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2011 (2) TMI 1422 - AT - Income TaxClaim for deduction u/s 080P(2)(a)(i) - cooperative society - The assessee in the instant case being an apex cooperative society lending money to such primary units functioning within the State of Kerala. The assessee’s claim is that it is not a ‘cooperative bank’, so that it would not be hit by the provision of section 80P (4). In fact, it is not a bank, inasmuch as it is not in the business of banking. It would be incorrect to be guided by the presence of the word ‘bank’ in its name, which is not determinative of its character. It is in fact a land mortgage bank, to which the provisions of Banking Regulation Act, by virtue of section 3 thereof, do not apply, even as being a cooperative society providing credit facilities to its members, its income continues to enjoy exemption u/s. 80P(2)(a)(i). Hence, this appeal. HELD THAT:- In view of the obtaining legal position, as discerned from the reading of the applicable laws, i.e., the BR Act and the NBARD Act, in conjunction with which the relevant provisions of the Act are to be read, and the judicial precedents brought to our notice, we are of the clear view that the assessee is a ‘cooperative bank’ and, consequently, hit by the provision of s. 80P(4), so that the deduction provided by the said section would not be available to it from A.Y. 2007-08 onwards and, accordingly, stood rightly denied the impugned claim in its assessment for the year. So, however, we also clarify that to the extent the assessee is (also) or is acting (also) as a ‘state land development bank’, which too falls within the purview of the NBARD Act, exigible for financial assistance from NBARD, the assessee’s claim merits acceptance, and it would be entitled to deduction u/s. 80P(2)(a)(i) on the income relatable to its lending activities as such a bank. The matter is, therefore, remitted to the file of the AO for a consideration of this aspect of the matter and adjudication as per law on factual verification and determination, per a speaking order, after allowing reasonable opportunity to the assessee to establish its claims, the onus for which is only on it. We decide accordingly.
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