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TMI Blog2023 (8) TMI 1417X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue, even as the decision in Totgar s CSS Ltd. [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] stands considered in Peroorkada SCB Ltd. [ 2021 (12) TMI 1084 - KERALA HIGH COURT] . We may, however, before parting with our order, place on record our humble view in the matter. The Hon ble Apex Court in Mavilayi Service Co-operative Bank Ltd [ 2021 (1) TMI 488 - SUPREME COURT] while discussing the import of sec.80P(4), which reads as under, clarified that the exclusion thereby extends only to co-operative banks, i.e., cooperative societies in the business of banking as defined in sec.5(b) of the Banking Regulation Act, 1949 (BRA), under the license from RBI: (4) The provisions of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. Whether, therefore, the co-operative societies were PACS or not, which aspect informed the decision by the Hon ble High Court, was immaterial. In other words, even if a co-operative society was not a PACS, as contended by the Revenue with reference to s.5(cc)(iv) of the BRA, as indeed the relevant provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... una Devi, Sr. D.R. ODER Per Bench: The captioned appeals raising a common issue, were heard together, and are being disposed of per a common order for the sake of convenience. 2. The instant appeals, initially decided by the Tribunal following the decision in Chirakkal Service Co-operative Bank Ltd. v. CIT [2016] 384 ITR 490 (Ker), were restored by it per a common order dated 16.9.2022 in rectification proceedings at the instance of the Revenue, for the reason that the said decision had been overruled vide it s subsequent, larger bench decision by the Hon ble High Court in CIT v. Poonjar Service Co-operative Bank Ltd. [2019] 414 ITR 67 (Ker)(FB) dated 19.3.2019. The later decision, however, having a retrospective effect, the captioned appellate orders were recalled following the decision in Kil Kotagiri Tea Coffee Estates Co. Ltd. v. ITAT [1988] 174 ITR 579 (Ker). 3.1 All assessees are co-operative societies registered as Primary Agricultural Credit Societies (PACSs) under the Kerala Co-operative Societies Act, 1969 (Kerala Act). The Tribunal had per the recalled orders set aside the issue of deduction under section 80P(1) of the Income-tax Act, 1961 ( the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra).The assessment being u/s.56, would, therefore, be of no consequence. The Revenue was, upon this, provided an opportunity by the Bench to rebut the claim; the decision by the Hon ble jurisdictional High Court being binding on the Tribunal, to, though, no effective rebuttal even as it was made clear that the Tribunal shall be in that case obliged to follow the said decision. 5. We have heard the parties, and perused the material on record. 5.1 Our first observation in the matter is that there had been no claim for deduction u/s. 80P(2)(d) in the instant appeals. Contrary to as was projected before us, it was not so in Peroorkada SCB Ltd. (supra), as a reading thereof would clarify. This, though, would be of no moment. This is as, as explained in Kerala State Cooperative Marketing Federation Ltd. Ors. v. CIT[1998] 231 ITR 814 (SC), the correct way of reading the different heads of exemption enumerated in sec. 80P would be to treat each as a separate and distinct head of exemption. Whenever a question arises as to whether any particular category of income of a co-operative society is exempt from tax what has to be seen is whether the income fell within any of the severa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must also establish that the interest income earned by the assessee is from a co-operative society. As a matter of fact, in the case on hand, there is no dispute that it is not from a co-operative society registered under Kerala Co-operative Societies Act. The interest income earned from District co-operative bank/State co-operative bank, in the facts and circumstances of the case, do come within section 80P(2)(d). Therefore, the income constitutes income from other sources and the only eligible deduction is covered by section 80P(2)(d), viz., interest or dividend derived by the assessee from its investments with any other co-operative society. The source of interest income is from bank and treasury, interest income received from treasury be included in the computation of total income of the assessee. In other words, interest earned from treasury is inadmissible for deduction and interest income from co-operative societies registered under the Kerala Co-operative Societies Act are eligible for deduction. The contra consideration of the Commissioner of Income-tax (Appeals) and the Tribunal is incorrect and liable to be modified as stated above. Hence, it is held that the interest i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , without the right to vote; participate in surplus, etc.) as well inasmuch as the Kerala Act provided for such membership. Income attributable to the credit to non-members would, accordingly, stand excluded while computing the amount deductible u/s.80P(2)(a)(i). This, to our mind, represents the said decision in substance, i.e., its ratio. The Revenue s contention of the assessee extending bulk of it s loans for nonagricultural purposes, and were in effect acting as banks, albeit without license from RBI, did not find traction with it inasmuch as their activity did not answer the definition of banking u/s.5(b) of BRA, the prime condition of which is the acceptance of deposits from the public for the purpose of lending. That being the case, the Hon ble High Court in Peroorkada SCB Ltd. (supra) extending the benefit of sec.80P(1) to deposits with co-operative banks, on the basis that they are also cooperative societies, though in the business of banking, so that income therefrom would fall to be covered u/s. 80P(2)(d), may be, with respect, inconsistent with the decision by the Hon ble Apex Court in Mavilayi SCB Ltd.(supra),which concerns itself in the main with the scope of the exc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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