. THIS IS AS SUCH AN INTERPRETA TION WOULD RENDER THE WORDS PRINCIPAL BUSINESS OCCURRING IN THE PROVISI ON AS SUPERFLUOUS AND OTIOSE, WHILE IT IS WELL SETTLED THAT EACH AND EVER Y WORD OF THE STATUE HAS TO BE GIVEN ITS DUE MEANING AND, THUS, EFFECT. AS S UCH, THOUGH NOT EXPRESSLY THROUGH ITS OBJECT CLAUSE, IF IT COULD YE T BE SHOWN BY THE ASSESSEE THAT ITS PRINCIPAL BUSINESS CONSISTS OF PR OVIDING FINANCIAL ACCOMMODATION TO ITS MEMBERS FOR AGRICULTURAL PURPO SES OR FOR PURPOSES CONNECTED WITH AGRICULTURAL ACTIVITIES (IN CLUDING MARKETING OF CROPS), IT WOULD IN LAW QUALIFY TO BE A PACS AND, T HUS, EXEMPT U/S. 80P(2)(A)(I) R/W S. 80P(4). AS APPARENT, THE PURPOS E FOR WHICH THE FINANCE IS PROVIDED, AS AGAINST ITS SECURITIZATION, IS ONLY RELEVANT, SO THAT THAT THE ASSESSEE WOULD NEED TO SATISFY THE TAXING AUTHORITY WITH REGARD THERETO. NEEDLESS TO ADD, THIS REQUIREMENT HAS TO B E SATISFIED BY IT INDEPENDENTLY FOR EACH YEAR, AS THERE COULD WELL BE A CHANGE IN THE PROFILE OF ITS LENDING ACTIVITIES WITH TIME. FURTHE R, WE OBSERVE THAT THE ASSESSEES CLAIM OF BEING A PRIMARY COOPERATIVE AGR ICULTURAL AND RURAL DEVELOPMENT BANK, WHICH THOUGH WOULD REQUIRE INDEPE NDENT EXAMINATION AND FINDING/S, IS STRONGLY INDICATIVE O F THE NATURE OF ITS LENDING ACTIVITIES, WHICH HAS A DIRECT BEARING ON T HE QUESTION OF IT BEING A PACS (OR NOT). THERE BEING NO FINDING IN THE MATT ER BY THE AUTHORITIES BELOW, WE RESTORE THE MATTER FOR THE PURPOSE OF NEC ESSARY VERIFICATION AND ISSUE OF DEFINITE FINDINGS OF FACT/S, BACK TO TH E FILE OF THE FIRST APPELLATE AUTHORITY, WHO SHALL ADJUDICATE THE SAME AFTER HEARING THE ITA NO.938//JP/2013 KEKRI SAHAKARI BHUMI VIKAS BANK LTD. VS. ITO, WARD- 2, BEAWAR 4 PARTIES, INCLUDING RECOURSE TO RULE 46A, WHERE THE ASSESSEE LEADS ANY NEW EVIDENCE IN THIS REGARD. ALSO, WHERE ANY COOPER ATIVE BANK IS A MEMBER OF THE ASSESSEE-SOCIETY, IT WOULD HAVE TO BE ADDITIONALLY SHOWN THAT THE SAME IS SO BY SUBSCRIBING TO ITS SHARE CAP ITAL OUT OF FUNDS PROVIDED FOR THE PURPOSE BY THE STATE GOVERNMENT, I. E., FALLS WITHIN THE PROVISO TO SEC. 5(CCIV) OF THE B.R. ACT. WE DIRECT ACCORDINGLY. 2.2 IN THE LIGHT OF THE DIRECTIONS ISSUED BY THE TR IBUNAL, THE AO HAS CONSIDERED THE CLAIM OF THE ASSESSEE AND HAS COME T O CONCLUSION THAT THE ASSESSEE IS NOT COVERED BY THE PROVISIONS OF SECTIO N 80P(2)(A)(1) OF THE ACT. THE REASONS RECORDED BY THE AO ARE GIVEN AT PAGE 12 OF THE ASSESSMENT ORDER WHICH ARE AS UNDER:- ESA FU/KKZFJRH DS IZKF/KD`R IZFRFUF/K DS MDR LIVHD J.K LS LGER UGH GWWA D;KSAFD FU/KKZFJRH ,D DKSIJSVHO LKSLKBZVH CSAD GSA TKS FD JKT; LJDKJ ;K DSUNZ LJDKJ DK