2022 (4) TMI 106

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....ssessee has assailed the impugned order on the following grounds of appeal: "1.The learned CIT(A), Belgaum has erred in facts and law upholding the Assessing Officer order in disallowing the appellant's claim u/s.80P(2)(a)(i) of the Income Tax Act, 1961 treating the activity of lending as akin to the banking business even though there is no Banking license from RBI (i) In the High Court of Karnataka (Dharwar Bench) in the case of CIT Vs. Shri GurubasavaPattinSahakari Sang Nyt ITA No.5006/2013 dated 05.02.2014, it has held " as the assessee is not a co-operative bank carrying on exclusively banking business and as it does not possess license from Reserve Bank of India to carry on banking business so it is not a co-operative bank. It is a....

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....ed the assessee's claim for deduction of Rs. 5,83,710/- u/s.80P(2)(a)(i) of the Act. Accordingly, the Assessing Officer vide his order passed u/s.143(3) of the Act, dated 31.10.2014, assessed the income of the assessee society at Rs. 5,83,710/-. 3. Aggrieved, the assessee carried the matter in appeal before the CIT (Appeals), but without any success. 4. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 5. We have heard the ld. authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements relied upon by them. As observed by us hereinabove, the A.O held a conviction....

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....ditions laid down under Sec.56(c)(ccv) of Part V of the Banking Regulation Act, 1949, viz. (i) the primary object of the principal business of the co-operative society was the transaction of banking business; (ii) the paid-up share capital and reserves of the co-operative society was not less than one lakh of rupees; and (iii) the bye laws of the co-operative society did not permitted admission of any other co-operative society as a member, therefore, it clearly fell within the category of a primary co-operative bank. In the backdrop of his aforesaid deliberations, the A.O concluded, that the assessee being a primary co-operative bank would not be eligible for claim of deduction under Sec. 80P(2)(a)(i). It was on the basis of his aforesaid ....

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....imary objective should be business of banking. (ii) its paid up share capital and reserves should not be less than rupee one lac. (iii) its bye laws do not permit admission of any other co-operative society as its member. In our considered view, the word "banking‟ means accepting for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdrawal by cheque, draft, order or otherwise. As in the case of a co-operative credit society the acceptance and lending of money is only from the members and not from the public, therefore, it can safely be concluded that the principal business or primary objective of the said co-operative credit society is not the business of banking. ....