Income Tax Officer (Ward) 1(3), Belgaum v. Shri. Gajanan Souharda Pattin Sahakari Niyamit,, Belgaum

ITA 44/PAN/2014 | 2009-2010
Pronouncement Date: 17-04-2014 | Result: Dismissed

Appeal Details

RSA Number 4424114 RSA 2014
Assessee PAN AAHTS7052B
Bench Panaji
Appeal Number ITA 44/PAN/2014
Duration Of Justice 2 month(s) 25 day(s)
Appellant Income Tax Officer (Ward) 1(3), Belgaum
Respondent Shri. Gajanan Souharda Pattin Sahakari Niyamit,, Belgaum
Appeal Type Income Tax Appeal
Pronouncement Date 17-04-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 17-04-2014
Assessment Year 2009-2010
Appeal Filed On 23-01-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH PANAJI BEFORE SHRI P.K. BANSAL HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA HONBLE JUDICIAL MEMBER ITA NO S . 4 4 &45 /PNJ/ 201 4 INCOME TAX OFFICER VS. WARD 1(3) OPP. CIVIL HOSPITAL DR. B R AMBEDKAR ROAD BELGAUM. (APPELLANT S ) AND CO. NOS. 1 7 & 1 8 /PNJ/2014 (ARISING OUT OF ITA NO S . 4 4 & 45 / PNJ/201 4 ) SHRI GAJANAN SOUHARDA PATTIN SAHAKARI NIYAMIT NADI GALLI SANKESHWAR TAL:HUKKERI DISTRICT BELGAUM. PAN : AAHTS7052B (APPELLANT S ) : (ASST. YEAR S : 20 09 - 1 0 & 2010 - 11 ) S H RI GAJANAN SOUHARDA PATTIN SAHAKARI NIYAMIT NADI GALLI SANKESHWAR TAL:HUKKERI DISTRICT BELGAUM. PAN : AA HTS7052B (RESPONDENT S ) (ASST. YEAR S : 2009 - 10 & 2010 - 11 ) INCOME TAX OFFICER WARD 1(3) OPP. CIVIL HOSPITAL DR. B R AMBEDKAR ROAD BELGAUM. (RESPONDENT S ) DEPARTMENT BY : SMT SONAL L. SONKAVDE LD. DR. APPELLANT BY : NONE . DATE OF HEARING : 10 /04/2014 DATE OF PRONOUNCEMENT : 17 /04/2014 O R D E R PER P.K. BANSAL BOTH THESE APPEALS AND CROSS OBJECTIONS HAVE BEEN FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) BELGAUM DT. 18.11.2013 FOR ASSESSMENT YEARS 2009 - 10 AND 2010 - 11. THE REVENUE HAS TAKEN THE FOLLOWING COMMON EFFECTIVE GROUNDS OF APPEALS IN BOTH THE APPEALS: - 2 ITA NO S .4 4 & 45 /PNJ/201 4 & C.O.NO S .1 7 &18 /PNJ/2014 (ASST. YEAR S : 2009 - 10 & 2010 - 11 ) (1) THE LEARNED CIT(APPEALS) ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT THE ASSESSEE IS A CO - OPERATIVE SOCIETY WHICH FULFILS ALL THE THREE CONDITIONS OF BEING HELD A PRIMARY COOPERATIVE BANK AS GI VEN IN SECTION 5(CCV) OF THE BANKING REGULATION ACT 1949. (2) THE LEARNED CIT(APPEALS) ERRED IN RELYING ON THE PROVISIONS OF THE KARNATAKA SOCIETIES ACT 1959 WHICH GIVES THE DEFINITION OF A COOPERATIVE SOCIETY TO MEAN A SOCIETY REGISTERED OR DEEMED TO BE REGISTERED UNDER THAT ACT. THE ABOVE DEFINITION OF CO - OPERATIVE SOCIETY APPEARS IN THE KARNATAKA CO - OPERATIVE SOCIETIES ACT 1959 AND THE DEFINITION OF CO - OPERATIVE SOCIETY MEANS A SOCIETY REGISTERED UNDER THAT ACT. (3) THE LEARNED CIT(APPEALS) ERRED IN LAW AND ON FACTS IN RELYING ON THIS DEFINITION WHICH WAS APPLICABLE TO THE KARNATAKA CO - OPERATIVE SOCIETIES ACT 1959 ONLY TO DEEM IT TO INCLUDE CO - OPERATIVE SOCIETIES UNDER THE KARNATAKA SOCIETIES REGISTRATION ACT 1960. THE KARNATAKA SOCIETIES REGIST RATION ACT 1960 DOES NOT APPLY TO A CO - OPERATIVE SOCIETY BUT ONLY APPLIES TO THE SOCIETIES REGISTERED UNDER THAT ACT. (4) THE LEARNED CIT(APPEALS) ERRED IN LAW AND ON FACTS IN ALLOWING DEDUCTION UNDER SECTION 80P(2)(A)(I) TO THE ASSESSEE IGNORING THE FA CT THAT THE ASSESSEE DOES NOT PERMIT CO - OPERATIVE SOCIETIES TO BECOME A MEMBER AND AS SUCH SATISFY CONDITIONS TO BECOME PRIMARY CO - OPERATIVE BANK. (5) THE LEARNED CIT(APPEALS) ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE DEFINITION OF A CO - OPERATIVE BANK WHICH AS PER EXPLANATION BELOW SECTION 80P(4) THE CO - OPERATIVE BANK SHALL HAVE THE MEANING ASSIGNED TO IT IN PART - V OF THE BANKING REGULATION ACT 1949. (6) THE LEARNED CIT(APPEALS) ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT THE A SSESSEE SOCIETY BEING A CREDIT CO - OPERATIVE SOCIETY ENGAGED IN BANKING BUSINESS IS A PRIMARY CO - OPERATIVE BANK WITHIN THE DEFINITION OF SECTION 5(CCV) OF THE BANKING REGULATION ACT 1949 AND AS SUCH NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE I.T. ACT 1961. