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2016 (2) TMI 152 - ITAT COCHIN

2016 (2) TMI 152 - ITAT COCHIN - TMI - Denial of claim of deduction u/s. 80P being interest received from other co-operative societies - Held that:- Section 80P(2)(c) of the Act exempts income of co-operative societies to the extent mentioned therein if the profits or gains are attributable to the activity in which the co-operative society is engaged. The expression "attributable to" is much wider than the expression "derived from" and it covers receipts from sources other than the actual conduc .....

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ual business.

Where, however, the assessee as owner of certain property lets out that property and receives rental income, the income thus received cannot partake of the character of profits and gains attributable to an activity carried on by the society. The building let out is not a commercial asset or the rent received is not profit or gain arising from the exploitation of a business asset. The word "activity" is wider than the word "business". It connotes a specified form of super .....

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d used by the assessee is not such an activity falling under clause (c). The rent thus received by the assessee is not eligible for the exemption provided thereunder. In this view, assessee's claim is correctly rejected - Decided against assessee. - ITA No. 58/Coch/2015, CO No. 05/Coch/2015, ITA No. 592/Coch/2014 - Dated:- 3-11-2015 - B. P. Jain, AM And George George K, JM For the Appellant : Shri K P Gopakumar, Sr. DR For the Respondent : Shri Josekutty Jacob, CA ORDER Per B. P. Jain, Accountan .....

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. 2. Ld. Commissioner of Income-tax (Appeals) has deleted the addition of ₹ 2,79,63,652/- on the ground that this amount is not assessable under the head "other sources". 3. The Ld. CIT(A) ought to have decided whether the income, which is treated as not assessable under "other sources", was to be assessed under any other head and if so, whether the assessee was entitled to deduction u/s. 80P of the Act. 4. The Ld. CIT(A) ought to have considered that in the assessment .....

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In such a situation, the Ld. CIT(A) ought to have decided whether the remaining income which is not assessable under the head "other sources" was to be assessed under any other head and if so, whether the assessee's claim u/s. 80P is allowable in view of the facts pointed out by the Assessing officer. For these and other grounds that may be advanced at the time of hearing, the order of the learned Commissioner of Income-tax(Appeals) on the above points may be set aside and that of .....

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eligible for deduction. If the income is derived by a co-operative society from the business of banking or providing credit facility to its members, it will fall within the exemption. In the case of CIT vs. Karnataka State Cooperative Apex Bank, reported in (2001), 251 IRE 194 (SC), it was held that interest from surplus funds kept as deposits in banks, being ancillary and incidental to the carrying on of the business of providing credit facility by the assessee cooperative society to its membe .....

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estments from another co-operative society is eligible for exemption from taxation. He further went wrong by upholding the addition of the gross interest income of ₹ 33,85,886/- to the taxable income ignoring the fact that the whole of the interest was received from other co-operative societies of which the details are as follows: 1. District Co-operative Bank, Pala ₹ 5,57,461/- 2. District Co-operative Bank, pala ₹ 417/- 3. District Co-operative Bank, Erattupetta Rs.20,08,270/ .....

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mmissioner of Income-tax(Appeals) has rightly deleted the addition of ₹ 2,79,63,652/- wrongly added by the appellant as income taxable u/s. 56 of the Act. 1.2 During the F.Y. 2008-09, your respondent has earned a total (gross) amount of ₹ 3,37,04,390/- as interest on loans given to its members. All these are earned during the course of the regular business of your respondent i.e., providing credit facility to its members. (Copy of the audited financial statements are attached as Exhi .....

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ich was rightly deleted by the Learned Commissioner of Incometax( Appeals). 1.5 As per the provisions of the Income Tax Act, 1961, a regular business income cannot be assessed u/s. 56. But the appellant has done the same in the case of your respondent which was rightly deleted by the Learned Commissioner of Income-tax(Appeals). 1.6 All the interest income received on loans given to its members are your respondent's business income which is to be taxed under the head Profits and Gains of Busi .....

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led by Income Tax Officer, Ward-3, Kottayam be dismissed. 5. The brief facts of the case as emanating from the order of the Assessing officer are reproduced for the sake of convenience as under: "This office vide letter No AAAAP4839K/ITO/Wd-3/2011-12 dated 30/11/2011 has asked the Secretary to furnish the details head wise amount for the income received for the period ended 31/03/2009. (i) Interest received on Loans (ii) Interest received on Bank Deposits (iii) Interest on Chitty/GDCS (iv) .....

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ee's arguments as detailed above have been carefully considered. The assessee is a primary agricultural credit co-operative society (PACS) registered under the Co-operative Societies Act. Therefore, subject to satisfaction of provisions of section 80P(1), if the gross total income includes any income referred in sub-section (2) of section 80P, the assessee shall be eligible only for that income for deduction in computing the total income. As per details filed in respect of different type of .....

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case. it is observed that majority of loans given were for non-agricultural activities. On gold-loan, housing loan and ordinary loan etc. the rate of interest was from 12% to 15.5%. Therefore, the loans bearing the lowest interest rate and for agricultural purposes are accepted to be agricultural loans. Out of the total interest received, the interest received on the following loans comes to ₹ 27963652/- which is not for the benefit of agricultural members and for the purpose of the activ .....

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he assessee had invested in the short term deposits with Banks as follows and earned interest to ₹ 3385886/-. 1. District Co-operative Bank, Pala ₹ 5,57,461/- 2. District Co-operative Bank, pala ₹ 417/- 3. District Co-operative Bank, Erattupetta Rs.20,08,270/- 4. Meenachil Taluk Co-operative Employees Society ₹ 3,19,738/- 5. Meenachil Rubber Marketing Co-operative Society ₹ 5,00,000/- Total Rs.33,85,886/- As per Sec 2(24)(1), both the above income of ₹ 2,79,63 .....

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,160/- Add: Disallowance on deduction claimed u/s. 80P(1) - 3,13,49,538/- Total income arrived - 3,13,57,698/-" 5. The Ld. CIT(A) has confirmed the disallowance of the sum of ₹ 33,85,886/- by following the decision of the earlier Bench of the ITAT, Cochin in the case of The Payyannur Service Co-operative Bank Ltd. vs. ITO in I.T.A. No. 325/Coch/2012 alongwith a bunch of 26 appeals vide its order dated 31st July, 2014. However, the Ld. CIT(A) has deleted the addition of ₹ 2,79,63 .....

