Panaji, Goa.… v. M/S. The Quepem Urban Co-Operative

IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEALS No.2,9, 23, AND 26 of 2018 TAX APPEAL NO.2 OF 2018 The Pr. Commissioner of Income Tax,Aayakar Bhavan, Patto Plaza, Panaji, Goa.…. Appellant Versus M/s. The Quepem Urban Co-operative Credit Society Ltd., Ground Floor, Cindios apartment, Quepem, Salcete, Goa.… Respondent Ms. Susan Linhares, Standing Counsel for the Appellant. Mr. Chythanya K.K. with Mr. Tata Krishna & Mr. S. Redkar, Advocatesfor the Respondent. WITH TAX APPEALS No.9, 23 & 26 of 2018 The Pr. Commissioner of Income Tax,Aayakar Bhavan, Patto Plaza, Panaji, Goa.…. Appellant Versus M/s. VPK Urban Cooperative Credit Society Ltd. Mahalasa Apartments, Near Post Office, Mardol, Ponda-Goa.… Respondent Ms. Amira Razaq, Standing Counsel for the Appellant. Mr. D.J. Pangam with Mr. P. Sawant, Advocates for the Respondent. Coram: - M.S. SONAK & DAMA SESHADRI NAIDU, JJ. Reserved on: 8 JANUARY 2021 Pronounced on: 7 MAY 2021 JUDGMENT: (Per Dama Seshadri Naidu, J.) Introduction: A cooperative credit society, registered under the Goa CooperativeSocieties Act, 2001, claims deductions under section 80P(2)(a) (i) of theIncome-Tax Act, 1961 ("IT Act"). It is in the face of section 80P(4) of thesame Act, effective from 01.04.2007. The question is, with its lending andborrowing involving non-members, whether the society still retains itscharacter as cooperative society or whether it should be treated as acooperative bank, disentitled to the benefits under section 80P(2)(a)(i) ofthe IT Act. Facts: 2.There are four appeals. In all those appeals, the facts are similarand the issues, too, are identical. The learned counsel on both sides haveadvanced common arguments. So we dispose of all the appeals throughthis common judgment. For the narrative convenience, we will refer to thefacts in Tax Appeal No.2 of 2018. 3. The Respondent (“the Assessee”) is a Co-operative credit societysaid to be engaged in the activity of providing credit facilities to itsmembers and carrying on the business of Banking. On 31 March 2013, theAssessee filed its e-return of income for the Assessment Year 2012-13declaring total income as Nil after claiming deduction under section 80Pof the Act. On 8 August 2013, the Assessee’s return was processed undersection 143(1) of the IT Act, and subsequently the case was selected forscrutiny under CASS and notice dated 08.08.2013 was issued undersection 143(2). 4. Through Assessment Order, dated 10.03.2015, passed undersection 143(3) of the Act, the Assessment Officer (AO) held that theAssessee is not a co-operative credit society but a Primary Co-operativeBank. As a result, it was declared ineligible for deductions under section 80P(2)(a)(i) and 80P(2)(c)(ii) of the Act. Besides, the AO has also held thatbecause of section 40a(ia) of the IT Act, the entire expenditure of ₹94,38,864/- is liable to be disallowed for the Assessee’s failure to complywith section 194A of the IT Act. The Audit Fee of 2,34,222/- was also₹disallowed for the Assessee’s failing to comply with section 194J. The AOhas assessed the Assessee’s total income at 3,69,82,101/-.₹ 5. Aggrieved, the Assessee appealed to the Commissioner of IncomeTax (Appeals), Panaji-1 (CIT). Through Order, dated 29.11.2016, theCIT(A) held that the issue of disallowance made under section 80P(2)(a)(i)of the IT Act stands precedentially established in the Assessee’s favour.That is, the previous year, in Assessee’s own case, this Court has ruled inAssessee’s favour. The addition of 94,38,864/- under section 40(a)(ia) of₹the IT Act was deleted because the assessee’s case is covered by clause (v)to section 194A(3) of the IT Act. But CIT(A) has upheld the disallowanceof audit fees of 2,34,222/-.₹ 5. Aggrieved, the Assessee appealed to the Commissioner of IncomeTax (Appeals), Panaji-1 (CIT). Through Order, dated 29.11.2016, theCIT(A) held that the issue of disallowance made under section 80P(2)(a)(i)of the IT Act stands precedentially established in the Assessee’s favour.That is, the previous year, in Assessee’s own case, this Court has ruled inAssessee’s favour. The addition of 94,38,864/- under section 40(a)(ia) of₹the IT Act was deleted because the assessee’s case is covered by clause (v)to section 194A(3) of the IT Act. But CIT(A) has upheld the disallowanceof audit fees of 2,34,222/-.