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE EVEN THOUGH NOTICES WERE DULY SENT WE THEREFORE DECIDED TO DISPOSE OF THE APPEALS AND C.O S AFTER HEARING THE LD. DR. THE LD. DR AGREED THAT THESE APPEALS BE DECIDED ON THE BASIS OF THE FACTS FOR THE ASSESSMENT YEAR 2009 - 10 AS THE FACTS INVOLVED ARE SAME IN BOTH THE 3 ITA NO S .4 4 & 45 /PNJ/201 4 & C.O.NO S .1 7 &18 /PNJ/2014 (ASST. YEAR S : 2009 - 10 & 2010 - 11 ) ASSESSMENT YEARS. THE BRIEF FACTS OF THE CASE FOR THE ASSESSMENT YEAR 2009 - 10 ARE THAT THE ASSESSEE IS A SOUHARDA SAHAKARI REGISTERED UNDER THE KARNATAKA SOUHARDA SAHAKARI CO - OPERATIVE SOCIETIES ACT 1997. THE ASSESSEE FILED RETURN DECLARING GROSS TOTAL INCOME OF RS.22 29 488/ - AND CLAIMED DEDUCTION U/S 80P(2)(A)(I) AND THEREFORE NET TAXABLE INCOME WAS SHOWN TO BE NIL. THE AO DID NOT ALLOW THE DEDUCTION TO THE ASSESSEE U/S 80P(2)(A)(I) AND THE INCOME WAS ASSESSED AT RS.22 29 490/ - . THE AO WHILE DENYING THE DEDUCTION TO THE ASSESSEE U/S 80P(2)(A)(I) TOOK THE VIEW THAT THE ASSESSEE IS A PRIMARY CO - OPERATIVE BANK AND THEREFORE PROVISIONS OF SEC. 80P(4) ARE APPLICABLE IN THE C ASE OF THE ASSESSEE. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE. 2.1 THE LD. DR VEHEMENTLY CONTENDED THAT THE ASSESSEE IS A CO - OPERATIVE BANK. IN VIEW OF THE DEFINITION OF THE CO - OPERATIVE BANK GIVEN UNDER EXPLANATION TO SEC. 80P(4) THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BANKING. SEC. 80P(4) PUTS AN EMBARGO W.E.F. 1.4.2007 THAT IF A CO - OPERATIVE SOCIETY IS CARRYING ON BANKING BUSINESS THE ASSESSEE WILL NOT BE ENTITLED FOR THE EXEMPTION. RELIANCE WAS PLACED ON THE DECISION OF HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF THE CITIZEN CO - OPERATIVE SOCIETY VS. ADDL. CIT IN ITA NOS. 1003/HYD/2011 & 1004/HYD/2011 DT. 2.7.2012. 2.2 WE HAVE HEARD THE D.R SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDER OF THE TAX AUTHORITIES BELOW AS WELL AS THE DECISIONS AND THE ENTIRE MATERIAL AND CASE LAWS REFERRED TO BEFORE US. 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 : - 4 ITA NO S .4 4 & 45 /PNJ/201 4 & C.O.NO S .1 7 &18 /PNJ/2014 (ASST. YEAR S : 2009 - 10 & 2010 - 11 ) 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 INC OME 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 TH E 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 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 SUB - SECTION (A) 'CO - OPERATIVE BANK' AND 'PRIMARY AGRICULTURAL CREDIT SOCIETY' SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO THEM IN PART V OF THE BAN KING REGULATION ACT 1949 (10 OF 1949); (B) 'PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK' MEANS A SOCIETY HAVING ITS AREA OF OPERATION CONFINED TO A TALUK A AND THE PRINCIPAL OBJECT OF WHICH IS TO PROVIDE FOR LONG - TERM CREDIT FOR AGRICULTU RAL AND RURAL DEVELOPMENT ACTIVITIES. 2.3 FROM THE PLAIN READING OF SEC. 80P(2)(A)(I) IT IS APPARENT THAT IF THE CO - OPERATIVE SOCIETY IS ENGAGED IN CARRYING OF BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS THE CO - OPERATIVE SOCIETY I S ENTITLED FOR DEDUCTION ON WHOLE OF THE INCOME RELATING TO ANY ONE OR MORE OF SUCH BUSINESS. FROM THE READING OF SEC. 80P(4) IT IS APPARENT THAT THIS SECTION DENIES DEDUCTION TO A CO - OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR PRIM ARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. THE PROVISIONS OF SEC. 80P(4) WAS INTRODUCED IN THE STATUTE BY THE FINANCE ACT 2006 W.E.F. 1.4.2007. THE EXPLANATION TO THE SECTION DEFINES