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TMI Blog2018 (1) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... nd or delete any other grounds or before hearing of the appeal. 3. Briefly facts of the case are that the respondent-assessee is a cooperative society engaged in the business of advancing various types of loans to agriculturists and non-farm sector, rural housing, small rural transport operator scheme and deposit mobilization, pledge jewel loan and salary loans to the staff. Return of income for the assessment year 2012-13 was filed on 29/09/2012 declaring total income at 'nil' after claiming exemption of Rs. 11,24,62,612/- u/s 80P of the Income Tax Act 1961 ['the Act' for short]. Against said return of income, the assessment was completed by the Asst. Commissioner of Income-tax, Circle 5(2)(1), Bengaluru, vide order dated 19/02/2015 passed u/s 143(3) of the Act denying exemption u/s 80P by holding that it is hit by sub-section (4) of section 80P as it is a co-operative bank and it is not a primary co-operative credit society or primarily co-operative agricultural rural development bank. 4. Being aggrieved, an appeal was preferred before the CIT(A) who vide impugned order, following the decision of the ITAT in the case of ITO vs. Janapragathi Credit Co-operative Society in ITA No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w: As per clause 19 of the Bye-laws, the bank entertain deposits from a) from agriculturists with the object promoting rural debentures. b) towards ordinary debentures from any persons and institutions. c) deposits from PCARD banks. The terms and conditions of these deposits. d) deposits from PCARD banks. The terms and conditions of these deposits shall be regulated by the Board from time of time. From the above, it is clear that the area of operation of the respondent- assessee is not confined to a Taluk and therefore it is not a primary cooperative agricultural and rural development bank. Therefore, provisions of sub-section (4) of section 80P are squarely applicable and the ratio of the decision of the Hon'ble Kerala High Court in the case of Kerala State Co-operative Agricultural & Rural Development Bank Ltd. (supra) is squarely applicable, which is extracted below: "7. Sub-section 1 of Section 80P of the IT Act authorises deductions in respect of co-operative societies; in terms of Sub-section 2 of Section 80P. That is a provision made in the case of an assessee being a cooperative society. Sub-section 4 of Section 80P provides that the provisions of Section 80P s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 read with Section 56 of the BR Act, "central co-operative bank" and "state co-operative bank" shall have the meaning respectively assigned to them in the NABARD Act. Those terms are defined in Clauses (d) and (u) of Section 2 of the NABARD Act to, respectively, mean the principal co-operative society in a district, or, in a State; the primary object of which is the financing of other co-operative societies in the district and State respectively. 13. The primary element required to be satisfied to fall under either of the definitions in Clause (d) or Clause (u) of Section 2 of the NABARD Act is that it should be a "co-operative society"; which term is defined in Section 2(f) of the NABARD Act to mean a society registered, or deemed to be registered, under the Co-operative Societies Act, 1912 (Central Act), or any other law relating to co-operative societies for the time being in force in any State. The appellant is not a society registered either under the Central Act or under the provisions of the KCS Act. Section 2(a) of the CARDB Act defines the "Agricultural and Rural Development Bank" as the one registered under Section 10 of the Travancore-Cochin Co-operative Societies A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of the CARDB Act. Carrying forward the structuring and operations provided for by the Kerala Cooperative Land Mortgage Banks Act, 1960, the CARDB Act provides for the Kerala State Co-operative Agricultural and Rural Development Bank Limited (appellant) as the principal co- operative society in the State for the purpose of agricultural credit facility. The provisions of the CARDB Act provide an operational mechanism through the primary banks and primary agricultural credit societies as defined in Clauses (g) and (h) of Section 2 of the CARDB Act. These provisions would show that the appellant falls within the term "co-operative bank" in Clause (cci) of Section 5 of the BR Act and thereby is a co-operative bank for the purpose of Section 80P of the IT Act. 15. Having held as aforesaid, the question for further consideration is as to whether the appellant is also a primary agricultural credit society. We proceed to decide that issue. 16. In terms of Clause (a) of the Explanation to Section 80P(4), "primary agricultural credit society" takes the meaning assigned to it in Part V of the BR Act. Clause (cciv) of Section 5 of BR Act defines the term 'primary agricul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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