₹ 6. Aggrieved by the CIT (A)’s Order, dated 29.11.2016, the Revenueappealed under section 253 of the IT Act to the Income Tax AppellateTribunal (Tribunal). The Tribunal by Order, dated 10.07.2017, dismissedthe Revenue’s appeal. Further aggrieved, in November 2017, the Revenuehas preferred this appeal under section 260A of the IT Act, 1961. 7. On 26 February 2018, this Court admitted the appeal afterframing these substantial questions of law: Substantial Questions of Law: I. Is the Income Tax Appellate Tribunal right in not appreciating thefact that the assessee is a co-operative society which fulfills all thethree conditions of being held a Primary Co-operative Bank, as givenin Section 5(ccv) of Banking Regulation Act, 1949? II. Is the Tribunal right in not appreciating the definition of a co-operative bank, which, as per explanation below Section 80P(4) “The Co-operative bank”, shall have the meaning assigned to it in part-V ofthe Banking Regulation Act, 1949? III. Is the Tribunal right in not appreciating the facts that the assesseeSociety being a credit cooperative society engaged in banking businessis a Primary Co-operative Bank within the definition of Section 5(ccv)of the Banking Regulation Act, 1949 and, as such, is not eligible fordeduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961?IV. Has the Tribunal exercised its power as contemplated andconferred under the provisions of the Income Tax Act, 1961? Submissions: 8. Given the clear precedential position, we need not set out therival contentions in detail; it will suffice it we extract the core ofcontentions, especially, by the Revenue. 9. The learned Advocate General has raised these issues: (1) theAssessee is a co-operative society in the name, but it carries on its full-blown banking operations with nonmembers; and (2) this position havingbeen admitted, it ought to be treated as a co-operative bank, rather than asa co-operative society. To support his contentions, the learned AdvocateGeneral has taken us through the statutory position: Section 80P(2)(a)(i)& (ii) and section 80P(4) of the IT Act; sections 3, 5(b), 22(1)(b), andsection 56 of the Banking Regulation Act, 1949, the provisions of the GoaState Cooperative Societies Act, 2001, as well as the Assessee’s bye-laws. 10. On the other hand, all the learned counsel for the Assesseeshave defended the impugned judgments. The learned counsel havesubmitted that the main object of the societies is to accept the deposits andprovide financial accommodation to their membes So, they have assertedthat the Assessees’ core activity continues to the that of a cooperativecredit society. They have pointed out that even the AO has accepted thatfor the earlier assessment years, the jurisdictional High Court (this Court) has ruled that the Assessee is entitled to the deductions under section 80Pof the IT Act. The AO has also acknowledged that this Assessment Year,too, they Assessee has not changed character, much less its activities. Asthere are no changed circumstances, the ruling on the jurisdictional HighCourt for the previous years must be applied with all vigour and vitality. Discussion: has ruled that the Assessee is entitled to the deductions under section 80Pof the IT Act. The AO has also acknowledged that this Assessment Year,too, they Assessee has not changed character, much less its activities. Asthere are no changed circumstances, the ruling on the jurisdictional HighCourt for the previous years must be applied with all vigour and vitality. Discussion: 11. The assessment concerns AY 2012-13. Under section 143 (3) ofthe IT Act, the AO held that the Assessee is not a co-operative creditsociety, but a primary co-operative bank. As a consequence, he ruled thatthe Assessee was ineligible for deductions under section 80P(2)(a)(i) and80P(2)(a)(ii) of the IT Act. Invoking section 40 a (ia) of the IT Act, the AOalso held that the entire expenditure of 94,38,864/- is liable to be₹disallowed for the Assessee's failure to comply with section 194A of the ITAct. Besides, The