THE CO - OPERATIVE BANK AND PRIMARY AGRICULTURAL CREDIT S OCIETY TO HAVE THE SAME MEANING AS ASSIGNED TO THEM IN PART - V OF THE BANKING REGULATION ACT 1949. IT IS NOT THE CASE OF EITHER OF THE PARTIES 5 ITA NO S .4 4 & 45 /PNJ/201 4 & C.O.NO S .1 7 &18 /PNJ/2014 (ASST. YEAR S : 2009 - 10 & 2010 - 11 ) THAT THE ASSESSEE IS A PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. IT IS ALSO NOT THE CLAIM O F THE ASSESSEE THAT ASSESSEE IS A PRIMARY AGRICULTURAL CREDIT SOCIETY. IF WE READ BOTH THE SECTIONS SEC. 80P(2)(A)(I) AND SEC. 80P(4) TOGETHER WE FIND THAT THE PROVISIONS OF SEC. 80P(4) MANDATES THAT THE PROVISIONS OF SEC. 80P WILL NOT APPLY TO ANY CO - O PERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK BUT AS PER THE PROVISIONS OF SEC. 80P(2)(A)(I) A CO - OPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF BANKING OR PROVIDIN G CREDIT FACILITIES TO ITS MEMBERS IS ENTITLED FOR DEDUCTION. AFTER THE INSERTION OF SEC. 80P(4) THE PROVISIONS OF SEC. 80P(2)(A)(I) WERE NOT AMENDED RATHER THE CO - OPERATIVE SOCIETY ENGAGED IN CARRYING ON BUSINESS OF BANKING FACILITIES TO ITS MEMBERS CO NTINUED TO BE ENTITLED FOR DEDUCTION U/S 80P(2)(A)(I). THIS PRE - SUPPOSES THAT EVERY CO - OPERATIVE SOCIETY ENGAGED IN CARRYING ON BUSINESS OF BANKING CANNOT BE REGARDED TO BE A CO - OPERATIVE BANK. THE EMBARGO PUT U/S 80P(4) ARE APPLICABLE ONLY TO A CO - OPERA TIVE BANK. IN OUR OPINION IT CANNOT BE SAID THAT A CO - OPERATIVE SOCIETY CANNOT CARRY ON BUSINESS OF BANKING FACILITIES TO ITS MEMBERS EVEN IF IT IS NOT A CO - OPERATIVE BANK. IF WE READ THE PROVISIONS IN THE MANNER THAT EVERY CO - OPERATIVE SOCIETY ENGAGED IN CARRYING ON BUSINESS OF BANKING EVEN FOR ITS MEMBERS IS REGARDED TO BE A CO - OPERATIVE BAN K THEN THE PROVISIONS OF SEC. 80P(2 )(A)(I) WILL BECOME REDUNDANT. THEREFORE IN OUR OPINION BEFORE DECIDING THE ISSUE WHETHER THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80P(2)(A)(I) IT IS ESSENTIAL TO DECIDE WHETHER THE ASSESSEE IS A CO - OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. IN CASE IT IS FOUND THAT THE ASSESSEE IS A CO - OPERATIVE BANK THE ASSESSEE WILL NOT BE ENTITLED FOR DEDUCTION AS STIPULATED U/S 80P(2)(A)(I) BUT IN CASE THE ASSESSEE IS NOT A CO - OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELO PMENT BANK THE PROVISIONS OF SEC. 80P(2)(A)(I) WILL BE APPLICABLE TO THE ASSESSEE PROVIDED THE ASSESSEE IS ENGAGED IN CARRYING ON BUSINESS OF 6 ITA NO S .4 4 & 45 /PNJ/201 4 & C.O.NO S .1 7 &18 /PNJ/2014 (ASST. YEAR S : 2009 - 10 & 2010 - 11 ) BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THIS ACTION NOWHERE STATES CO - OPERATIVE CREDIT SOCIETY EXC EPT MENTIONED UNDER PROVISO 2 TO SECTION 80P WHICH IS RELEVANT FOR SUB - CLAUSE 6 OR 7. IT HAS NOTHING TO DO WITH SECTION 80P(2)(A)(I). 2.4 IN OUR OPINION SEC. 80P(2)(A)(I) PROVIDES TWO TYPES OF ACTIVITIES IN WHICH THE CO - OPERATIVE SOCIETY MUST BE ENGAG ED TO BE ELIGIBLE FOR DEDUCTION UNDER SUB - CLAUSE (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 ACTIVI TIES. 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 CO - OPERATIVE SOCIETY CARRIES ON ONE OR BOTH OF THE ACTIVITIES IT WILL BE ELIGIB LE FOR DEDUCTION. THESE TWO ACTIVITIES ARE (A) CO - OPERATIVE SOCIETY ENGAGED IN CARRYING ON BUSINESS OF BANKING FACILITIES TO ITS MEMBERS OR (B) CO - OPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS. BOTH THE ACTIVITIES MUST BE CARRIE D ON BY THE CO - OPERATIVE SOCIETY FOR ITS MEMBERS. IF A CO - OPERATIVE SOCIETY IS ENGAGED IN CARRYING ON THESE ACTIVITIES/FACILITIES FOR THE PERSONS OTHER THAN ITS MEMBERS THE CO - OPERATIVE SOCIETY IN OUR OPINION WILL NOT BE ELIGIBLE FOR DEDUCTION U/S 80P( 2)(A)(I) ON THE 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 FACI LITIES 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 T O ALLOW DEDUCTION TO SUCH CO - OPERATIVE SOCIETIES IN RESPECT OF BUSINESS RELATING TO ITS MEMBERS. 