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TMI Blog2024 (1) TMI 1273X X X X Extracts X X X X X X X X Extracts X X X X ..... le issue raised in the instant appeal is the maintainability or otherwise of the assessee's, a society registered as a primary agricultural credit society (PACS) (under the Kerala Co-operative Societies Act, 1969 - Kerala Act) claim for deduction, made for the entirety of it's business profit at Rs.48.19 lakhs, u/s. 80P(1) r/w s. 80P(2)(a)(i) of the Act, denied in view of section 80P(4), i.e., as it stands after its amendment by Finance Act, 2006, w.e.f. 01.04.2007. 3. The basis for the said denial by the Revenue, as a perusal of their orders by the assessing and first appellate authority, shows, is as under: (a) the lending to the agricultural sector being at a negligible 0.38% of it's total lending, so that it cannot be regarded as a P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so specified), so much of its profits and gains attributable to such activities as does not exceed,- (i) where such co-operative society is a consumers' co-operative society, one hundred thousand rupees; and (ii) in any other case, fifty thousand rupees. Explanation.-In this clause, "consumers' co-operative society" means a society for the benefit of the consumers; (d) .... (f). Explanation.-For the purposes of this section, an "urban consumers' co-operative society" means a society for the benefit of the consumers within the limits of a municipal corporation, municipality, municipal committee, notified area committee, town area or cantonment. (3) In a case where the assessee is entitled also to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eties) Act, 1965 (23 of 1965); (b) in section 2, the words and figures 'the Companies Act, 1956 (1 of 1956), and' shall be omitted; (c) in section 5,- (i) after clause (cc), the following clauses shall be inserted namely:- (cci)...(cciii) (cciv) 'primary agricultural credit society' means 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 purposes connected with agricultural activities (including the marketing of crops) ; and (2) the bye-laws of which do not permit admission of any other co-operative society as a member: Provided that this sub-clause shall not apply to the admission of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The AO has given a clear finding at para 4 of his order, not rebutted at any stage, that the assessee is providing the following facilities: 1) providing various kinds of loans (Gold loan, mortgage loan, etc.); 2) accepting deposits from members as well as non-members; 3) maintaining saving bank account, current accounts, day deposit, etc.; and 4) providing cheque facility (which would include arrangements for withdrawal/ transfer of funds from his account, on demand, by an accountholder). Any member of the public can, as explained therein, become a 'member' on paying a nominal sum, which in fact is insisted upon as a practice, making co-operative societies, as the assessee, essentially public institutions. The legal basis for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other than a primary agricultural credit society,- (1) the primary object or principal business of which is the 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 not permit admission of any other co-operative society as a member: We refer only to the definition of a 'primary cooperative bank', and not of 'state cooperative bank' and 'central co-operative bank' inasmuch as the same, defined u/s. 5(ccvii) with reference to NABARD Act, are defined in the latter as principal societies for financing other co-operative societies in the respective state and district respectively, qua which there is no claim, so that the assessee co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applied therefor, but that is on the notion of it being a PACS, which claim it does not satisfy on facts. One cannot, after all, take advantage of his wrong to the prejudice of the other side. Why, in Mavilayi SCB Ltd. (supra), as the Tribunal notes, the fact of cooperative societies undertaking banking business without obtaining licence from RBI, i.e., unlicenced, was emphasized by the Revenue, and with reference to a communication by the RBI itself. Further, in the facts of Sivapuram SCB Ltd. (supra), it's bye-laws bore no restriction for the admission of another cooperative society as a member. The same was thus a cooperative-society in terms of s. 2(19) of the Act read with s. 2(oaa) of the Kerala Act, satisfying the basic condition o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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