TMI Blog2015 (4) TMI 1340X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned order gives no finding on that basis to deprive the appellant the benefit of Section 80P of the Act. The impugned order sets out the object clause of the appellant, which has 24 objects but thereafter draws no sequiter to conclude that the primary object is Banking. Consequently there is no occasion to deal with the same as that is not the basis on which the impugned order holds that it is a Primary Cooperative Bank. In the above view, the alternative contention of the appellant that it is not in the business of Banking as the sine quo non to carry on banking business is a licence to be issued by the Reserve Bank of India, which it admittedly does not have, is not being considered. As rightly pointed out on behalf of the appellant the word society as referred to bye law 9(d) would include the co-operative society. This is so as the definition of a society under the Co-operative Act is co-operative society registered under the Cooperative Act. Besides the qualifying condition 3 for being considered as a primary Cooperative bank is that the bye laws must not permit admission of any other cooperative society. This is a mandatory condition i.e. the bye laws must spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary Co-operative Bank, thus hit by the exclusion provided in Section 80P(4) of the Act. 2. All the three appeals were admitted on 25 March, 2014 on the following substantial question of law : Whether on the facts and in the circumstances of the case, the Hon'ble Tribunal was right in law in holding that the Appellant is a Co-operative Bank and hence, it is not entitled to deduction under Section 80P(2)(a)(i) by virtue of Section 80P(4) of the Act ? 3. The Appellant had taken out an application for interim reliefs. At that time it was noticed that the controversy is within a narrow compass, therefore at the request of the Counsel, it was decided to dispose of the appeal itself. 4. As the facts in all the three appeals are similar and the issues arising are identical it is agreed at the bar that the the decision on facts for any one assessment year would answer the question framed for the other two years. Therefore, for the purpose of convenience we shall refer to the facts in Appeal No.22/2015 relating to assessment year 2008-09, which are as under: (a) The appellant is Co-operative society registered under the Goa Co-operative Societies Act, 2001 (hereinafter ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 49. Section 80P : (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. (2) The sums referred to in sub-section (1) shall be the following, namely :- (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... the whole of the amount of profits and gains of business attributable to any one or more of such activities. (ii)to (vii)....; (b) to (f).....; (3) ........ (4) The provisions of this section shall not apply in relation to any co-operative 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 respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949): (b) pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of a banking licence issued to the appellant by the Reserve Bank of India under Banking Regulation Act. This licence is a sine quo non for recognizing to the appellant by a co-operative bank. The issue of the appellant not being a co-operative bank in the absence of a licnece to do banking business is concluded by the decision of the Karnakata High Court in Commissioner of Income Tax and another vs. Sri Biluru Gurubasva Pattina Sahakari Sangha Niyamitha Bagalkot (2014) 369 ITR 86. 7. As against the above, Ms. Asha Dessai, learned counsel tor the revenue in support of the impugned order submits as under : (a) The impugned order is correct in law and thus calls for no interference ; and (b) In any view of the matter, as there is finding of fact that the appellant is doing business along with non-members. Howsoever, miniscule, it would by itself disqualify the appellant from enjoying the exemption under Section 80P(2)(a)(i) of the Act. This on the ground that Section 80P(2)(a)(i) of the Act specifically provided that the deduction thereunder will be available only in case of co-operative society which is providing facilities to its members. 8. Section 80P of the Act pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nking Regulation Act. Section 5(ccv) of the Banking Regulation Act defines a primary cooperative bank to mean a cooperative society which cumulatively satisfies the following three conditions : (1) Its principal business or primary object should be banking business of Banking; (2) Its paid up share capital and reserves should not be less that rupees one lakh. (3) Its bye-laws do not permit admission of any other cooperative society as its member. It is accepted position that condition No.(2) is satisfied as the share capital in an excess of rupees one lakh. It has been the appellant's contention that the conditions No. (1) and (3) provided above are not satisfied. 10. Therefore the issue that arises for consideration is whether the appellant satisfies condition No.(1) and (3) above. The impugned order after referring to the definition of 'Banking Business' as defined in Section 5b of the Banking Regulation Act, held that the principal business of the Appellant is Banking. Section 5b of the Banking Regulation Act defines banking to mean accepting of deposits for the purpose of lending or investment, of deposit of money from the public repayable on demand o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondition No.3 of the definition/meaning of Primary Cooperative Bank as provided in Section 5(ccv) of the Banking Regulation Act is concerned, the same requires the Bye laws of society to contain a prohibition from admitting any other cooperative society as its member. In fact the bye-laws of the appellant society originally in bye-law 9(d) clearly provided that no co-operative society shall be admitted to the membership of the society. Thus there was a bar but the same was amended w.e.f. 12 January, 2001 as to permit a society to be admitted to the membership of the society. Therefore for the subject assessment years there is no prohibition to admitting a society to its membership and one of three cumulative conditions precedent to be a primary cooperative bank is not satisfied. However the impugned order construed the amended clause 9(d) of the appellant's bye laws to mean that it only permits a society to be admitted to the membership of the appellant and not a co-operative society. According to the impugned order, a society and a co-operative society are clearly words of different and distinct significance and the membership is only open to society and not to a co-operative ..... X X X X Extracts X X X X X X X X Extracts X X X X
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