7 ITA NO S .4 4 & 45 /PNJ/201 4 & C.O.NO S .1 7 &18 /PNJ/2014 (ASST. YEAR S : 2009 - 10 & 2010 - 11 ) 2.5 NOW THE QUESTION BEFORE US IS WHETHER THE ASSESSEE IS A CO - OPERATIVE BANK OR NOT. CO - OPERATIVE BANK IS DEFINED IN PART V OF THE BANKING REGULATIONS ACT 1949 AS UNDER : CO - OPERATIVE BANK MEANS A STATE CO - OPERATIVE BANK A CENTRAL CO - OPERATIVE BANK AND A PRIMARY CO - OPERATIVE BANK: 2.6 FROM THE DEFINITION OF CO - OPERATIVE BANK IT IS APPARENT THAT CO - OPERATIVE BANK MEANS STATE CO - OPERATIVE BANK A CENTR AL 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. 2.7 THE PR IMARY 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 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 NOT PERMIT ADMISSION OF ANY OTHER CO - OPERATIVE SO CIETY AS A MEMBER: PROVIDED THAT THIS SUB - CLAUSE SHALL NOT APPLY TO THE ADMISSION OF A CO - OPERATIVE BANK AS A MEMBER BY REASON OF SUCH CO - OPERATIVE BANK SUBSCRIBING TO THE SHARE CAPITAL OF SUCH CO - OPERATIVE SOCIETY OUT OF FUNDS PROVIDED BY THE STATE GOVE RNMENT FOR THE PURPOSE 2.8 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 CO - OPERATIVE SOCIETY DO NOT PERMIT ADMISSION OF ANY OTHER CO - OPERATIVE SOCIETY AS A MEMBER IT WILL BE REGARDED TO BE PRIMARY CO - OPERATIVE BANK. IF CO - OPERATIVE SOCI ETY DOES NOT FULFIL ANY OF THE CONDITIONS IT CANNOT BE REGARDED TO BE A PRIMARY CO - OPERATIVE BANK. THEREFORE IN THE CASE OF THE ASSESSEE WE HAVE 8 ITA NO S .4 4 & 45 /PNJ/201 4 & C.O.NO S .1 7 &18 /PNJ/2014 (ASST. YEAR S : 2009 - 10 & 2010 - 11 ) TO EXAMINE ON THE BASIS OF THE FACTS AND MATERIALS ON RECORD WHETHER THE ASSESSEE CO - OPERATIVE SOCIETY COMPL IES WITH ALL THE THREE CONDITIONS. IN CASE IT DOES NOT COMPLY WITH ALL THE THREE CONDITIONS IT CANNOT BE REGARDED TO BE A CO - OPERATIVE BANK AND THE PROVISIONS OF SEC. 80P(4) IN OUR OPINION WILL NOT BE 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 PROVIDIN G CREDIT FACILITIES TO ITS MEMBERS. 2.9 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 IN THIS CASE ARE ENUMERATED AS UNDER : - 1. TO ENCOURAGE SEL F - HELP THRIFT SAVINGS AND CO - OPERATI ON AMONGST EACH OTHER AND TO EXTEND THE LOAN FACILITY. 2. TO EXTEND FINANCIAL ASSISTANCE AND ADVANCES TO THE MEMBERS TO MEET THE REQUIREMENTS OF THE MEMBERS . 3. TO BRING AWARENESS AMONGST THE MEMBERS ABOUT THE SAVING SCHEMES ENCOURAGED BY THE INCOME TAX DEPARTMENT AND GOVERNMENT AND TO PROVIDE NECESSARY SERVICE TO THE MEMBERS TO UTILIZE SUCH SCHEMES. 4. TO PROCURE THE GOVERNMENT SECURITY BONDS ON BEHALF OF MEMBERS TO SELL THEM AND TO UNDERTAKE SUCH COLLECTING ACTIVIT IES . 5. ............................................................................ 16 . TO DISPOSE ANY PROPERTY POSSESSED BY THE SOCIETY AGAINST RECOVERY OF LOANS EITHER IN PART OR IN FULL . 1 7 . TO IMPLEMENT ALL SUCH MEANS AS TO DEVELOP THE SAHAKARI AND TO STRENGTHEN IT FROM ALL QUARTERS. TO ADOPT ALL THE MODERN TECHNOLOGY INCLUDING INTERNET FACILITY AS TO PROVIDE BETTER SERVICE . 1 8. TO CONSTITUTE A UNION CO - OPERATIVE FOR FULFILMENT OF THE AIMS OF THE CO - OPERATIVE UNDER THE PROVISIONS OF SOUHARD SAHAKARI ACT. TO ESTABLISH SISTER CONCERN. P ARTNERSHIP F IRM AND PRO - INSTITUTION. THE LOANS AS SPECIFIED HEREINABOVE SHOULD NOT BE EXTENDED BEYOND RS.20 00 000/ - . ON THE BASIS OF THESE OBJECTS WHETHER IT CAN BE SAID THAT THE PRIMARY OBJECT OR PRINCIPAL BUSINESS O F THE ASSESSEE IS TRANSACTION OF BANKING BUSINESS? BANKING BUSINESS HAS BEEN DEFINED U/S 5(B) OF THE BANKING REGULATION ACT IN THE FOLLOWING MANNER : 9 ITA NO S .4 4 & 45 /PNJ/201 4 & C.O.NO S .1 7 &18 /PNJ/2014 (ASST. YEAR S : 2009 - 10 & 2010 - 11 ) ' BANKING' MEANS THE ACCEPTING FOR THE PURPOSE OF LENDING OR INVESTMENT OF DEPOSITS OF MONEY FROM THE P UBLIC REPAYABLE ON DEMAND OR OTHERWISE AND WITHDRAWABLE BY CHEQUE DRAFT ORDER OR OTHERWISE. FROM THE SAID DEFINITION IT IS CLEAR THAT BANKING MEANS ACCEPTING DEPOSIT OF MONEY FROM THE PUBLIC WHICH IS REPAYABLE ON DEMAND OR OTHERWISE AND WITHDRAWAL OF THESE DEPOSITS BY CHEQUE DRAFT 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 OTHER WISE AND COULD BE WITHDRAWN BY THE DEPOSITOR BY CHEQUE DRAFT OR OTHERWISE. WE NOTED THAT THE ASSESSEE HAS CATEGORICALLY ACCEPTED BEFORE THE AUTHORITIES BELOW THAT THE ASSESSEE WAS ACCEPTING DEPOSITS OF MONEY NOT ONLY FROM THE MEMBERS BUT ALSO FROM THE GEN ERAL PUBLIC WHO ARE NON - MEMBERS. THIS FACT AS PER THE REMAND REPORT OF A.O DATED 9 . 10 .2013 BEFORE THE CIT(A) CONFIRMS FROM THE FOLLOWING : - THUS IT IS CLEAR THAT THE ASSESSEE SOCIETY ACCEPTS DEPOSITS FROM THE MEMBERS AND NON - MEMBERS. 2.10 THE DEPOSITS SO ACCEPTED ARE USED BY THE ASSESSEE CO - OPERATIVE SOCIETY FOR LENDING OR INVESTMENT. EVEN OUT OF THE DEPOSITS SO RECEIVED THE LOANS HAVE BEEN GIVEN TO THE MEMBERS OF THE SOCIETY IN ACCORDANCE WITH THE OBJECTS AS ENUMERATED ABOVE. THUS IN O UR OPINION CONDITION NO. 1 STANDS SATISFIED AND IT CANNOT BE SAID THAT THE ASSESSEE SOCIETY WAS NOT CARRYING ON BANKING BUSINESS AS IT WAS ACCEPTING DEPOSITS FROM THE PERSONS WHO WERE NOT MEMBERS. 2.11 IN OUR OPINION IT IS NOT NECESSARY THAT THE CO - OPER ATIVE SOCIETY SHOULD HAVE A BANKING LICENCE AS PER THE DEFINITION UNDER THE INCOME TAX ACT. WHAT WE HAVE TO SEE WHETHER THE NATURE OF THE BUSINESS CARRYING ON BY THE ASSESSEE IS A BANKING BUSINESS OR NOT. THE INCOME TAX IN OUR OPINION IS NOT CONCERNED WHET HER THE BANKING BUSINESS CARRIED ON BY THE ASSESSEE IS LEGAL OR ILLEGAL. THE 10 ITA NO S .4 4 & 45 /PNJ/201 4 & C.O.NO S .1 7 &18 /PNJ/2014 (ASST. YEAR S : 2009 - 10 & 2010 - 11 ) INCOME HAS TO BE ASSESSED U/S 14 OF THE INCOME TAX ACT UNDER THE SAME HEAD EVEN IF THE NATURE OF THE BUSINESS IS ILLEGAL. 2.12 SO FAR AS THE SECOND CONDITION IS CONCERNED THER E IS NO DISPUTE THAT THE PAID UP SHARE CAPITAL AND RESERVES IN THE CASE OF THE ASSESSEE IS MORE THAN RS. 1 LAC. THEREFORE THE ASSESSEE SATISFIES THE SECOND CONDITION. 2.13 S O FAR AS THE THIRD CONDITION IS CONCERNED WE NOTED THAT SEC. 20 OF THE KARNA TAKA SOUHARDA SAHAKARI ACT 1997 PERMITS ADMISSION OF ANY OTHER CO - OPERATIVE SOCIETY AS A MEMBER. THE PROVISIONS OF SEC. 20 ARE LAID DOWN AS UNDER : 20. PERSONS WHO MAY BE ADMITTED OR CONTINUED AS MEMBERS : - (1) SUBJECT TO THE PROVISIONS OF THIS ACT NO PERSON SHALL BE ADMITTED AS A MEMBER OF A CO - OPERATIVE - A) UNLESS HE NEEDS THE SERVICES OF THE CO - OPERATIVE AND ACCEPTS THE RESPONSIBILITY OF MEMBERSHIP AND IS COMPETENT TO CONTRACT UNDER THE CONTRACT ACT 1872 (CENTRAL ACT IX OF 1872); B) IF HE CONDUCTS ANY BUSINESS SUCH BUSINESS BEING IN CONFLICT OR COMPETITION WITH THE BUSINESS OF THE CO - OPERATIVE AS SPECIFIED IN THE BYE - LAWS; AND C) UNLESS HE FULFILS SUCH OTHER CONDITIONS AS MAY BE SPECIFIED IN THE BYE - LAWS OF THE CO - OPERATIVE: PROVIDED THAT AFTER T HE REGISTRATION OF A CO - OPERATIVE THE MEMBERS SHALL BE ADMITTED ONLY BY THE ELECTED BOARD. (2) NO PERSON SHALL BE ELIGIBLE TO CONTINUE AS A MEMBER IF SUCH PERSON - A) HAS NOT USED THE SERVICES OF THE CO - OPERATIVE FOR TWO CONSECUTIVE YEARS TO THE MINIMUM LEVEL SPECIFIED IN THE BYE - LAWS; OR B) HAS NOT ATTENDED THREE CONSECUTIVE GENERAL MEETINGS OF THE CO - OPERATIVE AND SUCH ABSENCE HAS NOT RECEIVED THE CONSENT OF THE GENERAL BODY; OR C) IS IN DEFAULT REGARDING ANY PAYMENT TO BE MADE TO THE CO - OPERATIVE EXCEE DING AN AMOUNT AND FOR A PERIOD SPECIFIED IN THE BYE - LAWS. (3) IF A QUESTION ARISES AS TO THE ELIGIBILITY OR OTHERWISE OF A PERSON TO BECOME A MEMBER OR TO CONTINUE AS A MEMBER THE BOARD SHALL DECIDE THE QUESTION AFTER GIVING SUCH PERSON AN OPPORTUNITY O F BEING HEARD. THE DECISION OF THE BOARD SHALL BE FINAL. 