AO is disallowed the audit fee of over ₹2 lakh for theassessee's failure to comply with section 194J of the IT Act. Thus, the AOassessed to tax a total income of 3,69, 82,101/-. ₹ 12. To put the issue in perspective, we must appreciate the previouslitigation involving the same Assessee. Indisputably, the appellant is Co-operative society registered under the Goa Co-operative Societies Act,2001 ('Cooperative Act'). Earlier, there was a common order, dated 26November 2014, passed by the Tribunal relating to assessment years2008-09, 2009-10 and 2011-12. The Quepem Urban Co-operative Credit Society Ltd. (2015): 13. First, the AO disallowed the Assessee’s claim for deductionunder Section 80P(2)(a)(i) of the IT Act. This was on the ground that theAssessee was a primary Co-operative Bank and, therefore, was hit bysection 80P(4) of the IT Act, which excludes the benefit of section 80P ofthe IT Act to cooperative banks. 14. On appeal, the Commissioner of Income Tax (Appeals)(“CIT(A)”) accepted the Assessee’s contention and held that the Assessee is not a Cooperative Bank but a Co-operative Credit Society. It is, thus,not hit by the exclusion provided under section 80P(4) of the Act. Then, itwas the Revenue’s turn to appeal. The Tribunal allowed the Revenue’sappeal. It has held that the Assessee is a Cooperative Bank and, therefore,not entitled to the benefit of Section 80P(2)(a)(i) of the Act. It has broughtin the statutory exclusion under section 80P(4) of the IT Act. It has, thus,restored the AO’s order. 15. Eventually, the Assessee came to this Court. This Court framedthis substantial question of law: Was the Tribunal right in holding thatthe Assessee is a Co-operative Bank and, hence, is not entitled todeduction under Section 80P(2)(a)(i) by virtue of Section 80P(4) of theAct? 16. This Court, through its judgment, dated 17 April 2015, in TXANos.22, 23, and 24 of 2015, has examined the statutory scheme undersection 80P of the IT Act. In paragraph 9 of the judgment, this Court hasheld that indisputably, the Assessee is a cooperative society as the same isregistered under the Co-operative Societies Act. The Assessee is claimingdeduction of income earned on providing credit facilities to its members asprovided under Section 80P(2)(a)(i) of the Act. It is Assessee’s case that itis not carrying on the business of the banking. In other words, not being aco-operative bank, it faces no hurdle through section 80P(4) of the Act toclaime the benefit of deduction under Section 80P(2)(a)(i) of the Act. 17. This Court has further observed that in terms of Section 80P ofthe Act, the meaning of the words Cooperative Bank is as assigned inChapter V of the Banking Regulation Act, 1949. A cooperative bank isdefined in Section 5(cci) of Banking Regulation Act to mean a StateCooperative Bank, a Central Cooperative Bank, and a primary cooperativebank. Admittedly, the Assessee is not a State Cooperative Bank or aCentral Cooperative Bank. Thus what has to be examined, according this Court, is whether the Assessee is a primary Cooperative Bank as definedin Para V of the Banking Regulation Act. 17. This Court has further observed that in terms of Section 80P ofthe Act, the meaning of the words Cooperative Bank is as assigned inChapter V of the Banking Regulation Act, 1949. A cooperative bank isdefined in Section 5(cci) of Banking Regulation Act to mean a StateCooperative Bank, a Central Cooperative Bank, and a primary cooperativebank. Admittedly, the Assessee is not a State Cooperative Bank or aCentral Cooperative Bank. Thus what has to be examined, according this Court, is whether the Assessee is a primary Cooperative Bank as definedin Para V of the Banking Regulation Act. 18. As we may note, section 5(ccv) of the Banking Regulation Actdefines a primary cooperative bank to mean a cooperative society whichcumulatively satisfies the following three conditions: (1) Its principal business or primary object should be banking business of Banking; (2) Its paid up share capital and reserves should not be less that rupeesone lakh. (3) Its bye-laws do not permit admission of any other cooperativesociety as its member. 19. It is an accepted position that condition No.