2018 (3) TMI 1965

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....at ld. Commissioner of Income Tax (Appeals) held the assessee to be eligible for deduction u/s.80(P)(2) of the Act. 2. Ld. Counsel for the Revenue submitted that assessee though it was not a normal Scheduled Bank, functioned as a bank. As per the ld. DR business of banking could not be narrowly construed. Contention of the ld. DR was that assessee was disbursing loans through its member primary banks which were treated as associate members. Contention of the ld. DR was that by virtue of judgment of Hon'ble Apex Court in the case of The Citizen Co-Operative Society Ltd vs. ACIT, (Civil Appeal No.10245 of 2017, dated 8.8.2017) the deduction u/s.80 (P) (2) of the Act could not be given where business of the assessee society included lending....

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....ctions as a bank specialized in re-finance. The business of banking cannot be narrowly taken to the definition of banking as per the Banking Regulations Act. The assessee bank gets loans from NABARD, State Governments, raises debentures and finance to its members. 2.3 The learned CIT(A) failed to appreciate that the assessee bank claims that it only lends to its members. The annual report of the bank states that the bank has disbursed jewel !oans both directly and also through its member primary banks, but the bank claims that the members of its member banks become associate members and avail loans. Sec. 80P(2) speaks only about lending loans to its member and the scope cannot be widened. 2.4 The learned CIT(A) failed to a....

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....d by the Ld.DR that the AO had denied the assessee the benefit of deduction u/s.80P of the Act. On appeal, Ld.CIT(A) had held that the assessee was entitled to the deduction u/s.80P. The Ld.CIT(A) had followed the decision of the Co-ordinate Bench of this Tribunal in the assessee's own case for the AY 2009-10 in ITA No.1318/Mds/2013 dated 01.05.2014. It was a submission that the issue was now squarely covered by the decision of the Hon'ble Kerala High Court in the case of Kerala State Co-operative Agricultural & Rural Development Bank Ltd., reported in [2016] 67 taxmann.com 111 (Kerala), wherein it has been held that "in terms of the definition clauses of the BR Act which apply to the interpretation of the terms in Secti6n 80P(4) of the IT ....