21. REMOVAL OF MEMBERSHIP. - (1) THE BOARD MAY BY A RESOLUTION PASSED BY A MAJORITY OF NOT LESS THAN TWO THIRDS OF THE MEMBERS PRESENT AND VOTING REMOVE THE MEMBERSHIP OF A PERSON IN THE CO - OPERATI VE FOR ACTS OR OMISSIONS WHICH ARE DETRIMENTAL TO THE INTEREST OF THE CO - OPERATIVE: 11 ITA NO S .4 4 & 45 /PNJ/201 4 & C.O.NO S .1 7 &18 /PNJ/2014 (ASST. YEAR S : 2009 - 10 & 2010 - 11 ) PROVIDED THAT A MEMBER SHALL NOT BE REMOVED UNLESS A REASONABLE OPPORTUNITY OF MAKING - REPRESENTATION IN THIS REGARD HAS BEEN PROVIDED TO HIM. (2) WHERE A MEMBER HAS B EEN REMOVED BY THE BOARD AN APPEAL SHALL LIE TO THE GENERAL BODY AND THE DECISION OF THE GENERAL BODY SHALL BE FINAL. (3)A PERSON WHOSE MEMBERSHIP HAS BEEN REMOVED SHALL SUBJECT TO THE PROVISIONS OF THIS ACT RULES AND BYE - LAWS BE INELIGIBLE FOR RE - ADM ISSION AS A MEMBER OF THAT CO - OPERATIVE FOR A PERIOD OF ONE YEAR AFTER THE DATE OF SUCH REMOVAL. [(4) NOTWITHSTANDING SUCH REMOVAL A PAST MEMBER SHALL BE LIABLE TO BE PROCEEDED AGAINST UNDER THIS ACT OR THE RULES OR THE BYE - LAWS FOR HIS ACTS OF COMMIS SION OR OMISSION AS SUCH MEMBER] [21.A NOMINAL AND ASSOCIATE MEMBERS (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 20 A CO - OPERATIVE MAY ADMIT A) ANY INDIVIDUAL B) ANY FIRM COMPANY CO - OPERATIVE SOCIETY CO - OPERATIVE OR ANYBODY OR CORPORATION CONSTITUTED BY OR UNDER ANY LAW FOR THE TIME BEING IN FORCE: - AS A NOMINAL OR ASSOCIATE MEMBER FOR ANY SPECIFIC PURPOSE FOR ANY SPECIFIC PERIOD AS MAY BE MENTIONED IN THE BYE - LAWS. (2) A NOMINAL MEMBERS SHALL NOT BE ENTITLED TO ANY SHARE IN ANY FORM WHATSOEVER IN THE ASSETS OR PROFITS OF THE CO - OPERATIVE AND SHALL NO T BE ENTITLED TO BECOME AN OFFICE - BEARER OF THE CO - OPERATIVE. (3) AN ASSOCIATE MEMBER MAY HOLD SHARES BUT SHALL NOT BE ENTITLED TO BECOME AN OFFICER - BEARER OF THE CO - OPERATIVE. (4) A NOMINAL OR ASSOCIATE MEMBER SHALL NOT HAVE THE RIGHT TO PARTICIPATE IN THE MANAGEMENT AND TO VOTE AT ANY MEETINGS OF THE CO - OPERATIVE INCLUDING THE ELECTION TO THE BOARD OF THE CO - OPERATIVE. (5) SAVE AS PROVIDED IN THIS SECTION A NOMINAL OR ASSOCIATE MEMBER SHALL HAVE SUCH PRIVILEGES AND RIGHTS OF A MEMBER AND BE SUBJECT T O SUCH LIABILITIES OF A MEMBER AS MAY BE SPECIFIED IN THE BYE - LAWS OF THE CO - OPERATIVE. THE AFORESAID PROVISION OF SEC. 20 TO 21A MANDATES ADMISSION OF ANY OTHER CO - OPERATIVE SOCIETY AS A MEMBER OF THE CO - OPERATIVE SOCIETY. THE WORD USED IN SEC.21A IS MAY. SECTION 21A FURTHER STATES THAT THE CO - OPERATIVE SOCIETY CAN BE ADMITTED AS NOMINAL OR ASSOCIATE MEMBER FOR ANY SPECIFIC PURPOSE FOR ANY SPECIFIC PERIOD AS MAY BE MENTIONED IN THE BYE - LAWS. THIS CLEARLY PROVES THAT IN CASE THE RULES AND BYE - LAWS OF THE OTHER CO - OPERATIVE 12 ITA NO S .4 4 & 45 /PNJ/201 4 & C.O.NO S .1 7 &18 /PNJ/2014 (ASST. YEAR S : 2009 - 10 & 2010 - 11 ) SOCIETY PROVIDES OTHERWISE THE CO - OPERATIVE SOCIETY MAY NOT BE ADMITTED AS A MEMBER OF THE CO - OPERATIVE SOCIETY. 2.10 WE HAVE GONE THROUGH THE BYE - LAWS WHICH CONTAINS THE MEMBERSHIP WHICH IS BYE - LAWS NO. 6 & 7. THEY STATE AS UNDER : - 6. ADMISSION FOR MEMBERSHIP . HE SHALL HAVE THE FOLLOWING ELIGIBILITY CRITERIA TO BE A MEMBER OF A SAHAKARI. 1. HE IS COMPETENT TO CONTRACT UNDER SECTION 11 OF THE INDIAN CONTRACT ACT 1872 AND ANY PERSON UNDER THE PROVISIONS OF THIS BYELAW 4(17). 2. PARTNERSHIP FIRMS OR THE SOCIETIES REGISTERED UNDER THE PROVISIONS OF KARNATAKA CO - OPERATIVE SOCIETIES ACT 1960 (AS PER THE PROVISIONS OF RULE 17). 3. AN INDIVIDUAL OR SELF HELP GROUPS UNDER THE PROVISIONS OF THIS BYE LAW 4(18). 