Case Law Details
Case Name : Deputy Commissioner of Income-tax V/s. Jayalakshmi Mahila Vividodeshagala Souharda Sahakari Ltd. (ITAT Panaji)
Appeal Number : IT Appeal No. 1 to 3 (PNJ) of 2012
Date of Judgement/Order : 30/03/2012
Related Assessment Year : 2007-08 to 2009-10
Courts :
All ITAT ITAT Panaji
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IN THE ITAT PANAJI BENCH
Deputy Commissioner of Income-tax, Central Circle, Panaji, Goa
V/s.
Jayalakshmi Mahila Vividodeshagala Souharda Sahakari Ltd.
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Dear Sir
A person avails Housing loan from Co-operative Society. Is Dedn under IT Act available for Principal and Interest on Housing Loan.
I would be grateful for your comments
regards
Shankar G
Observations of the Hon.court is correct. The primary object of the society is not Banking business. The society was engaged in banking business upto the year 2006-07 and was eligible for deduction under sec.80(P)(2)(a)(1). This privilege will not be available from 2007-08 onwards after the insertion of sec.80(P)(4)if they were engaged in the Banking business.But what we learn from the judgment is that the society is no more accepting deposits from public after 2006-07.
But what change does it make even if the society accepts deposits from public? It will not become a Primary co-operative Bank unless the primary object or principal business is transaction of banking business. The court has rightly find out that the principal object or principal business of the society is not banking. We can say that, in a way, it is accepting deposit not for the purpose of lending or investment only but much more.
Para 9 of the judgement reads as under :
“(CCV) “primary co-operative bank” means a co-operative society, other than a primary agricultural credit society,-
(1) the primary object or principal business of which is transaction of banking business:
(2) the paid-up share capital and reserves of which are not less than one lakh of rupees: and
(3) the bye-laws of which do not permit admission of any other co-operative society as a member:
Provided that this sub-clause shall not apply to the admission of a co-operative bank as a member by reason of such co-operative bank subscribing to the share capital of such co-operative society out of funds provided by the State Government for the purpose:”
therefore,When its paid up capital and reserves attain the level of Rs.1 lakh, a primary credit society “automatically” becomes a primary cooperative bank.
ABSTRACT OF PARA 2 OF THE JUDGEMENT :
The brief facts are that the assessee is involved in the business of providing credit facilities to its member by granting loans for various purposes like business, housing, vehicles, personal purposes etc to its members. It also collect fixed deposits, short term deposits, recurring deposits, and pigmy deposit up to A.Y. 2006-07.
THERE ARE SEVERAL HIGH COURT JUDGEMENT HOLDING THAT ASSESSES WITH ABOVE OBJECT AND ACTIVITIES IS DOING BANKING BUSINESS.
Para 10 of the order regarding nature of banking business is not analysed properly.
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