1. The assessee has come up in appeal invoking Section 260A of the Income Tax Act, 1961 (for short ‘the Act'), calling in question the assessment order dated 31.10.2012, Annexure 'B', the order dated 07.10.2013 of the First Appellate Authority, Annexure 'C' and order dated 17.04.2014 of the Income Tax Appellate Tribunal, Panji Branch, Panaji (for short 'Tribunal') Annexure 'A', declining to extend the benefit of deduction under Section 80P(2)(a)(i) of the Act.

2. The crux of the matter lies in the registration of the appellant Co-operative Credit Society under the Karnataka Co-operative Societies Act, 1959, (for short 'KCS Act') and the core question for decision making is:

"Whether the appellant—a Multi-purpose Co-operative Credit Society, falling within the definition of the term 'Primary Agricultural Credit Co-operative Society" under Section 2(h-2) of the 'KCS Act', is entitled to the benefit of deduction in respect of its income under Section 80P (2)(a)(i) of the Act regard being had to Section 80P(4) of the Act?"

3. The appellant a Multi-purpose Co-operative Credit Society, registered under the ‘KCS Act' with Registration Certificate dated 23.10.2001, filed its return for the assessment year 2010-11, declaring gross total income of Rs.11,24,117/- and claimed the entire amount as a deduction under Section 80P(2)(a)(i) and the taxable income as NIL.

4. The Assessing Authority (ITO, Ward-1(2), Belgaum), by assessment order dated 31.10.2012, Annexure 'B', declined the deduction and assessed the income to Rs.12,11,580/-, on the premise that the appellant is a Primary Co-operative Bank disentitled to the benefit of deduction under Section 80P(2)(a)(i), in the light of Section 80P(4) of the 'Act'. That order when carried in first appeal before the Commissioner of Income Tax (Appeals), Belgaum, was confirmed by dismissal of the appeal by order dated 07.10.2013, Annexure 'C'. The appellant preferred appeal before the Tribunal, whence by order dated 17.04.2014, Annexure 'A', the appeal was dismissed.

5. Sub-section (4) of Section 80P of the Act reads thus:

[80P. Deduction in respect of income of Co-operative Societies.—

(1) XXX

(2) x x x

(3) x x x

(lns. By the Finance Act, 2006 (21 of 2006), sec.19 (w.e.f. 1-4-2007). Earlier sub-section (4) was omitted by the Finance Act, 1969 (14 of 1969), sec. 10(b) (w.e.f, 1-4-1970).) [(4) The provisions of this section shall not 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.

Explanation.—For the purposes of this sub-section,—

(a) "co-operative bank" and "primary agricultural credit society" shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949);

(b) "primary co-operative agricultural and rural development bank" means a society having its area of operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities.]

6. This statuary provision disentitles any 'co-operative bank' other than a 'primary agricultural credit Society' or 'primary co-operative agricultural and rural development bank' to the benefits of deduction under Section BOP of the Act. Therefore, what is required to be noticed is whether the appellant Multi-purpose Co-operative Credit Society falls within the definition of either 'Primary Agricultural Credit Society' or 'Primary Co-operative Agricultural and Rural Development Bank'. The explanation to the said sub-section states that a Co-operative Bank and the primary agricultural credit Society shall have the meanings respectively assigned to them in Part V of the Banking Regulations Act, 1949 (10 of 1949). In the facts of this case, suffice it to notice explanation (a).

7. Part V of the Banking Regulation Act, 1949, provides for application of the Act to Cooperative Banks. Section 56, reads thus:

1 (1. Part v (containing