TMI Blog2015 (6) TMI 1113X X X X Extracts X X X X X X X X Extracts X X X X ..... e was nothing which forbid a cooperative society from becoming a member. It is clearly stated that every person competent to contract under section 11 of the Indian Contract Act, 1872 could become a member, provided other conditions are satisfied. A person will definitely include a cooperative society. In any case, we find that the Hon’ble jurisdictional High Court in the case of Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha Bagalkot (2015 (1) TMI 821 - KARNATAKA HIGH COURT ) in relation to a similar issue, has held the business of the assessee is to provide credit facilities to its members. Since the assessee cannot carry on any banking business, the interest on investment is taxable as income from other source. Therefore the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the orders and also heard the rival contentions. The claim of the assessee for deduction u/s. 80P(2)(a)(i) was disallowed by the AO for the reason that the assessee fell within the realm of Banking Regulation Act, 1949. No doubt, the assessee had satisfied two of the three primary conditions mentioned in section 5(ccv) of the Banking Regulation Act, 1949 viz., it had the primary object of banking and it had share capital which was in excess of Rs. One lakh. But, we find from the membership qualification as set out in the bye law, which has been reproduced by the Assessing Officer at page 37 of his order that there was nothing which forbid a cooperative society from becoming a member. It is clearly stated that every person competent to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciety and has not obtained any banking license. The business of the assessee is to provide credit facilities to its members. Since the assessee cannot carry on any banking business, the interest on investment is taxable as income from other source. Therefore the aforesaid facts, which is not in dispute clearly establishes that it is not a Cooperative Bank. In fact, the Revisional Authority also in its order has categorically stated that the assessee is a Co-operative society, which provides credit facilities. Section 80P of the Act deals with the deduction of income of a society. In the case of any assessee being a Co-operative society, the whole of the amounts of profits and gains of business attributable to any of other activities referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deny the said benefits to a primary agricultural credit society or a primary co-operative agricultural and rural development bank. They did not want to extend the said benefit to a Cooperative bank which is exclusively carrying on banking business i.e. the purport of this amendment. Therefore, as the assessee is not a Cooperative bank carrying on exclusively banking business and as it does not possess a licence from Reserve Bank of India to carry on business, it is not a Cooperative bank. It is a Co-operative society which also carries on the business of lending money to its members which is covered under Section 80P(2)(a)(i) i.e. carrying on the business of banking for providing credit facilities to its members. The object of the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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