(2) is satisfied as theshare capital is in excess of one lakh rupees. But, as the Assessee hascontended, the conditions Nos. (1) and (3) have not been satisfied. 20. That apart, the fact remains that the Assessee does deal withnon-members in a few cases; it accepts deposits from them. This activity,taken with its Bye law 43, allowed the Revenue to conclude that theAssessee is carrying on banking business. Before the Tribunal also theAssessee did not dispute that in a few cases it had dealt with non-membesThat said, the Assessee contended that the Bye-law 43 only permits thesociety to accept deposits from its members. In other words, Bye-law 43does not permit deposits from persons other then members; the word “anyperson”, the Assessee asserted, is a gloss the Tribunal added in theimpugned order, though it is not found in Bye-law 43. 21. Then, this Court has held that indisputably the transactionswith non-members are insignificant or miniscule. So it has refused toconclude that the Assessee’s principal business is of accepting depositsfrom public and that it is in banking business. At any rate, the Assessee’sprincipal business is not banking. 22. In the end, this Court has noted that Section 80P(1) of the Actrestricts the benefits of deduction of Co-operative Society’s income to theextent it earns by providing credit facilities to its members On theconverse, to the extent of the income it earns by its dealings with thenonmembers, the benefit of Section 80P of the Act would not be available.So, the Court has concluded that the authorities under the IT Act wouldrestrict the benefit of deduction under Section 80P of the Act only to theextent that the same is earned by the Asseesee by carrying on its businessof providing credit facilities to its members, but not non-members. 23. Here, too, for the Appeasement Year 2012-13, the contentionsand counter-contentions are identical. But we need not labour further onthis point. Recently, the Apex Court, speaking through a three-JudgeBench, put paid to any controversy on whether a cooperative creditsociety can be regarded as a cooperative bank given its activities. Mavilayi Service Co-operative Bank Ltd: 24. In Mavilayi Service Co-operative Bank Ltd. v. Commissioner ofIncome Tax (SC), the question concerns the deductions a primaryagricultural credit society can claim under section 80P(2)(a) (i) of theIncome-Tax Act, 1961 (“IT Act”) after the introduction of section 80P(4)of that Act. 23. Here, too, for the Appeasement Year 2012-13, the contentionsand counter-contentions are identical. But we need not labour further onthis point. Recently, the Apex Court, speaking through a three-JudgeBench, put paid to any controversy on whether a cooperative creditsociety can be regarded as a cooperative bank given its activities. Mavilayi Service Co-operative Bank Ltd: 24. In Mavilayi Service Co-operative Bank Ltd. v. Commissioner ofIncome Tax (SC), the question concerns the deductions a primaryagricultural credit society can claim under section 80P(2)(a) (i) of theIncome-Tax Act, 1961 (“IT Act”) after the introduction of section 80P(4)of that Act. 25. To provide the background for Mavilayi (SC), we may examinehow the dispute reached the Supreme Court. To begin with, a DivisionBench of the Kerala High Court has answered the above issue in ChirakkalService Co-operative Bank td. v. CIT (2016) 384 ITR 490 (Ker.). It has heldthat once a Co-operative Society is classified by the Registrar of Co-operative Societies under the Kerala Act as being a primary agriculturalcredit society, the authorities under the IT Act cannot go behind thecertificate so granted. That is, the certified credit society can claim thebenefit under section 80P(2)(a) (i) of the IT Act. 26. But Chirakkal Service Co-operative Bank was said to be inignorance of Perinthalmanna Service Co-operative Bank Ltd. v. ITO, (2014)363 ITR 268 (Ker.), a co-equal Bench decision. This judgment, on thecontrary, permits an inquiry by the IT authorities into the factualsituation: whether a society is in fact conducting business as a co-operativebank but not as a primary agricultural credit society. 