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this view of the A.O. seems to be not relevant. If this income is treated as income from other sources, then the profit, as per P&L account, will become a negative profit to the same extent. Further, the A.O. has wrongly applied the ratio pronounced in the Totgar's case is applicable where the interest income arising to a cooperative society, carrying on the business of providing credit facilities to its members or marketing of the agricultural produce of its members, on the surplus fun .....

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O. on this count is deleted and the assessee's appeal on this ground is allowed." 6. We have heard the rival contentions and perused the facts of the case. As evidenced from the order of the Assessing Officer wherein the assessee's arguments are referred to, the assessee has contended that the assessee is a Primary Agricultural Credit Co-operative Society (PACS) registered under Cooperative Societies Act. The contention of the assessee was that subject to satisfaction of provisions .....

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apart from interest earned from co-operative banks and co-operative societies amounting to ₹ 33,85,886/-. From the perusal of the record and arguments of the Ld. Counsel for the assessee, it is evident that banking business is not the object of the Society. The Society is formed mainly for providing credit facilities to its members for carrying out agricultural activities and also other agro-based activities. The principal business of the assessee is not doing banking business for the reas .....

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. CIT(A) is not justified in allowing the appeal of the assessee by deleting the addition of ₹ 2,79,63,652/- particularly when the assessee is already hit by the provisions of section 80P(4) of the Act. This issue has been elaborately dealt with by the earlier Bench of the ITAT, Cochin in a bunch of 26 appeals vide its order dated 31-07-2014(supra). It is very relevant to reproduce the said order wherein all the issues have been dealt with in detail herein below for the sake of convenience .....

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71 531. [PAN:AAAAT 7221K] The Income Tax Officer, Ward-2, Kasargod. 4. 134/Coch/2013 5.719/Coch/2013 2009- 10 2010- 11 The Kotacherry Service Cooperative Bank Ltd., Kanhangad, Kasargod-671 315. [PAN: AAAAT 3164F] The Income Tax Officer, Ward-2, Kasargod. 6. 135/Coch/2013 7. 720/Coch/2013 2009- 10 2010- 11 The Nileshwar Service Cooperative Bank Ltd., Nileshwar, Kasargod-671 314. [PAN:AAAAT 3163C] The Income Tax Officer, Ward-2, Kasargod. 8. 325/Coch/2012 2009- 10 The Payyannur Service Cooperative .....

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/2013 15. 685/Coch/2013 2007- 08 2008- 09 2010- 11 The Kappad Service Cooperative Bank Ltd., P.O. Kappad, Kannur-670 006. [PAN:AABAK 4922D] The Income Tax Officer, Ward-1, Kannur. 16. 739/Coch/2013 17. 740/Coch/2013 18. 741/Coch/2013 2007- 08 2008- 09 2009- 10 Cherukunnu Service Cooperative Bank Ltd., P.O. Cherukunnu, Kannur. [PAN:AAAAC 5016F] The Income Tax Officer, Ward-1, Kannur. 19. 742/Coch/2013 20. 743/Coch/2013 21. 744/Coch/2013 2007- 08 2008- 09 2010- 11 The Kannapuram Service Cooperativ .....

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Shri K K John, Sr. DR Respondent Rep by: Shri Vedanga Prabhu, Sri K P Pradeep and Shri Mathew Joseph, CAs & Smt. Divya Ravindran, Adv. ITA No.770 /Coch/2013 Assessment Year: 2009-10 INCOME TAX OFFICER WARD-4, KOTTAYAM Vs CHIRAKKADAVU SERVICE CO-OP BANK LTD CHIRAKKADAVU, KANJIRAPALLY KOTTAYAM-686520 PAN NO:AAABT2064P Appellant Rep by: Shri K K John, Sr. DR Respondent Rep by: Shri Prasanth Srinivas, CA CO No. 05/Coch/2014 (Arsg. out of ITA No.770/Coch/2013) Assessment Year: 2009-10 CHIRAKKADA .....

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2. The common ground in all these appeals and C.O. No. 05/Coch/2014 is with regard to allowability of deduction u/s. 80P(2) and 80P(2)(d) of the I.T. Act. 2. 1 The brief facts of the cases are that the lower authorities denied the claim of the assessees for deduction u/s. 80P of the Act. The primary object or principal business of the assessee is to provide financial accommodation to its members for agricultural purposes or for the purposes connected with agricultural activities. Since the asse .....

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ned by the assessee in the activity of providing credit facility to members. The Assessing officer disallowed the claim of deduction. According to the Assessing officer the assessee is a cooperative bank and at the same time it is not a Primary Agricultural Credit Society and therefore the provisions of sub-section (4) of sec. 80P would apply. Accordingly he denied the benefit of deduction u/s. 80P to the assessee. On appeal CIT(A) confirmed the decision of the Assessing officer. 4. Section 80P .....

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amely:- (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 its members, or (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or (v) the processing, without the aid of power, of the agricultural produce of its members, o .....

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to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank Explanation. - For the purposes of this subsection,- (a) "co-operative bank" and "primary agricultural credit 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 an rural development bank" means a society having its area .....

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society, or a primary co-operative agricultural and rural development bank. Thus the restriction u/s. 80P(4) is applicable only to co-operative banks and what has become taxable as per the amendment is the income from banking mentioned in the first part of 80P(2) a(i). The restriction in subsection 4 does not apply to any other Co-operative Institutions which are not banks. Hence all other co-operative societies such as consumer co-operatives, housing cooperatives etc. are still eligible for de .....

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trar of cooperative societies, Govt of Kerala. The co-operative department has classified the assessee as a Primary Agricultural Credit Society. The area of operation of this society is limited to a Village. This society is formed mainly for providing credit facility to the members for carrying out their agricultural and allied activities. The fund is mobilized mainly through deposits from members. The money is advanced or lent only to members and not to public mostly for agricultural, animal hu .....

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9 Part V of the Banking Regulation Act as referred to in the above explanation defines a primary agricultural society as "a Co-operative society, - (1) the primary object or principal business of which is to provide financial accommodation to its members for agricultural purposes or for the purposes connected with agricultural activities (including marketing of crops); and (2) the bye-laws of which do not permit admission of any other Cooperative society as a member; 9. The Ld. AR submitted .....

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n of any other cooperative society as a member. It is on fulfilling the above two conditions that the society is rightly classified as a primary agricultural credit society by the Registrar of Co-operatives. The authority to assign the status of a society being Registrar of Co-operatives, the contention of the Assessing officer that the society is not a primary agricultural credit society is beyond his powers and is invalid. 10. The principal business of the society is to provide financial accom .....