LALFKKU UGHA GS VKSJ UK BLD H VK;K VK;DJ & VF/KFU;E 1961 DH /KKJK 10 23 C O 12, DS RGR DJ EQDR GSA VR% VK;DJ&VF/KFU;E DH /KKJK 11 5W DH IFJHKKKK DS VUQLKJ EVERY ARTIFICIAL JURIDICAL PERSON, NOT FALLING WITHIN ANY OF THE PRE CEDING SUB-CLAUSES ESA LGDKJH HKWFE FODKL CSAD LFEEFYR GSA VKSJ ML IJ FRINGE BENEFITS TAX YKXW GKSRK GSAA VK;DJ & VF/KFU;E 1961 DH /KKJK 115 WB(1) & 115WC DS RGR FU/KKZFJRH }KJK YKHK&GKFU [KKRS ESA UKESA FY[K J[KSA [KPSZ FTUDK MYYS[K IJ FD;K X;K GS IJ FQZT CSFUFQV VSDL CURK GS A EKEYSA DH LQUOKBZ DS NKSJKU FU/KKZFJRH DS IZKF/KD`R IZFRFUF/K VIUS MDR TOKC ESA DOSY ;G CRYK;K FD XKM+H THI DK MI;KSX CSAD DS DEZPK FJ;KSA }KJK UGHA FD;K X;K GS VKSJ ;K=K FCY DK HKQXRKU DSOY LFPO DKS T;IQJ BR;KFN DH ;K=K DS FY, FN;K X;K GSA BLH IZDKJ VSYHQK SU DK HKH MI;KSX DSOY CSAD DS DK;KSZ DS FY, FD;K X;K CSAD DS DEZPKFJ;KSA US VSYHQKSU DK MI;KSX VIUS FUFT DK;KSZ DS FY;S UGHA FY ;K GSA YSFDU FU/KKZFJRH US VIUS LIVHDJ.K DS LEFKZU ESA DKSBZ BK SL LK{; IZLRQR UGHA FD;S GSAA FU/KKZFJRH }KJK IZLRQR VKWFMV FJIKSZV 3 L HMH DK VOYKSDU DJUS IJ IK;K FD VKWFMV FJIKSZV ESA ANNEXURE-II ESA FQZT VUQYKHK DS EWY; DH X.KUK FUEU IZDKJ LS DH TKRH GSA ITA NO.938//JP/2013 KEKRI SAHAKARI BHUMI VIKAS BANK LTD. VS. ITO, WARD- 2, BEAWAR 5 [KPSZ DH IZD`FR [KPSZ DH JKF'K IZFR'KR FQZT VUQYKHK DK EWY; LVKQ ESFMDY [KPZ 6]55 20 131 LVKQ ;K=K [KPZ 1]43]129 5 7]156 THI DS J[K&J[KKO] MHTY] CHEK] FDJK;K DS [KPSZ 4]55]269 20 91]053 VSFYQKSU [KPZ 64]155 20 12]831 LOKXR [KPZ 45]954 20 9]190 FQZT VUQYKHK DK DQY EWY; 1]20]361 MIJKSDRKUQLKJ FU/KKZFJRH DS EKEYS ESA FQZT VUQYKHK DK DQY EWY; JKF'K :I;S 1]20]361@& FU/KKZFJR FD;K TKRK GSA VKO';D IZI= TKJH FD;S TKOS O VK;DJ&VF/KFU;E 1961 / KKJK 234 CH DS RGR C;KT JKF'K :I;S 7]10]849@& PKTZ FD;K TKOSAA PWAFD FU/KKZFJRH US FQZT VUQYKHK DS EWY; DH LAX.KUK UGHA DH GS VKSJ VK;DJ&VF /KFU;E DH /KKJK 80 IH DS RGR XYR RF; IZLRQR DJRS GQ;S DVKSRH DK NKOK FD;K GS VR% XYR RF; DJUS DS DKJ.K VK;DJ&VF/KFU;E 1961 DH /KKJK 2711L H DS RGR 'KKFLR UKSFVL TKJH FD;K TKOSAA 2.3 FEELING AGGRIEVED BY THE ORDER OF THE AO, THE A SSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) AND THE LD. CIT(A) CON FIRMED THE ORDER PASSED BY THE AO AND HAS HELD AS UNDER:- 7.0 I HAVE CONSIDERED THE CONTENTION OF THE APPEL LANT AS WELL AS THE ASSESSMENT ORDER. IT IS SEEN THAT THE O RDER OF THE ITAT, IT HAS TO BE EXAMINED WHETHER THE PRINCIPAL BUSINESS O F THE ASSESSEE CONSISTED OF PROVIDING FINANCIAL TO ITS MEMBERS FOR AGRICULTURAL PURPOSES OR PURPOSES CONNECTED WITH AGRICULTURAL AC TIVITIES. IN THIS CONTEXT, THE CHART OF THE LOAN ADVANCED BY THE ASSE SSEE FOR THE VARIOUS SECTORS IS AS