Case Law Details
Case Name : The Chirakkal Service Co-Operative Bank Ltd Vs CIT (Kerala High Court)
Appeal Number : IT Appeal No. 212/2013
Date of Judgement/Order : 04/02/2016
Related Assessment Year :
Brief of the case:
The Hon’ble Kerala High court in the above cited case held that deduction u/s 80P is allowable to a primary agricultural credit society. In the instant case , assessee being a registered society classified in bye-laws as primary agricultural credit society is entitled to claim exemption u/s 80P.
Facts of the case:
- The AO disputed the exemption u/s 80P claimed by primary agricultural credit societies registered and classified as such under the provisions of the Kerala Co-operative Societies Act, 1969. The stand of the AO was upheld even by ITAT, Cochin. Tribunal agreed with the stand taken by the AO that the assessee is a co-operative bank and not merely a primary agricultural credit societies and hence not entitled to exemption u/s 80P.
- Aggrieved assessee is in appeal before High Court.
Contention of the Assessee:
- It was submitted that assessee is a primary agricultural credit societies and are, therefore, eligible to exemption in terms of sub-section 4 of section 80P of the IT Act. The characteristics of the assessee as primary agricultural credit societies including the fact that it is registered under the KCS Act and that their fund management is in terms of the regulatory directions of the Registrar of Co-operative Societies and other aspects are referred to, to show that all the appellants are eligible to the exemption provided for through section 80P (4) of the IT Act.
Contention of the Revenue:
- It was submitted that assessee is a co-operative bank and not merely a primary agricultural credit society and hence not entitled to exemption u/s 80P.
Held by High court:
- The court observed that Sub-section 4 of section 80P provides that the provisions of section 80P shall not apply in relation to any co-operative bank other than a primary agricultural credit society. ‘Co-operative bank’ is a term defined in section 5(cci) of the BR Act to mean, inter alia, a primary co-operative bank.
- For the purpose of Sec 80P, Co-operative banks and primary agricultural credit society shall have the meaning as assigned to them in Banking Regulations Act, 1949. A primary co-operative bank is a co-operative society other than a primary agricultural credit society, going by clause (ccv) of section 5 of the BR Act. Therefore, a primary agricultural credit society is not to be treated as a primary co-operative bank and therefore, not to be considered as a cooperative Bank.
- Assessee is a primary agricultural credit society as it is registered under the Kerala Co-operative Societies Act, 1969, and its bye-laws clearly show that they have been classified as primary agricultural credit societies by the competent authority under the provisions of that Act.
- For the aforestated reasons the assessee is entitled to exemption u/s 80P.