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d under other heads due to technical reasons. The observation by the Assessing officer in this regard is that the agricultural finance by the society is only a small percentage of the total loans sanctioned is not true to facts. Though majority of the advances are agricultural in nature, the circumstances under which the assessee society and other societies are forced to classify them as non agricultural should also been considered in the right perspective. The main source of funds of the assess .....

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be lent for 7%. This is the situation which compels a primary agricultural society to classify a part of the agricultural loans lend by it as non agricultural. Hence the assessee is a primary agricultural credit society factually and theoretically. 11. The alternative "or" in the term 'primary" object or principal business" is quite relevant. Once the primary object of the society is providing financial accommodation to members for agricultural purposes it satisfies the .....

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f India is treating the assessee as a primary agricultural credit society recognizing the status assigned to it by the Reg. of Co-operatives. That is why the assessee society is capable of engaging in trading activity which is not allowed to a banking company as per Banking Regulation Act. Banking license refused by RBI 13. According to the Ld. AR, the Madai Co-operative Rural Bank Ltd., The Kadirur Service Co-operative Bank Ltd. Etc. which are co-operative Banks functioning at par with the asse .....

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ciety a determination there of by the Reserve Bank of India shall be final. As the RBI has recognized the assessee as a Primary Agricultural Credit Society, the Assessing authority is bound to accept it. 14. According to the Ld. AR, the assessee is not a co-operative bank for the following reasons. As per the section 80P(4) of Co-operative bank and primary agricultural credit society shall have the meaning respectively assigned to them in part V of the Banking Regulation Act, 1949. Part V of the .....

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e assessee is a primary co-operative bank. The Primary Cooperative Bank is defined u/s. 5 clause (ccv) of Banking Regulation Act, 1949 as under: "(ccv) ":primary co-operative bank" means a cooperative society, other than a primary agricultural credit society". (1) the primary object or principal business of which is transaction of banking business" (2) the paid-up share capital and reserves of which are not less than one lakh of rupees: and (3) the bye-laws of which do n .....

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uot; it is doubtlessly clear that a primary agricultural society cannot be a co-operative bank as the definition is mutually exclusive one. The assessee being a primary agricultural credit society is not a co-operative bank. 16. Without prejudice to the assessee's contention that assessee is a primary agricultural credit society, the Ld. AR contended that it is not a cooperative bank even if it is not held to be primary agricultural credit society for arguments sake. 17. The first condition .....

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for carrying out their agricultural activities and also to promote other agro based activities. Principal business 19. As per the second part of sub clause (1) of clause (ccv) quoted above, in order to become a Co-operative society a bank, its principal business should be transaction of banking business. The principal business of the assessee is not doing banking business for the following reasons: The assessee does not have a banking license from the RBI. 20. The first and foremost requisite in .....

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es are collecting deposits and lending for home finance, vehicle finance and other infrastructural activities. The Ld. AR submitted that the requirement of obtaining a license being that much important, and the matter of obtaining it being that much difficult, it cannot be said that what the assessee is doing is banking business. According to the Ld. AR banking business has been defined u/s. 5(b) of the Banking Regulation Act as under: "Sec. 5(b) "banking" means the accepting, for .....

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of the assessee, the deposits are mostly accepted from the members and the deposits from public individuals are negligible. The money is advanced or lent only to members and not to public mostly for agricultural purposes. Hence the principle of mutuality is applicable in the case of the assessee which means that the activity of the assessee is not of banking but is that of providing credit facility to only members. 22. The Ld. AR submitted that the assessee is not a scheduled bank and hence not .....

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through RTGS. Similarly, he submitted that facilities like use of pass books has no connection with the business of banking and the cheques issued are only withdrawal slips. 24. The Ld. AR drew our attention to s. 43D and submitted that the assessee is not eligible to the benefits of s. 43D as per which scheduled banks, financial institutions etc. need not account interest non performing assets on accrual basis Interest on NPA is accounted for banks on receipt basis. But the assessee not being .....

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es (ccv) of Banking Regulation Act, 1949, the most important clause no. 1 is not being applicable to the assessee. Hence the assessee does not fall under the definition of cooperative bank as defined in Part V of the Banking Regulation Act, 1949 and therefore, sub-section 4 of section 80P of the Act is not applicable to it. 26. Alternatively, the Ld. AR contended that even if it is held to be a bank for arguments sake, still it is eligible for the deduction of 80P(2)(a)(i) since the intention of .....

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e bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank." 27. Thus the Ld. AR submitted that from the above it is very clear that the intention of law was only to tax co-operative banks like District Cooperative Bank, State Co-operative Bank and Urban Co-operative Bank which are functioning at par with other commercial banks. 28. The Ld. AR drew our attention to the interpretation of section 2(24) (viia) of the Act. For denyi .....

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nd the assessee is free to claim the eligible deductions provided under the Act. 29. The Ld. AR also drew our attention to the relief provided u/s. 43D of the Act. In the Income Tax Act, a differential treatment is meted out to primary agricultural societies in the matter of revenue recognition on nonperforming assets u/s. 43D. While all financial institutions including nationalized banks and scheduled banks are allowed to account income by way of interest on non performing assets on receipt bas .....

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AR also made a comparative study of the net profit, income assessed and tax liability of the assessees to show that the tax liability assessed is much more than the net profit. Such a situation could not be the consequence of the implementation of any prudent law as survival of the entity is at stake in the long run. 30. The Ld. AR drew our attention to the sub-section 80P(4) of the Act which is reproduced below: "(4) The provisions of this section shall not apply in relation to any co-oper .....

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herwise it would have been sufficient to say that "the provision of this section shall not apply in relation to any co-operative bank". Now the assessing authorities, may be out of their enthusiasm to achieve collection target, are not allowing exemption to any category of co-operative banks as intended in the subsection 80P(4), instead are trespassing legal boundaries of the related section to bring into tax net the co-operative societies which are not even banks. The Ld. AR relied on .....

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he assessee is banking business Therefore the assessee will not comply with the first condition as laid down in the definition as given under section 5(ccv) of the Banking Regulation Act, 1949 for becoming "primary co-operative bank". The assessee, therefore, cannot be regarded to be a primary co-operative bank and in consequence thereof, it cannot be a co-operative bank as defined under Part V of the Banking Regulation Act, 1949. Accordingly, in our opinion, the provisions of sec. 80P .....

