9911796707
TMI Blog2024 (12) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... see in the earlier assessment year is concerned, we conclude that the same would not amount to adopting a correct approach in light of the aforesaid case law. The assessee s instant former substantive ground succeeds therefore. Disallowance of payment of gratuity to LIC etc. under the regular business heads which are found as covered under the CBDT s landmark Circular No. 37/2016 dated 02.11.2016 in assessee s favour and against the department that any such disallowance made under the regular business heads increases the business profits eligible for deduction(s) prescribed under Chapter-VIA of the Act. We reiterate that the assessee s section 80P deduction claimed stands accepted in the preceding paragraphs. We thus allow all it s instant remaining substantive ground against the department in very terms. Necessary computation shall follow. - Sh. Satbeer Singh Godara, Judicial Member And Sh. M. Balaganesh, Accountant Member For the Assessee : Sh. Sanjay Malik, Adv. For the Revenue : Sh. Akhilesh Kumar Yadav, Sr. DR ORDER PER SATBEER SINGH GODARA, JUDICIAL MEMBER: This assessee s appeal for Assessment Year 2015-16, arises against the order of CIT(A), Muzaffarnagar dated 16.01.2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttributable to any one or more of such activities shall be deducted. The sub-section makes a clear distinction between business of banking on the one hand and providing credit facilities to its members by co-operative society on the other. Thus, the definition of banking under Section 5(b) of the BR Act must be borne in mind as opposed to providing credit facilities to its members. 15.2. Section 80P was inserted to the Act with effect from 01.04.1968, however, sub-section (4) was reinserted with effect from 01.04.2007, in the present form. Earlier sub-section (4) was omitted with effect from 01.04.1970. Sub-section (4) of Section 80P in the present form is in the nature of an exception which states that the provisions of Section 80P shall 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. The expressions co-operative bank and primary agricultural credit society as well as primary co-operative agricultural and rural development bank are defined in the Explanation as co-operative bank and primary agricultural credit society having the meanings respectively assigned to them in P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a co-operative bank and holds a licence issued in that behalf by the Reserve Bank, subject to such conditions, if any, as the Reserve Bank may deem fit to impose. Secondly, a cooperative society must obtain a licence under Section 22 of the BR Act, 1949, only if it functions as a cooperative bank and not otherwise. Thus, a co-operative society including a co-operative credit society which is not a co-operative bank does not require a licence to function as such. 15.5. Further, Section 2(d) of NABARD Act, 1981 defines central co- operative bank while Section 2(u) defines a state co-operative bank to mean the principal cooperative society in a State, the primary object of which is financing of other co-operative societies in the State which means, it is in the nature of an apex co-operative bank having regard to the definition under Section 56 of the BR Act, 1949, in relation to co- operative bank. The proviso states that in addition to such principal society in a State, or where there is no such principal society in a State, the State Government may declare any one or more co-operative societies carrying on business of banking in that State to be also or to be a state cooperative b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operative society in the context of a co-operative bank is in relation to or as a banking company. Thus, cooperative bank shall be construed as references to a banking company and when the definition of banking company in clause (c) of Section 5 of the BR Act, 1949 is seen, it means any company which transacts the business of banking in India and as already noted banking business is defined in clause (b) of Section 5 to mean the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or otherwise. Thus, it is only when a co-operative society is conducting banking business in terms of the definition referred to above that it becomes a co-operative bank and in such a case, Section 22 of the BR Act, 1949 would apply wherein it would require a licence to run a co-operative bank. In other words, if a co-operative society is not conducting the business of banking as defined in clause (b) of Section 5 of the BR Act, 1949, it would not be a co-operative bank and not so within the meanings of a state co-operative bank, a central co-operative bank or a primary co-operative bank in term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaning of NABARD Act, 1981 then it would be excluded from the benefit under Section 80P of the Act. Conversely, if a co-operative society is not a co-operative bank within the meaning of Section 56 of the BR Act, 1949, it would be entitled to the benefit of deduction under Section 80P of the Act. 15.11. Looked at from another angle, a co-operative society which is not a state co-operative bank within the meaning of NABARD Act, 1981 would not be a cooperative bank within the meaning of Section 56 of the BR Act, 1949. In the instant case, as already noted in A.P. Varghese case, the Kerala State Co-operative Bank being declared as a state co-operative bank by the Kerala State Government in terms of NABARD Act, 1981 and the appellant society not being so declared, would imply that the appellant society is not a state cooperative bank. 15.12. In fact, in Citizen Co-operative Society Ltd., this Court held that the appellant therein was having both members as well as nominal members who were depositing and availing loan facilities from the appellant therein and therefore, appellant therein was not entitled to the benefit of Section 80P of the Act as it was functioning as a co- operative b ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