UNDER:- ITA NO.938//JP/2013 KEKRI SAHAKARI BHUMI VIKAS BANK LTD. VS. ITO, WARD- 2, BEAWAR 6 - LA - LSDVJ DK UKE Y{; FORH; LA'KKSF/KR _.K FORJ.K MIYC/KH IZFR'KR XR EKG RD FORJ.K PKYW EKG ESA FORJ.K DQY _.K FORJ.K LA[;K JKF'K LA[;K JKF'K LA[;K JKF'K 1 Y?KQ FLPKABZ 150 - 00 130 102 - 64 89 74 - 08 219 176 - 70 117 - 80 2 QKEZ ;U=HDJ.K 350 - 00 47 214 - 14 11 48 - 68 58 262 - 82 75 - 09 3 FOFOF/KD`R 305 - 00 516 259 - 68 247 151 - 88 763 411 - 56 134 - 93 4 VD`FK 60 - 00 24 26 - 37 12 8 - 61 36 34 - 98 58 - 30 5 XZKEH.K VKOKL ;KSTUK 60 - 00 23 38 - 80 8 9 - 34 31 48 - 14 80 - 23 6 QLYH _.K & & & & & & & & ;KSX 925 - 00 740 641 - 63 367 292 - 57 1107 934 - 20 100 - 99 NOTE:- FOFOF/KD`R DS RGR D`F'K VK/KKFJR FUEU _.K FN;S X;S & XK; IKYU HKSAL IKYU CDJH IKYU HKSM+ IKYU VKFN FROM ABOVE CHART, IT IS APPARENT THAT ASSESSEE HAS GIVEN THE LOAN OF RS. 176.70 LACS +RS. 262.82 LACS = RS. 439. 52 LACS (47%) OF THE TOTAL LOAN) FOR THE IRRIGATION AND AGRICULTURAL EQUIPMENTS OUT OF THE TOTAL LOANS OF RS. 934.20 LACS. FURTHER, LOAN O F RS. 34.98LACS IS FOR NON-AGRICULTURAL PURPOSES, LOAN OF RS. 48.14 LA CS IS FOR RURAL HOUSING PURPOSES. THOUGH ASSESSEE HAS CLAIMED THAT LOAN FOR THE REARING OF COW, BUFFALO, GOAT AND SHEEP OF RS. 411. 56 LACS I.E. FOR ANIMAL FARMING SHOULD BE CONSIDERED AS PART OF LOAN FOR PURPOSES CONNECTED WITH THE AGRICULTURAL ACTIVITIES HOWEVER SAME IS NOT ACCEPTABLE AS THIS LOAN IS FOR SEPARATE ACTIVITY AN D NOT FOR AGRICULTURAL PURPOSES OR PURPOSES CONNECTED WITH TH E AGRICULTURAL ACTIVITIES. THESE ACTIVITIES ARE SEPARATE FROM AGRI CULTURAL ACTIVITIES ITA NO.938//JP/2013 KEKRI SAHAKARI BHUMI VIKAS BANK LTD. VS. ITO, WARD- 2, BEAWAR 7 THOUGH SAME PERSON MAY BE CARRYING OUT AGRICULTURAL ACTIVITIES AS WELL AS ANIMAL REARING. THE ASSESSEE'S RELIANCE IN THIS CONTEXT ON THE AGRICULTURAL DEBT AND DEBT RELIEF SCHEME 2008 IS MI SPLACED AS THIS SCHEME WAS FOR VARIOUS ACTIVITIES AND NOT EXCLUSIVE LY FOR THE AGRICULTURAL ACTIVITIES. AS PER EXPLANATION TO SECTION 80P(4), THE DEFINITIO N OF PRIMARY AGRICULTURAL CREDIT SOCIETY, IS TO BE TAKE AS PER PART-V OF BANKING REGULATION ACT, 1949. THE SAME HAS BEEN REP RODUCED IN THE ORDER OF HON'BLE ITAT ON PAGE 7 AS UNDER:- (CCIV) 'PRIMARY AGRICULTURAL CREDIT SOCIETY' MEANS A CO-OPERATIVE SOCIETY,-- (1) THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF WHI CH IS TO PROVIDE FINANCIAL ACCOMMODATION TO ITS MEMBERS FOR AGRICUL TURAL PURPOSES OR FOR PURPOSES CONNECTED WITH AGRICULTURAL ACTIVITIE S (INCLUDING THE MARKETING OF CROPS); AND (2) 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 ADMISSI ON OF A CO-OPERATIVE