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usively banking business and as it does not possess a license from Reserve Bank of India to carry on business, it is not a co-operative bank. It is a co-operative society which also carries on the business of lending money to its members which is covered u/s. 80P(2)(a)(i) i.e., carrying on the business of banking for providing credit facilities to its members. The object of the aforesaid amendment is not to exclude the benefit extended u/s. 80P(1) to such society." (iii) The Hon'ble Guj .....

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ot apply to it. In view of such clarification, we cannot entertain the Revenue contention that section 80P(4) would exclude not only the cooperative banks other than those fulfilling the description contained therein but also credit societies, which are not cooperative banks. In the present case, respondent assessee is admittedly not a credit co-operative bank but a credit cooperative society. Exclusion clause of sub-section(4) of section 80P, therefore would not apply." (iv) The Hon'bl .....

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credit society and share limit of the primary credit society so as to classify them as a co-operative bank and remove them out of the purview of the exemption clause. That is a matter to be decided under the Banking Regulation Act. As rightly contended by the petitioner, they are not controlled or governed by the RBI and they are registered and are bound by the provisions of the Cooperative Societies Act." (v) The Hon'ble Madras High Court in 188 ITR 671 (Mad.) has held as under: " .....

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its members, that would suffice to attract the benefit of deduction u/s. 80P(1) and (2) (a)(i)." 31. Thus the Ld. AR concluded that it is doubtlessly clear that a primary agricultural credit society providing credit facility to its members is not a bank coming under the control of Reserve Bank of India and is eligible for deduction u/s. 80P. It is not open for the revenue to dissect the operations of the society to remove it out of the exemption clause as observed by the Hon'ble High Co .....

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of the I.T Act was denied to the above societies since it was found that the Societies were not fulfilling their primary object or principal business of providing financial accommodation to its members for agricultural purposes. The assessee societies were providing only meager percentage of their total loans disbursed towards agricultural purposes. 33. The Ld. DR submitted that apart from this, it was found that the principal business of the above societies was banking business. Hence the asses .....

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), Calicut relied on his own order in the case of Karivellur Service Co-operative Bank Ltd. for the A.Y. 2009-10. The CIT(A)'s order was also confirmed by the Hon'ble ITAT Cochin vide order dated 22/03/2013 in I.T.A. No. 311/Coch/2012 in the case of The Karivelloor Service Co-Op Bank Ltd. 35. The Ld. DR also placed reliance on the recent decision of the ITAT, Panaji Bench dated 14-03-2014 in the case of Shri Chandraprabhu Urban Co-operative Society Ltd. (45 taxmann.com 14(Panaji-trib) an .....

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red in holding that certificate from the Registrar of Co-operative Societies categorizing the assessee as a primary agricultural credit society is sufficient to claim deduction u/s. 80P. This finding of the CIT(A) is against the finding of the Hon'ble High Court of Kerala in WP(C) No. 14226 of 2012(C) dated 14th September 2012 in the case of Thathamangalam Service Co-operative Bank Ltd. and others, wherein their Lordships have observed as under: "True, some of the petitioners have obtai .....

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redit Societies to substantiate that their main object of incorporation is being continued to be fulfilled as well." 37. The ld DR submitted that it is for the petitioners to establish their status as Primary Agricultural Credit Societies by obtaining and producing the relevant certificate from the competent authority, as mentioned hereinbefore. It is also open for the petitioners to opt to produce the relevant records before the income tax authorities as well, to establish their status and .....

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ducted into the factual situation whether co-operative bank is conducting the business as Primary Agricultural Credit Society or a primary co-operative agricultural and rural development bank and depending upon the transactions, the Assessing officer has to extend the benefits available and not merely looking at the registration certificate by the Kerala Co-operative Societies Act or the nomenclauture." 38. The Ld. DR further submitted that it is pertinent to note that the President of The .....

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asion in the case of Kunnamangalam Co-operative Bank in I.T.A. No. 156/Coch/2014 vide order dated 25/07/2014 decided the issue against the assessee. The relevant portion of the said order is as follows: "8.10 We have gone through the decision of the Hyderabad bench of this Tribunal in the case of The Citizen Cooperative Society vs. Addl. CIT, 41 305 (Hyd). We notice that this decision is applicable to the facts of the case before us. In that decision, under para 23 the Tribunal has given a .....

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Bangalore Bench of the Tribunal in the case of ITO vs. Divyajyothi Credit Co-operative Society Ltd. (supra) in ITA No.72/Bang/2013. In this case, we notice that the Hon'ble Tribunal confirmed the order of CIT(A) following the decision of the Tribunal in the case of ACIT, Circle 3(1), Bangalore vs. M/s. Bangalore Commercial Transport Credit Cooperative Society Ltd. in ITA No.1069/Bang/2010 holding that Sec. 80P(2)(a)(i) is applicable only to a co-operative bank and not to credit cooperative .....

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Seva Sahakara Sangha vs. State of Karnataka &Ors.(supra) we notice that the issue before the Hon'ble High Court in the Writ Petition filed by the Petitioner related to the legislative competence of the State Legislature for issuing a circular. The issue does not relate to the claim of deduction u/s 80P(2)(a)(i). While dealing with this issue, the Hon'ble High Court under para 12 observed as under : "12. It is not possible to accept this contention. The petitioners are not the ba .....

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use the petitioners the co-operative societies in question-are required to advance loans to their members, they do not cease to be co-operative societies governed by the Act nor can they be treated as banking companies. It is also not possible to hold that these activities of the petitioners amount to "banking" as contemplated under the Banking Regulation Act, 1949, inasmuch as these co-operative societies are not established for the purpose of doing "banking" as defined in s .....

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ari Ltd. in ITA No. 1 to 3/PNJ/2012 dt. 30.3.2012 (supra). While discussing this issue, after analysing the aims and objects of the co-operative society under para 12 of its order, this Tribunal has held as under : "12. From the aforesaid objects, it is apparent that none of the aims and objects allows the assessee cooperative society to accept deposits of money from public for the purpose of lending or investment. In our opinion until and unless that condition is satisfied, it cannot be sa .....

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ur opinion the provisions of section 80P (4) read with explanation there under will not be applicable in the case of the assessee. The assessee, therefore, in our opinion will be entitled for the deduction u/s 80P(2)(a)(i). We accordingly confirm the order of CIT(A) allowing deduction to the assessee." The other decisions also relied on are not applicable to the facts of the case of the assessee. 8.11. In view of our aforesaid discussion, we hold that the assessee is a primary cooperative b .....