7 . ELIGIBILITY CRITERIA F OR MEMBERSHIP BESIDES THE ABOVE QUALIFICATION THE PERSONS HAVING T HE FOLLOWING QUALIFICATION MAY BECOME A MEMBER . 1. ANY PERSON WITHIN THE AREA OF OPERATION OF THE SAHAKARI OR ANY EMPLOYEE BUSINESSMAN OR AN INDUSTRIALIST MAY BE CONSIDERED FOR MEMBERSHIP. 2. P ERSONS SEEKING MEMBERSHIP SHOULD REMIT THE SHARE FEE AND AN ENTRANCE FEE AS DECIDED IN THE ANNUAL GENERAL BODY MEETING OF THE SAHAKARI AND SHOULD CONTRIBUTE FULL AMOUN T OF AT LEAST ONE SHARE ALONG WITH SUBMISSION OF WRITTEN APPLICATION 3. ANY PERSON UNLESS MA KE THE PAYMENT OF MEMBERSHIP AMOUNTS CANNOT EXERCISE THE RIGHT AS MEMBER AND CANNOT INITIATE ANY KIND OF INTEREST PRESCRIBED UNDER THE PROVISIONS OF SOUHARD SAHAKARI ACT. FROM THIS IT IS APPARENT THAT THE BYE - LAWS OF SOCIETY DOES PERMIT THE ADMISSION O F OTHER CO - OPERATIVE SOCIETY AS MEMBER. THUS THE THIRD CONDITION FOR BECOMING PRIMARY CO - OPERATIVE BANK IS NOT COMPLIED WITH. SINCE THE ASSESSEE SOCIETY DID NOT COMPLY ALL THE THREE CONDITION S THEREFORE IN OUR OPINION THE ASSESSEE SOCIETY CANNOT BE REGARDED TO BE A PRIMARY CO - OPERATIVE BANK AS ALL THE THREE CONDITIONS AS DISCUSSED BY US IN THE PRECEDING PARAGRAPHS ARE NOT COMPLIED WITH AND IN CONSEQUENCE IT IS NOT A CO - OPERATIVE BANK AND THE ASSESSEE IS NOT HIT BY THE PROVISION OF SECTION 80P(4). 2.11 WE HAVE GONE THROUGH THE DECISION OF THE HYDERABAD BENCH OF THIS TRIBUNAL IN THE CASE OF THE CITIZEN COOPERATIVE SOCIETY VS. ADDL. CIT ( SUPRA ). WE NOTED THAT THIS DECISION IS NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US. IN THIS DECISION UNDER PARA 23 THE TRIBUNAL HAS GIVEN A FINDING THAT THE 13 ITA NO S .4 4 & 45 /PNJ/201 4 & C.O.NO S .1 7 &18 /PNJ/2014 (ASST. YEAR S : 2009 - 10 & 2010 - 11 ) ASSESSEE IS CARRYING ON BANKING BUSINESS AND FOR ALL PRACTICAL PURPOSES IT ACTS LIKE A CO - OPERATIVE BANK. THE SOCIETY IS GOVERNED BY THE BANKING RE GULATIONS ACT. THEREFORE THE SOCIETY BEING A CO - OPERATIVE BANK PROVIDING BANKING FACILITIES TO MEMBERS IS NOT ELIGIBLE TO CLAIM DEDUCTION U/S 80P(2)(A)(I) AFTER THE INTRODUCTION OF SUB - SECTION (4) TO SECTION 80P. IN VIEW OF THIS FINDING THE ASSESSEE WA S DENIED DEDUCTION U/S 80P(2)(A)(I). WE HAVE ALSO GONE THROUGH THE DECISION OF THE 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 NOTED THAT THE HON'BL E 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 CREDIT CO - OPERATIVE SOCIETY A AND NOT TO CO - OPERATIVE BANK. WITH DUE REGARDS TO THE BENCH WE ARE UNABLE TO FIND ANY TERM CREDIT CO - OPERATIVE SOCIETY U/S 80P(2)(A)(I) OR U/S 80P(4) THEREFORE THIS DECISION CANNOT ASSIST US. WE NOTE D THAT THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. JAFARI MOMIN VIKAS CO - OP. CREDIT SOCIETY LTD. IN TAX APPEALS NO. 442 OF 2013 443 OF 2013 AND 863 OF 2013 ( SUPRA ) VIDE ORDER DT. 15.1.2014 TOOK THE VIEW THAT SEC. 80P(4) WILL NOT APPLY TO A SOCIE TY WHICH IS NOT A CO - OPERATIVE BANK. IN THE CASE OF VYAVASAYA SEVA SAHAKARA SANGHA VS. STATE OF KARNATAKA & ORS. ( SUPRA) WE NOTED THAT THE ISSUE BEFORE THE HON'BLE HIGH COURT IN THE WRIT PETITION FILED BY THE PETITIONER RELATED TO THE LEGISLATIVE COMPETEN CE 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 CONTE NTION. THE PETITIONERS ARE NOT THE BANKING INSTITUTIONS COMING UNDER THE PURVIEW OF THE BANKING REGULATION ACT. THEY ARE THE CO - OPERATIVE SOCIETIES REGISTERED UNDER THE ACT AND AS SUCH THEY ARE GOVERNED BY THE PROVISIONS OF THE ACT PASSED BY THE STATE L EGISLATURE. CONSEQUENTLY THE STATE GOVERNMENT HAS CONTROL OVER THEM TO THE EXTENT THE ACT PERMITS. MAJOR ACTIVITIES OF 14 ITA NO S .4 4 & 45 /PNJ/201 4 & C.O.NO S .1 7 &18 /PNJ/2014 (ASST. YEAR S : 2009 - 10 & 2010 - 11 ) THE PETITIONERS ARE TO FINANCE ITS MEMBERS. FOR THE PURPOSE OF FINANCING ITS MEMBERS