BANK AS A MEMBER BY REASON OF SUCH CO-OPERATIVE BANK SUBSCRIBING TO THE SHARE CAPITAL OF SUCH CO-OPERA TIVE SOCIETY OUT OF FUNDS PROVIDED BY THE STATE GOVERNMENT FOR THE PUR POSE; FROM THE CHART OF LOANS ADVANCED BY THE ASSESSEE DU RING THE YEAR UNDER CONSIDERATION, IT IS APPARENT THAT ASSES SEE'S PRINCIPAL BUSINESS WAS NOT THAT OF PROVIDING FINANCIAL ACCOMM ODATION TO ITS MEMBERS FOR AGRICULTURAL PURPOSES OR PURPOSES CONNE CTED WITH AGRICULTURAL ACTIVITIES AS PER THE DEFINITION OF PR IMARY AGRICULTURAL ACTIVITY GIVEN IN PART-V OF BANKING REGULATION ACT, 1949. AS SUCH, THE ASSESSEE CANNOT BE CONSIDERED AS PRIMARY AGRICU LTURAL CREDIT SOCIETY. FURTHER, ASSESSEE IS NOT A PRIMARY COOPER ATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK AS ALREADY NOTED IN THE ORDER OF THE ITAT DATED 23-03-2014 IN PARA 4.4 OF THE ORDER. IN VIEW OF ABOVE DISCUSSION, THE ASSESSEE'S CLAIM O F DEDUCTION U/S 80P(2)(A)(I) IS NOT ALLOWABLE IN VIEW OF SECTION 80P(4) OF THE I.T. ACT. ITA NO.938//JP/2013 KEKRI SAHAKARI BHUMI VIKAS BANK LTD. VS. ITO, WARD- 2, BEAWAR 8 2.4 NOW THE ASSESSEE IS BEFORE US. 2.5 THE PRIMARY CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE IS PROVIDING FINANCIAL ASSISTANCE TO ITS MEMBERS FOR A GRICULTURAL PURPOSES OR FOR PURPOSES CONNECTED WITH AGRICULTURAL PURPOSES. FROM THE TABLE REPRODUCED IN PARA 7 OF THE LD. CIT(A)S ORDER REFE RRED AS ABOVE, THE ASSESSEE HAS DRAWN OUR ATTENTION THAT OUT OF TOTAL LOANS OF RS. 925 LACS, RS. 439.52 LACS WERE GIVEN FOR THE PURPOSE OF IRRI GATION AND AGRICULTURAL EQUIPMENTS. FURTHER IT WAS POINTED OUT LOANS OF RS . 411.56 LACS WERE GIVEN FOR REARING OF COW, BUFFALO, GOAT AND SHEEP. IT WAS SUBMITTED BY THE ASSESSEE THAT REARING OF THE COW, BUFFALO, GOAT AND SHEEP IS AN AGRICULTURAL ACTIVITY WITHIN THE MEANING OF SECTION 80P(4) OF TH E ACT. TO BUTRESS HIS ARGUMENT THE AR FOR THE ASSESSEE DRAWN OUR ATTENTIO N TO RAJASTHAN COOPERATIVE SOCIETY ACT, 2001, WHEREIN IT WAS MEN TIONED THAT LENDING OF LOANS BY THE BANK FOR THE PURPOSE OF AGRICULTURE , AGRICULTURAL PRODUCE, FOR CONSTRUCTION AND REPAIRS OF THE BUILDINGS FOR A GRICULTURE AND ALSO FOR REARING OF ANIMALS IS AN AGRICULTURAL ACTIVITY . IT WAS FURTHER CONTENDED THE RESERVE BANK OF INDIA VIDE CIRCULAR NO.RBI/2013-14/ 107 DATED 01-07- 2013 INDICATED THAT PRIORITY SECTOR LOANS SANCTIONE D UNDER THE GUIDELINES WILL CONTINUE TO BE CLASSIFIED UNDER THE PRIORITY S ECTOR NAMELY AGRICULTURAL. ITA NO.938//JP/2013 KEKRI SAHAKARI BHUMI VIKAS BANK LTD. VS. ITO, WARD- 2, BEAWAR 9 LASTLY, IT WAS CONTENDED THAT THE LOAN WHICH HAS BE EN ADVANCED BY THE SOCIETY TO ITS