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upreme Court in the case of CIT vs. Kumbakonam Mutual Benefit Fund Ltd., 53 ITR 241 (SC) wherein it was held that if the profits are distributed to shareholders as shareholders, the principle of mutuality is not satisfied. A shareholder in the assessee-company is entitled to participate in the profits without contributing to the funds of the company by taking loans. He is entitled to receive dividend as long as he held shares. He did not have to fulfil any other condition. His position is in no .....

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Corporation (P) Ltd., 69 ITR 278. Further, the Hon'ble Kerala High Court in the case of Kottayam Co-operative Land Mortgage Bank Ltd. vs. CIT, 172 ITR 443(Ker.) where it was held as under: "The Income-tax Officer held the view that the assessee is not entitled to claim any further exemption under clause (c) as the assessee is entitled to exemption u/s. clause (a) in respect of the banking activities. The Appellate Assistant Commissioner, in allowing the assessee's appeal, held that .....

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perty has been dealt with in sections 22 to 27 as income and not as profits and gains and that the assessee is not, therefore, entitled to any exemption under clause (c). The Tribunal did not accept the alternative contention raised by the assessee for the first time before the Tribunal that the letting out of surplus space should be treated as a business activity under clause (a) of sub-section (2) of section 80P of the Act. The appeals were accordingly allowed. The question of law arises out o .....

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does not exceed ₹ 20,000 shall be deducted in computing the total income. The co-operative society engaged in carrying on the business of banking or providing credit facilities to its members falls under clause (a) of section 80P(2). The claim for exemption under clause (c) is in addition to the exemption provided under clause (a). The provisions are cumulative and mutually supplementing. The limits specified in clause(c) are in relation to the profits and gains attributable to the activi .....

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exempts income of co-operative societies to the extent mentioned therein if the profits or gains are attributable to the activity in which the co-operative society is engaged. The expression "attributable to" is much wider than the expression "derived from" and it covers receipts from sources other than the actual conduct of the business of the assessee. In this view of the matter, interest earned by a co-operative society, which was carrying on the business of supplying suga .....

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cter of profits and gains attributable to an activity carried on by the society. The building let out is not a commercial asset or the rent received is not profit or gain arising from the exploitation of a business asset. The word "activity" is wider than the word "business". It connotes a specified form of supervised action or 0field of action. Read in the context of the profit earning activity of a co-operative society, it means the corporate activity of the society, that i .....

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In this view, the Appellate Tribunal was justified in rejecting the assessee's claim." 10. In view of the above discussions, we are inclined to hold that the assessee is not entitled for deduction u/s. 80P of the Act on any reasoning." 40 In view of the order or the Tribunal, we are inclined to dismiss this ground of the assessee in all the appeals. However, in the case of revenue appeal in I.T.A. No. 770/Coch/2013, the CIT(A) has brought on record that the primary object or princ .....

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3,746/Coch/2013, 747/Coch/2013, 800/Coch/2013,133/Coch/2013,124/Coch/2013,123/Coch/2013, 683/Coch/2013, 684/Coch/2013,685/Coch/2013,739/Coch/2013, 740/Coch/2013, 741/Coch/2013, 743/Coch/2013 & 744/Coch/2013 is with regard to deduction of 7.5% provision for bad and doubtful debts u/s. 36(1)(viia) of the Act. 41.1 After hearing both the parties, we are of the opinion that similar issue came up for consideration in the case of Kannur Co-operative Bank Ltd. in I.T.A. Nos. 182&183/Coch/2014 d .....

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7,238,241,243,254&258 of 2013 vide its judgment dated 3rd April, 2014. The Hon'ble Jurisdictional High Court held as under: "8. Section 36 of the Act deals with various deductions that could be allowed in computing the income referred to in Section 28 of the Act. Section 36 has various clauses and each clause refers to deduction allowable to a particular assessee like amount of premium paid in respect of insurance against risk of damages, federal milk co-operative society,general in .....

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-clause (a) reads as under: "A scheduled bank not being a bank approved by Central Government for the purposes of clause (viiia) or a bank incorporated by or under the laws of a country outside India or a non-scheduled bank or a co-operative bank other than a bank or a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank, an amount not exceeding seven and one-half percent of the total income (computed before mak .....

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explanation which read as under: "Non-scheduled bank" means a banking company as defined under clause (c) of section 5 of the Banking Regulation Act, 1949, which is not a scheduled bank. "Rural branch" means a branch of a scheduled bank or a non-scheduled bank situated in a place which has a population of nor more than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year". "C .....

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a particular bank is a scheduled bank, one has to see whether such bank finds a place in the Second Schedule to Reserve Bank of India Act. Cooperative Bank means a bank as explained under sub-section (4) of Section 80P of the Act. Section 5(c) of Banking Regulation Act defines banking company as under: "Banking company means any company which transacts the business of banking in India." U/s. 80P, it again refers to Section 56 of Banking Regulation Act. U/s. 56, falling under Chapter V .....

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ose of deciding the controversy, one has to see how presence of a particular term in a particular provision and simultaneously being absent in the explanation to the said provision would change the position of the appellate banks with reference to the context. 9. Admittedly, appellants/assessees are co-operative banks. With introduction of Finance Act of 2007, coming into effect from 01.04.2007, one has to understand what was the position prior to 01.04.2007 and after 01.04.2007, they were enjoy .....

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clarified that only such co-operative bank other than a primary agriculture credit society, etc. is included in sub-clause (a) of clause (viia). The provision is a beneficial one. No doubt, plain reading of main Section 36(1) (viia)(a) and Explanation under said section present certain difficulties, but situation is not without possibilities. The object and intention of the legislature is to be understood by harmonious construction of the provisions. The policy was to include Cooperative Banks .....

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far as co-operative bank and they were claiming benefits applicable to them u/s. 80P. During the assessment year in question they claimed deductions u/s. 36(1)(viia)(a) of the Act. Only with reference to the assessment year in question appellants/assessees have created provision for bad and doubtful debts in the books of accounts. So far as this issue is concerned, opinion of the assessing officer and two appellate authorities is justified and we need not interfere with the opinion of the author .....

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sel appearing for appellants tried to convince the court that adjective of rural would mean in relation to or characteristic of the countryside rather than the town; remote rural areas. Urban, no doubt, is opposite to rural. Urban is in relation to or characteristic of a town or city. 11. According to us, there is no necessity to find out the generic meaning of either urban or rural for the simple reason that explanation under Section 36(1) itself defines what could be considered as a rural bran .....

