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TMI Blog2024 (1) TMI 766X X X X Extracts X X X X X X X X Extracts X X X X ..... y public institutions, the restriction on area of operation being also not applicable to those formed prior to the commencement of the Amendment Act of 1999 (s. 2(oaa)). Assessee is, thus, for all intents and purposes, a co-operative bank, i.e., a co-operative society in the business of banking, even as explained in several decisions, including in Mohammed Usman v. Registrar of Co-operative Societies [ 2002 (11) TMI 686 - HIGH COURT OF KERALA] We are conscious of it being not licenced with RBI, as required under BRA, as aspect considered in Mohammed Usman (supra). Further, it may, by virtue of its bye-laws, consistent with the Kerala Act, been titled to be so licenced, as was found by the Tribunal in Sivapuram SCB Ltd. [ 2024 (1) TMI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a cooperative society, at par. Without prejudice to the foregoing, where and to the extent any interest or dividend income does not fall to be regarded as of a banking business, the same, to the extent it arises from investments with co-operative banks, would stand to be deducted u/s. 80P(2)(d) of the Act, as clarified in Perroorkada SCB Ltd. [ 2021 (12) TMI 1084 - KERALA HIGH COURT] which is again premised on the same understanding, i.e., of co-operative banks being co-operative societies in the business of banking. Surely, cooperative banks, in contradistinction to cooperative societies, are public institutions, meant for public at large, and, thus, cannot be regarded as cooperative societies meant for it s members, which is expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered u/s. 80P(2)(c) of the Act. Assessee, though undertaking banking business, is not a co-operative bank, i.e., as defined u/s. 5(cci) of the BRA, which stands excluded for the benefit of s. 80P, u/s. 80P(4) of the Act. Accordingly, income in respect of which deduction u/s. 80P(2)(a)(i) stands claimed and disallowed, which does not fall to be considered as part of the income of the banking business, including provision of credit to it s members, as afore-discussed; or on investment with co-operative banks, to the extent it exceeds the limit u/s. 80P(2)(c) of the Act, would only be liable to be disallowed. We direct accordingly. - SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI MANOMOHAN DAS, JUDICIAL MEMBER For the Assessee : Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1] 251 ITR 522 (SC);CIT v. Ramanathapuram Distt. Co-op. Central Bank Ltd. [2002] 255 ITR 423 (SC); and CIT v. Nawanshahar Central Co-operative Bank Ltd. [2007] 289 ITR 6 (SC),wherein such investments are held to be as a part of the business of banking. The Thalayal commission is only a foreman commission on the Chitties being run by the assessee-society for the benefit of it s members, and which has been held in CIT v. Kottayam Co-operative Bank Ltd. [1974] 96 ITR 181 (Ker) as only a manner of providing credit to it s members and, thus, entitled for deduction u/s. 80P(2)(a)(i). 3. Before us, the assessee made an alternate plea of the impugned disallowance, to the extent not deductible u/s. 80P(2)(a)(i) of the Act, would stand to be deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d purposes, a co-operative bank, i.e., a co-operative society in the business of banking, even as explained in several decisions, including by the Hon'ble jurisdictional High Court in Mohammed Usman v. Registrar of Co-operative Societies, AIR 2003 (Ker) 299/[2003] 116 Comp. Cases 505 (Ker). We are conscious of it being not licenced with RBI, as required under BRA, as aspect considered in Mohammed Usman (supra). Further, it may, by virtue of its bye-laws, consistent with the Kerala Act, been titled to be so licenced, as was found by the Tribunal in Sivapuram SCB Ltd. v. ITO (in ITA Nos. 61 62/Coch/2023, dated 13.12.2023), wherein the matter stands discussed in detail, further explaining that being unlicenced would imply it operating ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not fall to be regarded as of a banking business, the same, to the extent it arises from investments with co-operative banks, would stand to be deducted u/s. 80P(2)(d) of the Act, as clarified in Perroorkada SCB Ltd. (supra), which is again premised on the same understanding, i.e., of co-operative banks being co-operative societies in the business of banking. Surely, cooperative banks, in contradistinction to cooperative societies, are public institutions, meant for public at large, and, thus, cannot be regarded as cooperative societies meant for it s members, which is explained as the rationale of the provision, as indeed the exclusion of cooperative banks w.e.f. 01/4/2007 from the purview of s. 80P, by the Apex Court in The Citizen Co- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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