27. In fact, these divergent views compelled the Kerala High Courtto refer the matter to a Full Bench. Then, in Mavilayi Service Co-operativeBank Ltd. v. Commissioner of Income Tax, Calicut, 2019 (2) KHC 287,(“Mavilayi HC”) the Full Bench has endorsed Perinthalmanna Service Co-operative Bank’s view: that the IT Authority can go behind the certificategranted by the Registrar of Co-operative Societies. To hold thus, the FullBench has relied on the Supreme Court’s Citizen Cooperative Society Ltd. v.Asst. CIT, Hyderabad (2017) 9 SCC 364. The Full Bench decision taken infurther appeal, the Supreme Court, finally, in Mavilayi SC considered thecontroversy threadbare and reversed the Kerala High Court’s Full Benchdecision. It has, thus, endorsed Chirakkal Service Co-operative Bank’s view. 28. Here, before us, an identical question of law has arisen. It willsuffice if we examine the case holding of Mavilayi SC and see whether itapplies on all four. For here, too, the Revenue relies on Citizen CooperativeSociety, as did Mavilayi (HC). 29. To begin with, a three-Judge Bench of the Apex Court inMavilayi (SC) has noted that though the main object of the primaryagricultural society is to provide financial assistance in the form of loansto its members for agricultural and related purposes, yet some of theobjects go well beyond, and include banking operations ‘as per rulesprevailing from time to time’. Then, Mavilayi SC has examined the caseholding of Citizen Cooperative Society. In fact, Mavilayi SC underlines the 28. Here, before us, an identical question of law has arisen. It willsuffice if we examine the case holding of Mavilayi SC and see whether itapplies on all four. For here, too, the Revenue relies on Citizen CooperativeSociety, as did Mavilayi (HC). 29. To begin with, a three-Judge Bench of the Apex Court inMavilayi (SC) has noted that though the main object of the primaryagricultural society is to provide financial assistance in the form of loansto its members for agricultural and related purposes, yet some of theobjects go well beyond, and include banking operations ‘as per rulesprevailing from time to time’. Then, Mavilayi SC has examined the caseholding of Citizen Cooperative Society. In fact, Mavilayi SC underlines the fact that even Citizen Cooperative Society acknowledges that section 80-P ofthe IT Act is a benevolent provision; it was enacted by Parliament toencourage and promote growth of cooperative sector in the country.Citizen Cooperative Society, as noticed by Mavilayi SC, has further acceptedthat once the assessee is entitled to avail itself of deduction, the entireamount of profits and gains of business that are attributable to any one ormore activities mentioned in subsection (2) of section 80P must be givenby way of deduction. Further, Citizen Cooperative Society also accepts thatsection 80P(4) is in the nature of a proviso to the main provision containedin section 80P(1) and (2). This proviso specifically excludes only co-operative banks which are cooperative societies that must possess a licencefrom the RBI to do banking business. In this backdrop, on facts, CitizenCooperative Society concludes that the appellant assessee did not have RBIlicence; so it would “not fall within the mischief of section 80P(4)”. 30. Mavilayi SC points out that in Citizen Cooperative Society thecounsel for the assessee advanced no argument that “the assessing officerand other authorities under the IT Act could not go behind theregistration of the co-operative society” to discover whether it wasconducting business in accordance with its bye-laws. Without thatquestion in the Court’s contemplation, Citizen Cooperative Society,according to Mavilayi SC, stands robbed of its precedential on a point thathas never been raised and, thus, never discussed. For a decision binds notbecause of its conclusion but because of the ratio and the principle it laysdown. In other words, a decision is only an authority for what it actuallydecides. What matters in a decision is its ratio and not every observationfound in it or what logically follows from the various observations madein it. 31. Then, Mavilayi SC turns to the proper interpretation of Section80P of the IT Act. In interpreting that provision, it