TaxTMI 
TaxTMI 
2023 (6) TMI 1417
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.... 2. Brief facts are that the assessee is registered as a Primary Agricultural Credit Co-operative Society under the Kerala Co- operative Societies Act, 1969. The assessee filed its return of income for AY. 2012-13 declaring a total income of Rs.2,07,080/- after claiming deduction u/s 80P(2)(a)(i) of the Act amounting to Rs.1,17,46,978/- which was disallowed by the AO. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) wherein assessee challenged the action of the AO disallowing the deduction u/s 80P of the Act. The Ld. CIT(A) also agreed with AO by holding that the assessee cannot be considered as a Primary Credit Society or as a Primary Co-operative Agricultural & Rural Development Bank. According to him, the assessee soc....
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....143(3) of the Act by order dated 12.03.2015 computing the total income at Rs.1,24,09,392/- According to the AO, the deduction u/s 80P of the Act was made by the AO mainly on the ground that the assessee's main activity is banking business in view of section 7 (Part V) of the Banking Regulation Act, 1949; and further according to AO assessee is not providing advances/credit for Agriculture & Rural Development activities. According to the AO, the assessee cannot be classified as a Primary Agricultural Credit Society, since its primary activity is not providing credit to agricultural purposes. According to the AO, since the assessee is mainly into banking business it need to be treated it as a Co-operative Bank instead of Primary Agricultural ....
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....e grounds raised by the assessee. We note that assessee is a Co-operative Society registered under the Kerala Co-operative Societies Act, 1969 and claims to be as a Primary Agricultural Credit Co-operative Society. The assessee society asserts that it provides credit facilities to its members; and its income earned while carrying on the business of providing credit facility to its members are eligible for deduction u/s 80P(2)(a)(i) of the Act. We note that the issue involved in this appeal has been settled by the Hon'ble Supreme Court in the case of Malvilayi Services Co-operative Bank Ltd. (supra) while reversing the full bench decision of the Hon'ble Kerala High Court, the Hon'ble Supreme Court held inter-alia as under: - "45. To....
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....ed. 46. It must also be mentioned here that unlike the Andhra Act that Citizen Cooperative Society Ltd. (supra) considered, 'nominal members' are 'members' as defined under the Kerala Act. This Court in U.P. Cooperative Cane Unions' Federation Ltd. v. CIT [1997] 11 SCC 287 referred to section 80P of the IT Act and then held: "8. The expression "members" is not defined in the Act. Since a cooperative society has to be established under the provisions of the law made by the State Legislature in that regard, the expression "members" in Section 80-P(2)(a)(i) must, therefore, be construed in the context of the provisions of the law enacted by the State Legislature under which th....
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....tate Co-operative Bank. Provided further that, with the general or special sanction of the Registrar, a society may make loans to another society. (2) Notwithstanding anything contained in sub-section (1), a society may make a loan to a depositor on the security of his deposit. (3) Granting of loans to members or to non-members under sub- section (2) and recovery thereof shall be in the manner as may be specified by the Registrar." Thus, the giving of loans by a primary agricultural credit society to non-members is not illegal, unlike the facts in Citizen Cooperative Society Ltd. (supra). 48. Resultantly, the impugned Full Bench judgment is set aside. The appeals and all pending applications are ....