THEY BORROW MONEY FROM THE FINANCING AGENCIES A ND REPAY THE SAME. MERELY BECAUSE 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 I S 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 ECTION 5(B) OF THE BANKING REGULATION ACT 1949. THIS DECISION IN OUR OPINION IS NOT APPLICABLE TO THE CASE BEFORE US BECAUSE THE PROVISIONS OF SEC. 80P(2)(A)(I) AS WE HAVE ALREADY HELD IN THE PRECEDING PARAGRAPHS ARE APPLICABLE TO A CO - OPERATIVE SOC IETY WHICH IS ENGAGED IN CARRYING ON BANKING BUSINESS FACILITIES TO ITS MEMBERS IF IT IS NOT A CO - OPERATIVE BANK. WE HAVE ALSO GONE THROUGH THE DECISION OF THIS BENCH IN THE CASE OF DCIT VS. JAYALAKSHMI MAHILA VIVIDODESHAGALA SOUHARDA SAHAKARI LTD. IN ITA NO. 1 TO 3/PNJ/2012 DT. 30.3.2012 ( SUPRA) FOR WHICH THE UNDERSIGNED IS THE AUTHOR. 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 C ANNOT BE SAID THAT THE PRIME OBJECT OR PRINCIPAL BUSINESS OF THE ASSESSEE IS BANKING BUSINESS. THEREFORE THE ASSESSEE WILL NOT COMPLY WITH THE FIRST CONDITION AS LAID DOWN IN THE DEFINITION AS GIVEN U/S. 5(CCV) OF THE BANKING REGULATION ACT 1959 FOR BECO MING PRIMARY COOPERATIVE BANK. THE ASSESSEE THEREFORE CANNOT BE REGARDED TO BE PRIMARY COOPERATIVE 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 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. WE HAVE ALSO GONE THROUGH THE DECISION OF ACIT VS PALHAWAS PRIMARY AGRICULTURE CO - OPERATIVE SOCIETY LTD 23 TAXMAN.COM 318 (DELHI). SECTION 80P(4) CLEARLY EXCLUDES PRIMARY AGRICULTURE CREDIT SOCIETY FROM ITS DOMAIN . 15 ITA NO S .4 4 & 45 /PNJ/201 4 & C.O.NO S .1 7 &18 /PNJ/2014 (ASST. YEAR S : 2009 - 10 & 2010 - 11 ) THEREFORE THIS DECISION WILL NOT ASSIST THE ASSESSEE. WE HAVE ALSO GONE THROUGH THE DECISION OF PUNE BENCH IN THE CASE OF ITO VS JANKALYAN NAGRI SAHAKARI PAD SANSTHA LTD 24 TAXMAN.COM 127 PUNE. THIS WE HAVE ALREADY STATED THAT SECTION 80P(2)(A)(I) NOW HERE TALKS OF CO - OPERATIVE CREDIT SOCIETY AND THEREFORE THE DISTINCTION MADE UNDER THE BANKING REGULATION ACT CANNOT BE IMPORTED U/S 80P(2)(A)(I). THIS DECISION IN OUR OPINION WILL NOT ASSIST THE ASSESSEE. THE DECISION OF KARNATAKA HIGH COURT IN THE CASE O F CIT VS SRI BILURU GURUBASAVA PATTANA SAHAKARI SANGH NIYAMITHA DATED 5.2.2014 RELATES TO AN APPEAL FILED AGAINST THE ORDER PASSED U/S 263 AND THE QUESTION INVOLVED WAS WHETHER THE REVISIONAL AUTHORITY WAS JUSTIFIED IN INVOKING HIS POWER U/S 263 WITHOUT T HE FOUNDATIONAL FACT OF THE ASSESSEE BEING CO - OPERATIVE BANK. THEREFORE THIS DECISION IS NOT APPLICABLE. 2.12 WE THEREFORE IN VIEW OF OUR AFORESAID DISCUSSION HOLD THAT THE ASSESSEE HAS NOT TO BE REGARDED TO BE A PRIMARY CO - OPERATIVE BANK AS ALL TH E THREE BASIC CONDITIONS ARE NOT COMPLIED WITH THEREFORE IT IS NOT A CO - OPERATIVE BANK AND THE PROVISIONS OF SEC. 80P(4) ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE AND ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80P(2)(A)(I). WE THEREFORE CONFIRM THE O RDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION TO THE ASSESSEE U/S 80P(2)(A)(I) ON THE INCOME GENERATED FOR PROVIDING BANKING OR CREDIT FACILITIES TO ITS MEMBERS. SINCE THE C.OS FILED BY THE ASSESSEE ARE SUPPORTIVE TO THE ORDER OF CIT(A) THEREFORE THEY ARE ALLOWED AS SUCH. 3. IN THE RESULT BOTH THE APPEALS FILED BY THE REVENUE ARE DISMISSED AND THE C.OS ARE ALLOWED. 4. ORDER PRONOUNCED IN THE OPEN COURT ON 17 .04.2014. SD/ - (D.T.GARASIA) JUDICIAL MEMBER SD/ - (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI / GOA DATED : 17 .04.2014 *A* 16 ITA NO S .4 4 & 45 /PNJ/201 4 & C.O.NO S .1 7 &18 /PNJ/2014 (ASST. YEAR S : 2009 - 10 & 2010 - 11 ) COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) CIT(A) CONCERNED (5) D.R (6) GUARD FILE TRUE COPY BY ORDER SR. PRIVATE SECRETARY ITAT PANAJI GOA