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ia), their Lordships opined as under: "Next question raised pertains to the assessee's claim for deduction of provision for bad debts in terms of section 36(1) (viia) of the Income-tax Act. Here the only question raised is as to basis of classifying branches of the bank as rural branches and other branches. Rural branch is defined under Explanation (ia) to section 36(1)(viia) as follows: "rural branch" means a branch of a scheduled bank or a non- schedules bank situated in a p .....

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definition clause is the ward of a panchayat or municipality, the Assessing officer took the view that "place" contained in the definition clause should mean a revenue village. No doubt," as such is not defined in the definition clauses and so much so, we have to find out the scope and meaning of "place" referred to in the section. Standing counsel for the Department produced before us last published Census Report of 2001. Even though the previous Census Report may be t .....

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meaning of rural branch which necessarily excludes urban areas. If the assessee's case accepted by the Tribunal that population in a ward has to be reckoned for deciding as to whether the location of a panchayat is in a rural area or not is accepted, then probably even in municipal areas there may be wards with less than 10000 population thereby answering the branch located in such municipal area also as a rural branch. Going by the ordinary meaning of rural branch, we feel only branches of .....

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t; referred to in the above definition clause for the purpose of identifying the branch of a bank as a rural branch with reference to its location is the revenue village. Therefore, in our view, the finding of the Tribunal that "place" referred to in the definition is the ward of a local authority like panchayat or municipality is incorrect and, in our view, a rural branch has to be always in rural areas and the place referred can easily be taken as a village. Several wards may come wi .....

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h falls under Explanation (ia) to Section 36(1) (viia). Tribunal had to reverse the judgment of CIT(appeals) in the light of the decision in Lord Krishna Bank's case (supra). 12. Then coming to the controversy whether co-operative bank could claim deduction of 10% of the aggregate average advances while computing the income irrespective of falling under rural branch as per Explanation, in order to consider a company as a banking company it must transact business of banking in India as define .....

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y indicates though any company which transacts business of banking in India would come within the meaning of non-scheduled bank, by virtue of Explanation (1) under this clause scheduled bank is excluded. So far as subclause(a) of clause (viia) to Section 36(1), two types of deductions are provided to non-scheduled bank, a scheduled bank and a co-operative bank other than a primary agricultural credit society, etc. It is to be noted that appellants/assessees are not primary agricultural credit co .....

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erative bank, virtually every bank which is not a scheduled bank would fall under the definition of non-scheduled bank. Reading of definition of non-schedule bank along with meaning of rural branch under Explanation to Section 36(1) of the Act, clearly indicate that cooperative bank also falls under the category of non-schedule bank for the purpose of this Section. Therefore, reading of entire Section 36(1)(viia)(a) along with explanation would mean two kinds of deductions referred to in the sec .....

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In the light of above observations and reasoning, none of the contentions raised by appellants are sustainable. Hence, these appeals are dismissed answering substantial questions of law in favour of Revenue." 41.2 In view of the above order of this Tribunal, we are inclined to decide the issue against the assessee. Accordingly, this ground raised by the assessees in all the appeals is dismissed. 42. Next ground No in I.T.A. Nos. 325/Coch/2012, 660/Coch/2013, 680/coch/2013, 681/Coch/2013, 68 .....

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s. ITO in I.T.A. No. 311/Coch/2012 vide order dated 22-03-2013 wherein it was held as under: "11. We have considered the rival submissions on either side and also perused the material available on record. In the case of Kadachira Service Co-operative Bank Ltd. (supra), this Tribunal found that the taxpayers were not carrying on any banking activity and, therefore, they are agricultural cooperative societies. In view of the specific provisions exempting the agricultural co-operative societie .....

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he loan appears to have been given on pledging of gold jewellery and mortgage of land. In view of the admitted fact that the taxpayer is maintaining savings account, current account and providing cheque facility to its customers, it is obvious that the taxpayer is engaged itself in the business of banking apart from other trading activities. Exemption u/s. 194A(3)(viia) is applicable only in respect of agricultural cooperative societies. The agricultural cooperative banks are bound to deduct tax .....

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ties are confirmed." 42.2. Being so, this issue is identical and the facts are also similar to the one considered by this Bench of the Tribunal in the earlier occasion, we are inclined to decided the issue against the assessee. This ground in all the assessee's appeals is dismissed. 43. Next ground in I.T.A. Nos. 325/Coch/2012, 680/Coch/2013, 681/Coch/2013, 683/Coch/2013 684/Coch/2013 and 685/Coch/2013 is with regard to disallowance of contribution to the employees pension fund/gratuity .....

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or LIC Pension Fund was within the time limit for filing return of income u/s. 139(1) of the Act. On the similar line, we are inclined to remit the issue back to the file of the Assessing officer for fresh examination. Being so, this ground is allowed for statistical purposes. 44. The next ground in I.T.A. Nos. 325/Coch/2012, 720/Coch/2013 and 719/Coch/2013 is with regard to disallowance of unrealised interest on overdue loans. In earlier paragraph, we have decided the issue against the assessee .....

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and 685/Coch/2013 are partly allowed for statistical purpose. The appeal filed by the Revenue in I.T.A. No. 770/Coch/2013 is dismissed. (Pronounced accordingly on 31.7.2014.) 7. Also, the said issue has been clearly dealt with by the earlier Bench of the ITAT, Cochin vide its order in the case of Kunnamangalam Co-operative Bank vs. ITO in I.T.A. No. 156/Coch/2014 dated 25/07/2014. It is very relevant to reproduce the said order of the earlier Bench of ITAT, Cochin wherein the all the issues have .....

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jari: This appeal by the assessee is directed against the order dated 04-02-2014 passed by the CIT(A), Kozhikode for the assessment year 2009-10. 2. The assessee has raised the following grounds: 2. The assessee has raised the following grounds: 1. The assessee is Kunnamangalam Co-operative Bank, Kunnamangalam, Kozhikode and in regard to the assessment year 2009-10, the Assessing officer has disallowed the deduction u/s. 80P of the Act and the Commissioner of Income Tax has gone wrong in confirm .....

