TaxTMI 
TaxTMI 
2024 (12) TMI 902
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....ted as a cooperative bank. The learned lower authorities have undisputedly placed reliance on legislative amendment in section 80P(4) of the Act by the Finance Act 2006 w.e.f. 01.04.2007 to reject the impugned deduction forming subject matter of our apt adjudication. 4. We have given our thoughtful consideration to the vehement rival submissions against and in support of correctness of impugned section 80P disallowance made in the assessee's hands. We find no merit in the Revenue's arguments supporting the same thereby treating the assessee as a cooperative bank. It appears that case law Mavilayi Service Cooperative Bank Ltd. vs. CIT (2021) 123 taxmann.com 161; as followed in Kerala State Co-Operative Agricultural & Rural Development Bank decision (2023) 458 ITR 384, has already rejected the Revenue's very arguments thereby holding that in absence of banking license being issued under the provisions of Banking Regulation law and dealing with general public at large; the departmental authorities could not proceed on the basis of "namesake" only to decline the impugned section 80P deduction as under: 15.1. Section 80P speaks about deduction in respect of income of co- operative so....
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....d states that notwithstanding anything contained in any other law for the time being in force, the provisions of the said Act shall apply to, or in relation to, co-operative societies as they apply to, or in relation to banking companies subject to the following modifications, namely, in clause (a) throughout the said Act, unless the context otherwise requires,- (i) references to a "banking company" or "the company" or "such company" shall be construed as references to a co- operative bank in clause (c), it is stated that in Section 5 as per clause (cci), "co- operative bank" means a state co-operative bank, a central co- operative bank and a primary co-operative bank clause (ccv) defines "primary co-operative bank" while clause (ccvii) defines "central co-operative bank" and "state cooperative bank" to have the meanings assigned to them in the NABARD Act, 1981. Since the expression 'banking company' is defined under the BR Act, 1949, it would be useful to consider the definition of banking company in Section 5(c) thereof which means any company which transacts the business of banking in India. "Banking" is defined in Section 5(b) of the said Act to mean the accepting, for the purp....
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....t. Section 2(x) of the said Act states that words and expressions used in the NABARD Act, 1981 and not defined either in the said Act or in the RBI Act, but defined in the BR Act, 1949, shall have the meanings respectively assigned to them in the BR Act, 1949. Therefore, we revert back to BR Act, 1949. 15.7. What is central to the controversy in this batch of cases is, whether, the appellant bank is a co-operative bank. What is of significance to know is, a state cooperative bank or central co-operative bank under the NABARD Act, 1981 is essentially a principal co- operative society either in a district or in a State, respectively, the primary object of which is the financing of other co-operative societies in the district or the State respectively. Further, NABARD Act, 1981 does not define banking business. Hence, reliance is to be placed, on the definition of banking business in terms of clause (w) of Section 2 of NABARD Act, 1981 which means the RBI Act has to be seen. When the RBI Act is perused, it is noted that clause (i) of Section 2 defines "co- operative bank", "co-operative credit society", "director", "primary agricultural credit society", "primary co-operative bank" a....
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.... other hand, if it is a co-operative bank within the meaning of Section 56 of BR Act, 1949 read with the provisions of NABARD Act, 1981 then it would not be entitled to the benefit of deduction under sub-section (4) of Section 80P of the Act. 15.9. Section 56 of the BR Act, 1949 begins with a nonobstante clause which states that notwithstanding anything contained in any other law for the time being in force, the provisions of the said Act, shall apply to, or in relation to, co-operative societies as they apply to, or in relation to, banking companies subject to certain modifications. The object of Section 56 is to provide a deeming fiction by equating a co-operative society to a banking company if it is a co-operative bank within the meaning of the said provision. This is because Chapter V of the BR Act, 1949, deals with application of the Chapter to co-operative societies which are co-operative banks within the meaning of the said chapter. For the purpose of these cases, what is relevant is that throughout the BR Act, 1949, unless the context otherwise requires, - references to a "banking company" or "the company" or "such company" shall be construed as references to a co-operat....
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....ravancore Cochin Co-operative Societies Act, 1951, which shall be known as Kerala State Co-operative Agricultural and Rural Development Bank Limited i.e. the appellant herein. Thus, from a conjoint reading of all the relevant statutory as alluded to hereinabove, it is quite clear that the appellant is not a co-operative bank within the meaning of sub-section (4) of Section 80P of the Act. The appellant is a co-operative credit society under Section 80P(2)(a)(i) of the Act whose primary object is to provide financial accommodation to its members who are all other co-operative societies and not members of the public. 15.14. Therefore, when the definition of "co-operative bank" in Section 56 of BR Act, 1949 is viewed in terms of Sections 2(u) of the NABARD Act, 1981, it is clear that only a state co-operative bank would be within the scope and meaning of a banking company under Section 2(c) of the BR Act, 1949 on obtaining licence under Section 22 of the said Act. Conclusion: In the instant case, although the appellant society is an apex co-operative society within the meaning of the State Act, 1984, it is not a co-operative bank within the meaning of Section 5(b) read with Sect....