MEMBERS PRE-DOMINANTLY FOR THE PURPO SE OF AGRICULTURAL OR ACTIVITIES INCIDENTAL TO THE AGRICULTURE IS COVERED UNDER SECTION 80 P OF THE ACT , THEREFORE, THE ASSESSEE SOCIETY IS ENTITLED T O DEDUCTION U/S 80P(4) OF THE ACT. 2.5 PER CONTRA, THE REVENUE HAS TAKEN US TO THE ORD ER PASSED BY THE TRIBUNAL DATED 23-03-2012 AND IT WAS ARGUED THAT TH E TRIBUNAL IN ITS EARLIER ORDER HAS REJECTED THE CONTENTION OF THE AS SESSEE AND MORE PARTICULARLY RELIANCE WAS PLACED BY THE REVENUE ON PARA 4 OF SECTION 80P REFERRED HEREIN ABOVE . IT WAS THEREFORE SUBMITTED THAT THE ACTIVITIES OF THE ASSESSEE IS NOT COVERED UNDER THE PROVISIONS O F SECTION 80P(4)OF THE ACT AND IS THEREFORE NOT ENTITLED TO AVAIL THE DEDU CTION. IT WAS FURTHER CONTENDED THAT THE ORDER PASSED BY THE TRIBUNAL IS CORRECT AND THE ASSESSEE IS NOT ENTITLED TO CLAIM DEDUCTION U/S 80P (2)(A)(I) IN VIEW OF SECTION 80P(4)OF THE ACT. 2.6 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. BEFORE WE PROCEED TO EXAMINE T HE CONTENTIONS OF THE PARTIES, WE WOULD LIKE TO STATE THE PROVISIONS OF L AW AND THE SAME ARE REPRODUCED FOR THE PURPOSE OF CONVENIENCE. ITA NO.938//JP/2013 KEKRI SAHAKARI BHUMI VIKAS BANK LTD. VS. ITO, WARD- 2, BEAWAR 10 SECTION 80P - DEDUCTION IN RESPECT OF INCOME OF CO- OPERATIVE SOCIETIES (1) WHERE, IN THE CASE OF AN ASSESSEE BEING A CO-OP ERATIVE SOCIETY, THE GROSS TOTAL INCOME INCLUDES ANY INCOME REFERRED TO IN SUB-SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE WITH AND SUB JECT TO 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 I N (I) CARRYING ON THE BUSINESS OF BANKING OR PROVIDIN G CREDIT FACILITIES TO ITS MEMBERS, OR (II) A COTTAGE INDUSTRY, OR 1 [(III) THE MARKETING OF AGRICULTURAL PRODUCE GROWN BY ITS MEMBERS, OR] (IV) THE PURCHASE OF THE AGRICULTURAL IMPLEMENTS, S EEDS, LIVESTOCK OR OTHER ARTICLES INTENDED FOR AGRICULTURE FOR THE PUR POSE OF SUPPLYING THEM TO ITS MEMBERS, OR (V) THE PROCESSING, WITHOUT THE AID OF POWER, OF TH E AGRICULTURAL PRODUCE OF ITS MEMBERS, OR (VI) THE COLLECTIVE DISPOSAL OF THE LABOUR OF ITS M EMBERS, 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, ITA NO.938//JP/2013 KEKRI SAHAKARI BHUMI VIKAS BANK LTD. VS. ITO, WARD- 2, BEAWAR 11 THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUS INESS 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 ................................................... NAMELY: (1) THE INDIVIDUALS........................ (2) THE CO-OPERATIVE ....................... (3) THE STATE GOVERNMENT; (B) IN THE CASE OF A CO-OPERATIVE SOCIETY, BEING A PRIMARY SOCIETY ENGAGED IN SUPPLYING MILK, OIL SEEDS, FRUITS OR VEGETABLES RAISED OR GROWN BY ITS MEMBERS TO (I) A FEDERAL ............... OR (II) THE GOVERNMENT OR A LOCAL AUTHORITY; OR (III) A GOVERNMENT COMPANY ........................ ..........., THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF SUC H BUSINESS; (C) IN THE CASE OF A CO-OPERATIVE SOCIETY ENGAGED I N 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 N OT EXCEED, (I) WHERE SUCH CO-OPERATIVE SOCIETY IS A CONSUMERS CO-OPERATIVE SOCIETY, 2 [ONE HUNDRED] THOUSAND RUPEES; AND (II) IN ANY OTHER CASE, 3 [FIFTY] THOUSAND RUPEES. EXPLANATION : IN THIS CLAUSE, CONSUMERS CO-OPERAT IVE SOCIETY MEANS A SOCIETY FOR THE BENEFIT OF THE CONSUMERS; ITA NO.938//JP/2013 KEKRI SAHAKARI BHUMI VIKAS BANK LTD. VS. ITO, WARD- 2, BEAWAR 12 (D) IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY THE CO-OPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANY OTHER COOPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME; (E) IN RESPECT OF ANY INCOME DERIVED BY THE CO-OPER ATIVE SOCIETY FROM THE LETTING OF GODOWNS OR WAREHOUSES FOR STORAGE, PROCE SSING OR FACILITATING THE MARKETING OF COMMODITIES, THE WHOLE OF SUCH INC OME; (F) IN THE CASE OF A CO-OPERATIVE SOCIETY, NOT BEIN G 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 CHARGE ABLE UNDER SECTION 22 . EXPLANATION : FOR THE PURPOSES OF THIS SECTION, AN URBAN CONSUMERS COOPERATIVE SOCIETY MEANS A SOCIETY FOR THE BENEFI T OF THE CONSUMERS WITHIN THE LIMITS OF A MUNICIPAL CORPORATION, MUNIC IPALITY, MUNICIPAL COMMITTEE NOTIFIED AREA COMMITTEE, TOWN AREA OR CAN TONMENT. (3) IN A CASE WHERE THE ASSESSEE ................................................... ..................... 4 [(4) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY IN RELATION TO ANY CO- OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CR EDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOP MENT BANK . ITA NO.938//JP/2013 KEKRI SAHAKARI BHUMI VIKAS BANK LTD. VS. ITO, WARD- 2, BEAWAR 13 EXPLANATION : FOR THE PURPOSES OF THIS SUB-SECTION, -- (A) CO-OPERATIVE BANK AND PRIMARY AGRICULTURAL C REDIT 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 DE VELOPMENT BANK MEANS A SOCIETY HAVING ITS AREA OF OPERATION CONFIN ED TO A TALUK AND THE PRINCIPAL OBJECT OF WHICH IS TO PROVIDE FOR LON G-TERM CREDIT FOR AGRICULTURAL AND RURAL DEVELOPMENT ACTIVITIES.] {4 INSERTED BY THE FINANCE ACT, 2006, WITH EFFECT F ROM 1ST APRIL, 2007.