TaxTMI 
TaxTMI 
2014 (2) TMI 676
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....arned CIT(A) didn't look into the facts which had been distinguished clearly before allowing the appeal. 5. For these and other grounds that may be adduced at the time of hearing, the order of CIT (Appeals) may be cancelled and that of the Assessing Officer be restored." 3. The only issue involved in this appeal of the Revenue is whether the assessee is a 'Co-operative Bank' or a 'Primary Agricultural Credit Society'. 4. The brief facts of the case are that the Assessing Officer observed that the assessee carried out the following activities: a) Banking business b) Trading in Civil supply goods c) Trading in Fertilizers The assessee claimed deduction u/s 80P of the Act of Rs. 36,76,329/-. According to the Assessing Officer, the assessee's main activity was only banking business and income from banking business was taxable from assessment year 2007-08 onwards by amending section 80P(2)(a)(i) of the Act. Hence, the provisions of section 80P are not applicable to any co-operative bank other than Primary Agricultural Credit Society with effect from 1.4.2007. According to the Assessing Officer, the intention of the....
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....any other co-operative society 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 Government for the purpose. 6. It was, therefore, submitted that admittedly, the assessee was not a State Co-operative Bank, a Central Co-operative Bank and a Primary Co-operative Bank, as defined under BR Act, does not fit into first limb of clause (a) to Explanation to section 80P(4). It was further submitted that it has to be seen whether the assessee falls within the meaning of the second limb of clause (a) of Explanation to section 80P(4). It was argued that undisputedly the assessee does not fit into that definition also due to the following reasons: a) First, all the conditions, being cumulative, are not satisfied in the case of the assessee. b) The first condition, that the principal business is to provide financial accommodation to its members for agricultural purposes, is not satisfied, for the bye-laws do not say so. &....
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....9]. E) The assessee, admittedly, does not fall under 'Primary Credit Society' as defined in section 5(cci) of the BR Act. Therefore, it was argued that the assessee, admittedly, does not also fall within the meaning of 'Co-operative Bank' as defined in section 5(cci) of the BR Act and does not hold a license issued in that behalf by the RBI. Hence, it cannot be said that the assessee has been carrying on the banking business and it cannot denied deduction u/s 80P of the Act by invoking sub-section(4). 9. It was further submitted that the Mumbai Bench of the Tribunal in the case of Apex Urban Co-operative Bank of Maharashtra & Goa vs ITO in I.T.A.No.6061/Mum/2008 has held that the assessee's income cannot be considered as from the business of banking on the reason that the assessee is not having any license to do the business of banking. It was further submitted that for the other activities of the assessee, support was drawn from the above decision for the principle that the assessee should be in the business of banking to engage in any one or more of the forms of business as listed in section 6 of the BR Act. 10. It was further argued that section 22 of th....
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....s the affording of the facility to the customer to draw funds from the bank by issuing cheques. This is the primary characteristic of a banking business. Without it, the business is not banking as known. 13. It was further argued that to put it otherwise, an ordinary money lender who does not accept money on terms enabling a depositor to draw cheques upon him would not, therefore, be a bank or banker properly so called. The provisions of the Act would, therefore, apply only to limited class of cases where the bank or banker allows withdrawal of money by issue of cheques. Therefore, it is abundantly clear that the essence of banking is the relationship which is brought into existence at the time of the deposit; that is the core of banking. It is true that the essence of banking covers every possible phase or combination of deposit, custody, investment, loan, exchange, issue and transmission of money, creation and transfer of credit and other connected activities but if the essential characteristic of banking, namely, the power to receive deposits from the public which are repayable in the manner indicated in section 5(1)(b) of the Banking Companies Act is absent and merely the po....
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....es Act, 1959 Cooperative Societies Act, 1959 Nature of business 1. As defined in Section 6 of Banking Regulation Act. 2. Can open Savings Bank account, current account, overdraft account, cash credit account, issue letter of credit, discounting bills of exchange, issue cheques, demand drafts (DD), Pay order, gift cheques, lockers, bank guarantees, etc. 3. Cooperative banks can act as clearing agent for cheques, DDs, pay orders and other forms. 4. Banks are bound to follow the rules, regulations and directions issued by Reserve Bank of India (RBI) 1. As per the bye laws of the cooperative society. 2. Society cannot open Savings Bank account, current account, issue letter of credit, discounting bills of exchange, issue cheques, demand drafts, pay orders, gift cheques, lockers, bank guarantees, etc. 3. Society cannot act as clearing agent for cheques, DDs, pay orders and other forms. 4. Society is bound to follow the rules and regulations as specified by in the Cooperative Societies Act. Filing of returns Cooperative banks have to submit annual return to RBI every year. Society has to submit the annual return to Registrar of Societies. Inspect....