ITA No 523/C/2014 IN INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH KOCHI BEFORE S/SHRI B P JAIN, AM & GEORGE GEORGE K, JM ITA No 523 Coch/2014 (Asst Year 2010-11) Payyannury Ser Coop Bank Vs Income Tax Officer No.F 1401 Payannur Ward 4 Kannur 670 307 Kannur ( Appellant) (Respondent) PAN No. AAABPO133D Assessee By Sh George Thomas Revenue By Shri Dhanaraj, Sr DR Date of Hearing 26th Sept 2016 Date of pronouncement 26th Sept 2016 ORDER PER GEORGE GEORGE K,JM: This appeal is restored to Tribunal by Hon ble Kerala High Court vide judgment dated 16.2.2016 in ITA no.231 of 2015. 2 Brief facts of case are as follows: assessee, primary agricultural credit society registered under Kerala Cooperative Societies Act, 1969. It is engaged in business of providing agricultural credit to its members. claim of deduction u/s 80P (2) was denied by AO for reason that assessee is primarily engaged in business 1 ITA No 523/C/2014 of banking and in view of section 80P(4) of Act, assessee is not entitled to deduction u/s 80P(2) of Act 3 Aggrieved by assessment, assessee preferred appeal to first appellate authority. CIT(A) confirmed assessment order. 4 Aggrieved by above order of CIT(A), assessee preferred appeal to Tribunal. Tribunal disposed off appeal of assessee holding that assessee was not entitled to benefit of deduction u/s 80P of Act. 5 Aggrieved by order of Tribunal, assessee preferred further appeal u/s 260A of Act. Hon ble Kerala High Court, vide judgment dated 16..2.2016 in ITA No. 231 of 2015, restored matter to Tribunal. It is in this context, case was heard on 26th Sept 2016. 6. We have heard rival submissions and perused material on record. Hon ble High Court had held that Tribunal was not justified in denying benefit of exemption u/s 80P of Act. Hon ble High Court was considering following substantial question of law: a) Whether on facts and in circumstances of case under consideration, Tribunal is correct in law in deciding against assessee, issue regarding entitlement for exemption under section 80P, ignoring fact that assessee is primary agricultural credit society? 2 ITA No 523/C/2014 6.1 In considering above substantial question of law, Hon ble High Court rendered following findings: 15. Appellants in these different appeals are indisputably societies registered under Kerala co-operative societies Act, 1969, for sort, KCS Act and bye-laws of each of them, as made available to this court as part of paper books, clearly show that they have been classified as primary agricultural credit societies by competent authority under provisions of that Act. parliament, having defined term 'co-operative society' for purposes of BR Act with reference to, among other things, registration of society under any State law relating to co-operative societies for time being; it cannot but be taken that purpose of societies so registered under State Law and its objects have to be understood as those which have been approved by competent authority under such State law. This, we visualise as due reciprocative legislative exercise by Parliament recognising predominance of decisions rendered under relevant State Law. In this view of matter, all appellants having been classified as primary agricultural credit societies by competent authority under KCS Act, it has necessarily to be held that principal object of such societies is to undertake agricultural credit activities and to provide loans and advances for agricultural purposes, rate 'of interest on such loans and advances to be at rate fixed by Registrar of co-operative societies under KCS Act and having its area of operation confined to village, panchayat or municipality. This is consequence of definition clause in section 2(oaa) of KCS Act. authorities under IT Act cannot probe into any issue or such matter relating to such applicants. 16. position of 1aw being as above with reference to statutory provisions, appellants had shown to authorities and Tribunal that they are primary agricultural credit societies in terms of clause (cciv) of section 5 of BR Act, having regard to primary object or principal business of each of appellants. It is also clear from materials on record that bye-laws of each of appellants do . not permit admission of any other co-operative society as member, except may be, in accordance with proviso to sub-clause 2 of section 5(cciv) of BR Act. different orders of Tribunal which are impeached in these appeals do not contain any finding of fact to effect that bye- 1aws of any of 3 ITA No 523/C/2014 appellant or its classification by competent authority under KCS Act lS anything different from what we have stated herein above. For this reason, it cannot but be held that appellants are entitled to exemption from provisions of section 80P of IT Act by virtue of sub- section 4 of that sect; on. In this view of matter, appeals succeed. 17. In light of aforesaid, we answer substantia1 question 'A' in favour of appellants and hold that Tribunal erred in law in deciding issue regarding entitlement of exemption under section 80P against appellants. We hold that primary agricultural credit societies, registered as such under KCS Act; and classified so, under that Act, including appellants are entitled to such exemption. 6.2 In instant case, assessee is primary agricultural credit society registered under Kerala Cooperative Societies Act, 1969. certificate has been issued by Registrar of Cooperative Societies to above said effect and same is on record. Hon ble High Court, in assessee s own case and other batch of cases, had held that primary agricultural credit society, registered under Kerala Cooperative Societies Act, 1969, is entitled to benefit of deduction u/s 80P(2). Since there is certificate issued by Registrar of Cooperative Societies, stating that assessee is primary agricultural credit society, we hold that assessee is entitled to benefit of deduction u/s 80P(2) of Act. 7 No other issues were argued by ld counsel for assessee during course of hearing of this appeal. 4 ITA No 523/C/2014 8 In result, appeal filed by assessee is allowed. Order pronounced in open Court on this 26th day of Sept 2016. Sd/- Sd/- (B P JAIN) (GEORGE GEORGE K ) Accountant Member Judicial Member Cochin: Dated 26th Sept 2016 Raj* Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT, 5. DR 6. Guard File By order Assistant Registrar ITAT, COCHIN 5 Payyannury Ser Co-op Bank v. Income-tax Officer, Ward-4, Kannur