} 2.7 PRIOR TO INSERTION OF SUB-CLAUSE 4 TO SECTION 80 P, THE CO-OPERATIVE SOCIETIES WHICH ARE ENGAGED IN CARRYING ON BUSINESS OF BANKING, PROVIDING CREDIT FACILITIES, COTTAGE INDUSTRY, CREDIT SOCIETY ENGAGED IN AGRICULTURE PRODUCE GROWN BY ITS MEMBERS, THE SOCIETY ENGAGED I N PURCHASE OF AGRICULTURAL IMPLEMENTS, SEEDS, LIVESTOCK OR OTHER ARTICLES INTENDED FOR AGRICULTURAL OR FOR THE PURPOSES OF SUPPLYING THE S AME TO ITS MEMBERS WERE ENTITLED TO THE DEDUCTION OF PROFITS AND GAINS OF THE BUSINESS ATTRIBUTABLE TO ANY ONE OR MORE ACTIVITIES . HOWEVE R AFTER THE AMENDMENT, THE DEDUCTION WAS NOT AVAILABLE TO THE CO-OPERATI VE BANK, HOWEVER THE DEDUCTION CONTINUED TO BE AVAILABLE TO A PRIMARY A GRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK ITA NO.938//JP/2013 KEKRI SAHAKARI BHUMI VIKAS BANK LTD. VS. ITO, WARD- 2, BEAWAR 14 . THUS IN OUR VIEW THE BENEFIT OF THE PROVISION I S AVAILABLE TO THE CO- OPERATIVE SOCIETY WHICH ARE OTHER THAN THE CO-OPER ATIVE BANK AND FURTHER THE BENEFIT IS ALSO AVAILABLE TO A PRIMARY AGRICULTURAL CREDIT SOCIETY AND THE PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK . THE EXPLANATION TO SUBSECTION 4 OF 80P HAS ALSO DEF INED THE PRIMARY CO- OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK ' MEANS A SOCIETY HAVING ITS AREA OF OPERATION CONFINED TO A TALUK AN D THE PRINCIPAL OBJECT OF WHICH IS TO PROVIDE FOR LONG-TERM CREDIT FOR AGRICULTURAL AND RURAL DEVELOPMENT ACTIVITIES' 2.8 T HUS IT IS CLEAR IS A SOCIETY HAVING PRINCIPAL OBJE CT IS TO PROVIDE LONG TERM CREDIT FOR AGRICULTURAL AND RURAL DEVELOP MENT ACTIVITIES IS ENTITLE TO DEDUCTION UNDER THIS PROVISION OF THE ACT . 2.9 MOREOVER, THE HONBLE GUJARAT HIGH COURT IN TAX APPEAL NO.1149 OF 2013 TITLED AS CIT-II VS. SURAT VANKAR SAHKARI S ANGH LTD., VIDE ORDER DATED 17TH JANUARY, 2014 HELD VIDE PARAGRAPH 7 AS U NDER: 7. FROM THE ABOVE CLARIFICATION, IT CAN BE GATHER ED THAT SUB- SECTION(4) OF SECTION 80P WILL NOT APPLY TO AN ASS ESSEE WHICH IS NOT A CO-OPERATIVE BANK. IN THE CASE CLARIFIED BY CBDT , DELHI COOP ITA NO.938//JP/2013 KEKRI SAHAKARI BHUMI VIKAS BANK LTD. VS. ITO, WARD- 2, BEAWAR 15 URBAN THRIFT & CREDIT SOCIETY LTD. WAS UNDER CONSI DERATION. CIRCULAR CLARIFIED THAT THE SAID ENTITY NOT BEING A COOPERATIVE BANK, SECTION 80P (4) OF THE ACT WOULD NOT APPLY TO IT. IN VIEW OF SUCH CLARIFICATION, WE CANNOT ENTERTAIN THE REVENUES CO NTENTION THAT SECTION 80P(4) WOULD EXCLUDE NOT ONLY THE CO-OPERA TIVE BANKS OTHER THAN THOSE FULFILLING THE DESCRIPTION CONTAINED TH EREIN BUT ALSO CREDIT SOCIETIES, WHICH ARE NOT COOPERATIVE BANKS. IN THE PRESENT CASE, RESPONDENT ASSESSEE IS ADMITTEDLY NOT A CRED IT CO-OPERATIVE BANK BUT A CREDIT CO-OPERATIVE SOCIETY. EXCLUSION CLAUSE OF SUB- SECTION (4) OF SECTION 80P, THEREFORE, WOULD NOT A PPLY. IN THE RESULT, TAX APPEALS ARE DISMISSED. 