TaxTMI 
TaxTMI 
2013 (11) TMI 1283
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....hat unlike in the case of The Khamano Primary Cooperative & Agri. Development Bank Ltd., Khamano, there was no finding in this case that the assessee satisfied the conditions mentioned in the Explanation below Section 80P(4)to be eligible for deduction u/s 80P(2)(a)(i) of the Income Tax Act. 2. It is prayed that the order of the Ld. CIT(A) be set aside and that of the AO restored. 3. The appellant craves leave to add or amend any grounds of appeal before the appeal is finally heard and disposed of." 3. The learned A.R. for the assessee at the outset pointed out that the issue in the case is identical to the issue raised in The Khamano Primary Cooperative Agricultural Development Bank Ltd. Vs. ITO in ITA No.798/Chd/2011 and is covered by the order of the Tribunal vide order dated 30.12.2011. 4. The learned D.R. for the Revenue placed reliance on the order of the Assessing Officer. 5. We have heard the rival contentions and perused the record. The issue raised in the present appeal is in relation to exemption claimed by the assessee under section 80P of the Act. The assessee is a cooperative society and was providing credit facilities to its members and had claimed its....
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....ity of immovable properties for various purposes in connection with agricultural activities or purchase of land for cultivation, fencing of agricultural land, construction of godown, cattle shed etc. As per clause 5, the objectives of the assessee society are enlisted. Under clause 7 of the bye laws, the eligibility for admission as a members of the primary bank are to be restricted to (1) Central Cooperative Bank, Cooperative farming society, Tubewell Irrigation Cooperative Society and such other cooperative society as may be approved by Register. In case of individual, as per clause 7(iii), criteria for admission as members of the assessee society's primary registration in the area of operation of primary bank, being persons over 18 years of age and of sound mind and owners or cultivators of agricultural land or landless agricultural labour with the area of operation of the primary bank. Further, the bye laws of the assessee society provide the eligibility criteria of the A class and B class members. The bye laws also enlist the procedure to be followed for membership and allotment of shares to the said members of the assessee society. Further clauses of bye laws provide the term....
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....llowing, 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 (ii) a cottage industry, or [(iii) the marketing of agricultural produce grown by its members, or] (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or (v) the processing, without the aid of power, of the agricultural produce of its members, [or] [(vi) the collective disposal of the labour of its members, or (vii) fishing or allied activities, that is to say, the catching, curing, processing, preserving, storing or marketing of fish or the purchase of materials and equipment in connection therewith for the purpose of supplying them to its members,] the whole of the amount of profits and gains of business attributable to any one or more of such activities : [Provided that in the case of a co-operative society falling under sub-clause (vi), or sub-clause (vii), the rules and bye-laws of the society restrict the voting rights to the following classes of its members, namely:-- (1) the indivi....
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....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. [(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 Banking 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 and the principal object of which is to provide for long-term credit for agricultural and rural development activities.]" 18. Under the provision of section 80-P of the Act, income derived from co- operative activities to large extent are exempt from tax. Section 80 P(2)(a)(i) of the Act provided that in the case of co-operative society engaged in the carrying of the business of ....
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....cultural credit society or primary co-op agricultural and rural development bank. The explanation under section 80P of the Act, defines the abovesaid societies. The claim of the assessee is that it is primary co-op agricultural and rural development bank i.e. society having an area of operation confined to a taluka and providing long term credit for agricultural and rural development activities. The assessee before us is admittedly not engaged in the banking activities and hence is not hit by the amendment by Finance Act, 2006. 22. In the facts of the case before us, the Special Auditor has also confirmed that the assessee was not a primary agricultural credit society nor was co-operative bank. Further it has been observed by the Special Auditor that "However, the assessee may fall within the definition of primary cooperative agricultural and rural development bank which means a society area of operation is confined to a taluka and the principal object of which is to provide for long term credit for agricultural and rural development activities. Since the word taluka means a tehsil of a district, a group of several villages organized for Revenue purposes. It means a congregat....
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....s of persons could be members of the assessee society. The Special Auditors by on error had not considered the category of individuals, who could be members of the assessee society. The assessee admittedly has 5000 such members and the list of members is attached at pages 60 to 158 of the Paper Book. 26. The Special Auditors have enlisted the list of members to whom loans have been given under various schemes. There were certain members, against whom membership number was not found by the Special Auditor and hence the objections in granting exemption u/s 80P of the Act. The Ld. authorized representative for the assessee has placed on record the membership numbers of all such persons and has pointed out that the said list was also provided to Assessing Officer/CIT(A). In the above said facts & circumstances, where the assessee society is engaged in the business of providing long terms loans to is members, who are based in Khamano district and are owner/s of agricultural land and have been granted loans under different schemes formulated by the society, we hold that the assessee is primary co-op agriculture and rural development bank, entitled to benefit of deduction u/s 80P(2)(a)....
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....the case was dismissed by the Hon'ble Supreme Court as reported in 209 ITR (St) 87. 30. Similar view, has been held by the Hon'ble Allahabad High Court in the case of CIT Vs. Krishak Sahkari Ganna Samiti Ltd. 258 ITR 594 (All), 8 wherein the society was lending or arranging finance to its members to enable them to purchase good seeds of sugar cane, fertilizers, etc., the assessee was held to be engaged in carrying on business of providing credit facilities to its member. The interest earned from members was held to be exempt under section 80P(2)(a)(i) of the Act. 31. Similarly, in the facts of the case before us, the assessee-society is one of such co-operative societies acting within its area of operation i.e. Sub Division, Khamano. Many such co-operative societies are operating in Punjab under affiliation to Punjab State Co-op. Agricultural Development Bank Ltd. The object of the assessee-society is to give long term loans to its members for its utilization for specific purposes and the assessee is carrying on such activities and had earned interest income on such loans provided to its members under various schemes. The Special Auditors have also admitted to the above sa....