2018 (2) TMI 1281

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....ssee being a Primary Agricultural Credit Co-operative Society registered under the Kerala Co-operative Society Act is entitled for exemption its income u/s. 80(P)(2) as claimed in the return filed. 2. It is respectfully submitted that the respondent is essentially, a Co-operative bank and not merely a primary agricultural credit Society and hence the allowance of deduction u/s. 80P to the respondent assessee while computing the total income was irregular in nature and also against law. 3. The present appeal involves substantial question of law. The appeal involving similar question is pending before the Hon'ble Supreme Court of India in the case of M/s. Karakulam Service Co-operative Bank Ltd.[Civil Appeal No. 11288 of 2016 dated ....

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...., and in view of insertion of section 80P(4) with effect from 01.04.2007, the assessee would not be entitled to deduction u/s 80P(2) of the I.T.Act. 4. Aggrieved by the assessment order, the assessee preferred an appeal to the first appellate authority. The CIT(A) following the judgment of the Hon'ble jurisdictional High Court in the case of The Chirakkal Service Co-operative Bank Ltd. and Others v. CIT [(2016) 384 ITR 490 (Ker.)] held that assessee is entitled to the benefit of deduction u/s 80P(2) of the I.T.Act. 5. Aggrieved by the order of the CIT(A), the Revenue has filed the present appeal before the Tribunal. The learned Departmental Representative relied on the grounds raised in the memorandum of appeal and supported the order of ....

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.... defined the term 'co-operative society' for the purposes of the BR Act with reference to, among other things, the registration of a society under any State law relating to co-operative societies for the time being; it cannot but be taken that the purpose of the societies so registered under the State Law and its objects have to be understood as those which have been approved by the competent authority under such State law. This, we visualise as due reciprocative legislative exercise by the Parliament recognising the predominance of decisions rendered under the relevant State Law. In this view of the matter, all the appellants having been classified as primary agricultural credit societies by the competent authority under the KCS Ac....

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...., it cannot but be held that the appellants are entitled to exemption from the provisions of section 80P of the IT Act by virtue of sub- section 4 of that sect; on. In this view of the matter, the appeals succeed. 17. In the light of the aforesaid, we answer substantia1 question 'A' in favour of the appellants and hold that the Tribunal erred in law in deciding the issue regarding the entitlement of exemption under section 80P against the appellants. We hold that the primary agricultural credit societies, registered as such under the KCS Act; and classified so, under that Act, including the appellants are entitled to such exemption." 6.2 The assessee is admittedly only providing credit facilities to its members during the relev....