Cooperators connected with State Cooperative Agricultural and Rural Development Banks (SCARDBs) were a jubilant lot as soon as the news of the Supreme Court giving relief to them under 80P became public. Since the Indian Cooperative was the first media house to break the news, many of the leaders mailed their reactions to us.
To recapture the news item, on 14th September, the apex court restored income tax relief to Kerala State Co-operative Agricultural and Rural Development Bank (SCARDB) under 80P. The apex court ruled that since the SCARDB is not a bank in the true sense of the term, it can enjoy the benefits.
The entire fraternity of the ARDs spread across the country, have taken a sigh of relief. Chairman of the apex body of ARDBs called NAFCARD Dolar Kotecha was one of the firsts to write to us. Kotecha said “This will be a big boost in improving the financial position of SCARDBs which are ailing in many states and their efforts to increase credit availability to farmers at an affordable cost could be made possible after the judgement”.
Indian Cooperative has gathered that several top functionaries of the SCARDBs are seeing this judgment as an opportunity to file a case against the pending notices of IT.
Capturing the sentiments, Kotecha said “This judgement of the Supreme Court will help to settle hundreds of disputes on the issue of admissibility of tax exemption under section 80P to ARDBs pending at various levels across States. These cases relate to tax demand made to ARDBs for various years since 2008”, said Kotecha who is also the Chairman of Gujarat SCARDB, which is popularly known as Kheti Bank.
He further added, “The judgement brings tax relief of more than Rs 600 crore to Kerala SCARDB and total relief to all banks will be about Rs 1500 crore once all cases are settled on the basis of Supreme Court judgement”.
In his reaction, West Bengal SCARDB Special Officer Moinul Hassan wrote, “It is a long-term relief for the cooperative sector, that the Hon’ble Supreme Court has given a remarkable judgement in favour of Kerala SCARD BANK, as far as the tax deduction is concerned”.
“It will help the movement and ultimately the borrowers. Recently the IT department has forcefully closed all branches of the West Bengal SCARD bank in Alipurduar district for not paying the Income Tax. According to IT, the taxable amount is around Rs 26 crore. But we are planning to knock on the door of tribunals against IT action”, said Hassan who is also the Vice-Chairman of NAFCARD.
Talking to the Indian Cooperative, Uttar Pradesh Sahakari Gram Vikas Bank Managing Director Shashi Rao said, “The Supreme Court decision has brought relief for Bhumi Vikas Bank also. We hail the decision. The UP SCARDB had also filed several cases against the IT notices in the Tribunal which continue to be pending. We hope to get relief now”.
There are 16 State Cooperative Agriculture & Rural Development Banks (SCARDBs) of which only 13 are fully functional with a network of 1,744 PCARDBs/branches of SCARDBs at ground level. These banks have a total membership of 1,10,84,964 rural households of which 65,30,812 have outstanding loans.
The total loans outstanding and borrowings outstanding of these banks as on 31.03.2022 were Rs 21341.06 crores and Rs 13337.10 crores respectively. The fully functional SCARDBs have total deposits of Rs 2257.67 crores as on 31.3.2022.