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2018 (2) TMI 866 - ITAT COCHINEligibility for claiming deduction u/s 80P - denial of claim as assessee failed to fulfil the principal objective of providing agricultural credits to members and it was engaged in the business of banking and only negligible percentage of loans disbursed by the assessee was for agricultural purposes - Held that:- An identical issue was considered by this Tribunal in the case of Edanad-Kannur Service Co-operative Bank Ltd [2018 (1) TMI 848 - ITAT COCHIN] wherein held that the Reserve Bank of India, which is the competent authority as per the Banking Regulation Act, treats assessee society and similar societies as only “Primary Agricultural 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 entitled for banking license. That being the case, the assessing officer was not competent and did not possess the jurisdiction to resolve / decide the issue as to whether the assessee was a 'Primary Agricultural Credit Society' or a 'Co-operative bank', within the meaning assigned to it under the provisions of the Banking Regulation Act and to take 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 Regulation Act. The assessee had extended credit facilities only to the members. The Revenue does not have a case that such credit facilities are extended to the outsiders. Therefore the income generated in the instant case is only out of the transaction with the members. Deduction u/s. 80P is allowed only for the said income. The assessee had claimed deduction u/s. 80P only in respect of net income which is derived by extending credit facilities to the members. - Decided against revenue
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