refers, among other things, to (a) the marginal note to Section 80P to ascertain the general“drift” of the provision; to the Finance Minister’s speech, dated28.02.2006, on the floor of Parliament; to a Circular dated 28.12.2006,explaining the provision as found in the Finance Act, 2006. Eventually,Mavilayi SC holds that to earn eligibility for deduction, the assessee mustbe a “co-operative society”; it is unnecessary to probe any further whetherthe co-operative society is classified as X or Y. Besides, the gross totalincome must include income that is referred to in sub-section (2) of section80P of IT Act. 32. Mavilayi (SC) has referred to sub-section (4) of section 80P,which, according to it, is in the nature of a proviso to that section. Thissub-section clarifies that no deduction shall be admissible for a cooperativebank. But, if it is a primary agricultural credit society or a primarycooperative agricultural and rural development bank, the deduction willstill be provided. Thus, only cooperative banks now specifically standexcluded from the ambit of Section 80-P of the Act. 32. Mavilayi (SC) has referred to sub-section (4) of section 80P,which, according to it, is in the nature of a proviso to that section. Thissub-section clarifies that no deduction shall be admissible for a cooperativebank. But, if it is a primary agricultural credit society or a primarycooperative agricultural and rural development bank, the deduction willstill be provided. Thus, only cooperative banks now specifically standexcluded from the ambit of Section 80-P of the Act. 33. On the facts, Mavilayi (SC) has noted that the appellant cannotbe termed a cooperative bank. It is also a matter of common knowledgethat in order to do the business of a cooperative bank, it is imperative forthat bank to have a licence from Reserve Bank of India. And, admittedly,the appellant does not have it. In Mavilayi (SC), as is the case here, themain reason for the Revenue to disentitle the appellant from getting thededuction under Section 80-P of the Act is not sub-section (4). It is theappellant’s alleged activities in violation of the Cooperative Societies Act,under which it is formed. The AO has pointed out that the appellant hasbeen catering to two distinct categories of people: the first category is theresident members or ordinary members; the second category is the"nominal members". These are those members who are making deposits with the assessee for the purpose of obtaining loans, etc. And, in fact, theyare not members in real sense. 34. As Mavilayi (SC) has noted, most of the appellant’s business waswith this second category of persons, who have been giving deposits,which are kept in fixed deposits with a motive to earn maximum returns.A portion of these deposits is utilised to advance gold loans, etc. to themembers of the first category. It is found, as a matter of fact, that thedepositors and borrowers are quite distinct. 35. In reality, the appellant’s activity, Mavilayi (SC) agrees, is thatof finance business and cannot be termed as cooperative society. It is alsofound that the appellant is engaged in the activity of granting loans togeneral public as well. All this is done without any approval from theRegistrar of the Societies. With indulgence in such kind of activity by theappellant, the AO has concluded that the appellant’s activity violates theCooperative Societies Act. Moreover, it is a cooperative credit societywhich is not entitled to deduction under Section 80-P(2)(a)(i) of the Act. 36. The appellant in Mavilayi (SC) has argued that the assessingofficer and other authorities under the IT Act could not go behind theregistration of the co-operative society in order to discover as to whetherit was conducting business in accordance with its bye-laws. Accepting thiscontention, Mavilayi (SC) observes: Nor can it be said that it would logically follow from the finding onfacts that the assessing officer can go behind the registration of asociety and arrive at a conclusion that the society in question iscarrying on illegal activities. * * * Secondly, for purposes of eligibility for deduction, the assessee mustbe a "co-operative society". A co-operative society is