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under Mutuality. 5. The Commissioner of Income Tax (Appeals) has gone wrong in concluding the agricultural loans is only 31.81% of the loan. The gold loan are for agricultural purposes and the other loans are for related matters of agriculture. For the purpose of the percentage of utilization of loan, the fixed deposit loan of ₹ 1,67,88,656/- at 5.43% of the total loans, day deposit loan ₹ 15,62,025/- and employee's overdraft ₹ 41,10,338/- should not be considered. The loa .....

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crutiny assessment under CASS. In the course of assessment, the Assessing officer noticed that the assessee has claimed its entire income as being exempt u/s. 80P of the Income Tax Act. As per Finance Act, 2006, deduction u/s. 80P of the Act is limited to primary Agricultural Society and Primary Co-operative Agricultural and Rural Development Bank with an intersection to allow tax benefits only to primary societies which help agriculturists by providing agricultural credits to promote agricultur .....

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As regards the first ground of appeal against the disallowance of deduction claimed u/s. 80P of the Income Tax Act, 1961, the Assessing officer after analyzing the activities of the assessee-society came to the conclusion that since the assessee has not fulfilled its main object of providing financial accommodation to its members for agricultural purposes or for purposes connected with agricultural activities, it is not eligible for deduction u/s. 80P of the Act. During remand proceedings, the A .....

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ral Credit Societies. But, by virtue of the amendment of Section 2(oa) of the Kerala Co-operative Societies Act, if the Society does not continue to fulfil the obligation, it will lose the colour and characteristics of a Primary Agricultural Credit Society, except for the purpose of staff strength. Thus, it is very much obligatory for the petitioners societies, who claim the status and the benefits of Primary Agricultural Credit Societies to substantiate that their main object of incorporation i .....

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ricultural Credit Societies so as to absolve from further proceedings at the hands of the Income Tax Department….." In the instant case, it is crystal clear, as stated by the Assessing officer in his order that the assessee has been more in the field of banking instead of its principal object of extending credit facility to its members for agricultural purposes. At no point of time either before the Assessing officer or during the course of appeal hearing, the Ld. Counsel has produce .....

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plea with any fact. Second, admitting any new fact at this late stage will be a clear violation of rule 46A of IT Rules. Thus, in view of the decision of the Hon'ble High Court of Kerala referred above, and also for the reasons stated in my order in I.T.A. No. 245/KNR/CLT/2011-12 dated 21-09-2012 in the case of Karivellur Service Co-operative Bank Ltd. for A.Y. 2009-10, I uphold the decision of the Assessing officer". 5. Against this, the assessee is in appeal before us. The Ld. AR reli .....

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said entity not being a co-operative bank, section 80P(4) of the Act would not apply to it. In view of such clarification, we cannot entertain the Revenue's contention that section 80P(4) would exclude not only the co-operative banks other than those fulfilling the description contained therein but also credit societies, which are not co-operative banks. In the present case, respondent assessee is admittedly not a credit co-operative bank but a credit co-operative society. Exclusion clause .....

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89 (SC). 7. On the other hand, the Ld. DR submitted that this is a covered matter wherein the Tribunal consistently held that when the assessee is carrying on the operation in the field of banking, the assessee cannot be granted deduction u/s. 80P of the Act. He submitted that the question of applying the concept of mutuality also does not arise. 8. We have heard both the parties and perused the material on record. In this case, the assessee's contention is that it is lending money primaril .....

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ed for the purpose of agricultural activities; the assessee is entitled for deduction u/s. 80P of the I.T. Act. The question before us is whether the Assessee is entitled for deduction u/s 80P(2)(a)(i) and whether the Assessee is hit by the provisions of Sec. 80P(4) which was introduced in the statute by the Finance Act, 2006 w.e.f. 1.4.2007. The relevant provisions of both the sections are re-produced for our ready reference as under : "80P.(1) Where, in the case of an assessee being a co- .....

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......."the whole of the amount of profits and gains of business attributable to any one or more of such activities. "80P(4)The provisions of this section shall not apply in relation to any cooperative bank other than a primary agricultural credit society or a primary cooperative agricultural and rural development bank. Explanation.-For the purposes of this sub-section,- (a) "co-operative bank" and "primary agricultural credit society" shall have the meanings respec .....

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n under subclause (i). These two activities are not alternate ones because the section allows deduction to the co-operative society on the whole of profits and gains of business attributable to any one or more of such activities. This pre-supposes that eligible co-operative society can carry on either one of these two businesses or can carry both these businesses for the members. If the Assessee cooperative society carries on one or both of the activities, it will be eligible for deduction. Thes .....

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he income which it derives from carrying on the activities not relating to its members. Therefore, where a co-operative society is engaged in carrying on business of banking facilities to its members and to the public or providing credit facilities to its members or to the public, the income which relates to the business of banking facilities to its members or providing credit facilities to its members will only be eligible for deduction u/s 80P(2)(a)(i). There is no prohibition u/s 80P not to a .....

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erative bank, a Central Co-operative Bank and a Primary Co-operative bank. It is not the case of the revenue that the assessee is a state Co-operative bank or Central Co-operative bank. We have therefore to find whether the assessee is a primary Co-operative bank. 8.4 The Primary Co-operative bank is defined under section 5 clause (CCV) of Banking Regulation Act 1949 as under:- "(CCV)" primary co-operative bank" means a co-operative society, other than a primary agricultural credi .....

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rovided by the State Government for the purpose" 8.5 From the aforesaid definition, it is apparent that if the co-operative society complied with all the three conditions; firstly that the primary object or principle business transacted by it is a banking business, secondly, the paid up share capital and reserve of which are 1 lakh or more and thirdly, by laws of the cooperative society do not permit admission of any other co-operative society as a member, it will be regarded to be primary .....

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applicable in the case of the Assessee. Once, the Assessee will not fall within the provisions of Sec. 80P(4), the Assessee, in our opinion, will be eligible to get deduction u/s 80P(2)(a)(i) in respect of whole of the income which the Assessee derives from carrying on the business of banking or providing credit facilities to its members. 8.6 Whether condition no. 1 is applicable in the case of the Assessee, for this we have to look into the bye-laws of the Assessee. The objects of the Assessee .....

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schemes for collection, processing and the marketing of agricultural produce of the members; 6) In order to lend money to members, take loans from government and other co-operative institutions; 7) To provide banking facilities to members including encashment of cheque, drafts, bills etc.; 8) To acquire movable and immovable assets for the functioning of the bank; 9) To collect deposits from members and customers under different deposit Schemes; 10) Marketing of the agricultural produce of the .....