2.10 IN THE LIGHT OF ABOVE DISCUSSION NOW WE ARE R EQUIRED TO EXAMINE WHETHER THE ASSESSEE IS ENGAGED IN AGRICULTURAL AN D RURAL DEVELOPMENT ACTIVITIES AND IS QUALIFIED UNDER EXPLANATION TO SU BSECTION 4 OF 80P. IN THE PRESENT CASE THE ACTIVITIES OF THE ASSESSEE WERE RE PRODUCED BY THE LOWER AUTHORITIES AS UNDER:- -LA- LSDVJ DK UKE Y{; FORH; LA'KKSF/KR _.K FORJ.K MIYC/KH IZFR'KR XR EKG RD FORJ.K PKYW EKG ESA FORJ.K DQY _.K FORJ.K LA[;K JKF'K LA[;K JKF'K LA[;K JKF'K 1 Y?KQ FLPKABZ 150 - 00 130 102 - 64 89 74 - 08 219 176 - 70 117 - 80 ITA NO.938//JP/2013 KEKRI SAHAKARI BHUMI VIKAS BANK LTD. VS. ITO, WARD- 2, BEAWAR 16 2 QKEZ ;U=HDJ.K 350 - 00 47 214 - 14 11 48 - 68 58 262 - 82 75 - 09 3 FOFOF/KD`R 305 - 00 516 259 - 68 247 151 - 88 763 411 - 56 134 - 93 4 VD`FK 60 - 00 24 26 - 37 12 8 - 61 36 34 - 98 58 - 30 5 XZKEH.K VKOKL ;KSTUK 60 - 00 23 38 - 80 8 9 - 34 31 48 - 14 80 - 23 6 QLYH _.K & & & & & & & & ;KSX 925 - 00 740 641 - 63 367 292 - 57 1107 934 - 20 100 - 99 THUS IT IS CLEAR THAT THE ASSESSEE IS PRIMARILY IN VOLVED GIVING LOANS TO ITS MEMBERS FOR THE PURPOSES OF PURCHASING MINOR IRRIG ATION AND AGRICULTURAL EQUIPMENTS , REARING OF THE CATTLE'S NAMELY COWS, BUFFALOS GOATS AND SHEEP. THESE ARE AGRICULTURAL ACTIVITIES WITHI N THE MEANING OF ACT ITSELF AND FURTHER COMES WITHIN THE SCOPE OF AGRICULTURAL AND RURAL DEVELOPMENT ACTIVITIES. THUS GIVING THE LOANS FOR THE AGRICULTURE IMPLEMENT S SEEDS, AND LIVE STOCK CLEARLY ENTITLE THE ASSESSEE TO AVAIL THE BENEFIT O F SECTION 80 P OF THE ACT. THEREFORE WE HOLD THAT REVENUE WAS WRONG IN CONTEN DING THAT THE GIVING LOAN FOR LIVESTOCK ONLY I.E. COW, BUFFALO, G OAT AND SHEEP IS NOT AGRICULTURAL ACTIVITIES AND THEREFORE THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER THE ABOVE SAID PROVISION . 3.0 IN THE RESULT THEREOF WE HEREBY ALLOW THE APPE AL WITH THE DIRECTION TO THE AO TO GIVE ALL THE BENEFITS TO THE ASSESSEE UNDER 80P OF THE ACT. ITA NO.938//JP/2013 KEKRI SAHAKARI BHUMI VIKAS BANK LTD. VS. ITO, WARD- 2, BEAWAR 17 ORDER PRONOUNCED IN THE OPEN COURT ON 24/09/2015. SD/- SD/- (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 24/09/ 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT M/S. KEKRI SAHAKARI BHUMI VIKAS BAN K LTD. 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 2, BEAWAR 3. VK;DJ VK;QDRVIHY ) @ CIT(A), 3. VK;DJ VK;QDR@ CIT, 4. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 5. XKMZ QKBZY@ GUARD FILE (ITA NO.938/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR ITA NO.938//JP/2013 KEKRI SAHAKARI BHUMI VIKAS BANK LTD. VS. ITO, WARD- 2, BEAWAR 18