defined inSection 2(19) of the IT Act, as being a co-operative societyregistered either under the Co-operative Societies Act, 1912 or under any other law for the time being in force in any State for theregistration of co-operative societies. This, therefore, refers only to thefactum of a co-operative society being registered under the 1912 Act orunder the State law. For purposes of eligibility, it is unnecessary to probeany further as to whether the co-operative society is classified as X or Y. (Italics supplied) * * * Secondly, for purposes of eligibility for deduction, the assessee mustbe a "co-operative society". A co-operative society is defined inSection 2(19) of the IT Act, as being a co-operative societyregistered either under the Co-operative Societies Act, 1912 or under any other law for the time being in force in any State for theregistration of co-operative societies. This, therefore, refers only to thefactum of a co-operative society being registered under the 1912 Act orunder the State law. For purposes of eligibility, it is unnecessary to probeany further as to whether the co-operative society is classified as X or Y. (Italics supplied) 37. Section 80P being a beneficial provision, according to Mavilayi(SC), must be construed with the object of furthering the co-operativemovement generally. And section 80P(2)(a) (i) must be contrasted withsection 80P(2)(a)(iii) to (v), which expressly speaks of agriculture. It mustalso further be contrasted with sub-clause (b), which speaks only of a"primary" society engaged in supplying milk etc. thereby defining whichkind of society is entitled to deduction, unlike the provisions contained insection 80P(2)(a)(i). Also, the proviso to section 80P(2), when it speaks ofsubclauses (vi) and (vii), further restricts the type of society which can getthe deductions contained in those two sub-clauses, unlike any suchrestrictive language in Section 80P(2)(a)(i). 38. Mavilayi (SC) emphasises that once a co-operative society isproviding credit facilities to its members, the fact that it is providingcredit facilities to non-members does not disentitle the society fromavailing itself of the deduction. The distinction between eligibility fordeduction and attributability of amount of profits and gains to an activityis a real one. Since profits and gains from credit facilities given tononmembers cannot be said to be attributable to the activity of providingcredit facilities to its members, such amount cannot be deducted. 39. To sum up, Mavilayi (SC) has held that the ratio decidendi ofCitizen Cooperative Society Ltd., must be given effect to. Section 80P of theIT Act, being a benevolent provision enacted by Parliament to encourageand promote the credit of the co-operative sector in general must be readliberally and reasonably. And if there is ambiguity, it must be resolved the Assessee’s favour. A deduction given without any reference to anyrestriction or limitation cannot be restricted or limited by implication. Conclusion: 40. First, the Assessee has all these years continued with the sameset of activities. And this has been accepted by AO. On earlier occasions,until the Assessment Year we are considering (2012-13), this Court hasconsistently declared that the Assessee continues to be a cooperativecredit society entitled to the benefits under section 80P of the IT Act. Wesee no reason for the AO to take a different stand this Assessment Year. 41. That apart, the Apex Court has put a quietus to the controversywhether the Revenue could go behind the registration certificate of co-operative society and examine its activities to determine its true nature, ifany. In Mavilayi (SC), the enunciation of law is emphatic: the authoritiesunder the IT Act cannot go behind the certificate. Here, indisputably, allthe Assessees have been registered as cooperative credit societies.Banking, as understood by the Revenue, has never been its core activity.Their accepting deposits from nonmembers does not disqualify them fromclaiming benefits under section 80P of the IT Act. Result: So all the substantial questions of law are answered against theRevenue and for the Assessees. NH DAMA SESHADRI NAIDU, J. M.S. SONAK, J.