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ects (i.e. clause no. 2,4,5 and 10) are related to agriculture or agricultural operations. So from the bye-laws of the bank it cannot be aid that the primary object or principal business of the bank is to provide financial accommodation to its members for agricultural purposes or for the purposes connected with agricultural activities. 8.7 On the basis of these objects whether it can be said that the primary object or principal business of the Assessee is transaction of banking business? Banking .....

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order or otherwise and these deposits are accepted for the purpose of lending or investment. These deposits must be accepted from the public, not only from the members. These deposits must be repayable on demand or otherwise and could be withdrawn by the depositor by cheque, draft or otherwise. We notice that the CIT(A) has given a categorical finding that the Assessee has carried on banking activities on the basis of findings in the assessment order. The relevant portion of the assessment orde .....

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bank is having four types of share holdings. (A) Class equity shares of ₹ 5/- each with voting rights. It is explained that these shares are issued to individuals. (B) Class equity shares of ₹ 250/- each. It is submitted that presently Kerala Government is holding three shares. (C) Class equity shares of ₹ 5/- each without voting rights. These shares are issued to individuals. (D) Class equity shares of ₹ 25/- each without voting rights. These shares are also issued to i .....

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ut as narrated above, it does not satisfy the criteria or conditions stipulated in the Banking Regulation Act, 1949. So it squarely falls under the operation of Sub-section (4) of Section 80P of Income Tax Act, 1961. As such the assessee is not eligible for deduction u/s. 80P of the Income Tax Act, 1961." 8.8 The deposits accepted are used by the Assessee co-operative society for lending or investment. This fact has not been denied. Even out of the deposits so received, the loans have been .....

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he second condition. 8.9 Thus, we notice that all the three conditions in the case of the assessee for becoming primary cooperative bank stand complied with. 8.10 We have gone through the decision of the Hyderabad bench of this Tribunal in the case of The Citizen Cooperative Society vs. Addl. CIT, 41 305 (Hyd). We notice that this decision is applicable to the facts of the case before us. In that decision, under para 23 the Tribunal has given a finding that the Assessee is carrying on banking bu .....

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vs. Divyajyothi Credit Cooperative Society Ltd. (supra) in ITA No. 72/Bang/2013. In this case, we notice that the Hon'ble Tribunal confirmed the order of CIT(A) following the decision of the Tribunal in the case of ACIT, Circle 3(1), Bangalore vs. M/s. Bangalore Commercial Transport Credit Co-operative Society Ltd. in ITA No. 1069/Bang/2010 holding that Sec. 80P(2)(a)(i) is applicable only to a co-operative bank and not to credit co-operative society. With due regards to the Bench, we are un .....

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p;Ors. (supra) we notice that the issue before the Hon'ble High Court in the Writ Petition filed by the Petitioner related to the legislative competence of the State Legislature for issuing a circular. The issue does not relate to the claim of deduction u/s 80P(2)(a)(i). While dealing with this issue, the Hon'ble High Court under para 12 observed as under : "12.It is not possible to accept this contention. The petitioners are not the banking institutions coming under the purview of .....

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in question-are required to advance loans to their members, they do not cease to be co-operative societies governed by the Act nor can they be treated as banking companies. It is also not possible to hold that these activities of the petitioners amount to "banking" as contemplated under the Banking Regulation Act, 1949, inasmuch as these co-operative societies are not established for the purpose of doing "banking" as defined in section 5(b) of the Banking Regulation Act, 1949 .....

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12 (supra). While discussing this issue, after analysing the aims and objects of the co-operative society under para 12 of its order, this Tribunal has held as under : "12. From the aforesaid objects, it is apparent that none of the aims and objects allows the assessee cooperative society to accept deposits of money from public for the purpose of lending or investment. In our opinion until and unless that condition is satisfied, it cannot be said that the prime object or principal business .....

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ead with explanation there under will not be applicable in the case of the assessee. The assessee, therefore, in our opinion will be entitled for the deduction u/s 80P(2)(a)(i). We accordingly confirm the order of CIT(A) allowing deduction to the assessee." The other decisions also relied on are not applicable to the facts of the case of the assessee. 8.11. In view of our aforesaid discussion, we hold that the assessee is a primary cooperative bank and therefore hit by the provisions of sec .....

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Mutual Benefit Fund Ltd., 53 ITR 241 (SC) wherein it was held that if the profits are distributed to shareholders as shareholders, the principle of mutuality is not satisfied. A shareholder in the assessee-company is entitled to participate in the profits without contributing to the funds of the company by taking loans. He is entitled to receive dividend as long as he held shares. He did not have to fulfil any other condition. His position is in no way different from a shareholder in a banking .....

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Hon'ble Kerala High Court in the case of Kottayam Co-operative Land Mortgage Bank Ltd. vs. CIT, 172 ITR 443(Ker.) where it was held as under: "The Income-tax Officer held the view that the assessee is not entitled to claim any further exemption under clause (c) as the assessee is entitled to exemption u/s. clause (a) in respect of the banking activities. The Appellate Assistant Commissioner, in allowing the assessee's appeal, held that exemption under clause (c) is in addition to t .....

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as income and not as profits and gains and that the assessee is not, therefore, entitled to any exemption under clause (c). The Tribunal did not accept the alternative contention raised by the assessee for the first time before the Tribunal that the letting out of surplus space should be treated as a business activity under clause (a) of sub-section (2) of section 80P of the Act. The appeals were accordingly allowed. The question of law arises out of the order of the Tribunal. Section 80P of th .....

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cted in computing the total income. The co-operative society engaged in carrying on the business of banking or providing credit facilities to its members falls under clause (a) of section 80P(2). The claim for exemption under clause (c) is in addition to the exemption provided under clause (a). The provisions are cumulative and mutually supplementing. The limits specified in clause(c) are in relation to the profits and gains attributable to the activity other than that specified in clause (a). I .....

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the extent mentioned therein if the profits or gains are attributable to the activity in which the co-operative society is engaged. The expression "attributable to" is much wider than the expression "derived from" and it covers receipts from sources other than the actual conduct of the business of the assessee. In this view of the matter, interest earned by a cooperative society, which was carrying on the business of supplying surgarcane on statutory investment in Government .....

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n activity carried on by the society. The building let out is not a commercial asset or the rent received is not profit or gain arising from the exploitation of a business asset. The word "activity" is wider than the word "business". It connotes a specified form of supervised action or 0field of action. Read in the context of the profit earning activity of a co-operative society, it means the corporate activity of the society, that is to say, whether or not they amount to a b .....

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