Kerala State Co-Operative Agricultural And Rural Development Bank Ltd. Vs Assessing Officer (Supreme Court of India)
The Supreme Court considered a batch of appeals arising from the judgment of the Kerala High Court dated 26 November 2015, the order of the Commissioner of Income Tax (Appeals) dated 8 August 2016, and the order of the Income Tax Appellate Tribunal dated 7 February 2019. The common issue was whether the appellant, Kerala State Co-Operative Agricultural and Rural Development Bank Ltd., was entitled to deduction of the whole of its profits and gains under Section 80P of the Income Tax Act, 1961, in respect of the business of banking or providing credit facilities to its members, all of whom were co-operative societies.
The appellant stated that it was a State-level co-operative society governed by the Kerala Co-operative Societies Act, 1969. It had originally been registered under the Travancore-Cochin Co-operative Societies Act, 1951 as a Co-operative Central Land Mortgage Bank and, following enactment of the Kerala State Co-Operative Agricultural Development Banks Act, 1984, became known as the Kerala State Co-operative Agricultural and Rural Development Bank Limited. The appellant contended that it provided credit facilities only to its member co-operative societies and was not a co-operative bank within the meaning of Section 80P(4) of the Income Tax Act read with Part V of the Banking Regulation Act, 1949. It also submitted that it did not hold, and was not required to hold, a banking licence from the Reserve Bank of India under Section 22 of the Banking Regulation Act. Reliance was placed upon the judgment of the Supreme Court in Mavilayi Service Co-operative Bank Limited vs. Commissioner of Income Tax, Calicut.
