AI Drafter 
TaxTMI 
TaxTMI 
2017 (4) TMI 181
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....nce interest is received, non-farm sector loans do not qualify for deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961 and that the assessee's activity is purely in the nature of commercial banking activities. Further, the Assessing Officer held that as per section 80P(4), deduction is available only if primary agricultural credit societies are engaged with a primary object of providing financial assistance to its members for agricultural activities. Therefore the assessee's claim under section 80P was rejected. b. Against the assessment order, the assessee filed an appeal to the Commissioner of Income-tax (Appeals). It is submitted that on an identical issue, in other cases, the Commissioner of Income-tax (Appeals) has found that as per the bye-laws, there were two types of members, viz., Class A and Class B members. Class A members are regular members, who have voting rights and were involved in the running of the assessee's business and can become the members of administrative committee, etc. Class B members are those other than Class A members, who had availed of loans from the assessee and are necessarily enrolled as Class B members. The Class....
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....o its members and is entitled for deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961 with respect to the interest received from Class B members who were involved in non-agricultural activity ? (ii) Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the Class B members of the asses see society can be treated as a member of the society for the purpose of section 80P(2)(a)(i) when Class B members do not have the right to participate in the voting and meetings of the board of the society ? (iii) Whether on the facts and in the circumstances of the case the Tribunal was right in not considering the fact that the assessee was lending monies for non-agricultural purpose and the provisions of section 80P(4) and section 2(24)(viia) ?" 4. The contention of the learned counsel for the appellant/Revenue, that Class B members of the respondent societies cannot be treated as members of the assessee societies, as Class B members were not recognised as per the bye-laws of the assessee society, for the purpose of voting, attending the board meetings etc. Therefore, as per section 80P(4), the benefit under section 80P c....
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....e common order dated March 17, 2014 and also the decision of 'C' Bench in the cases of M/s. 1915 Vellalapatty Primary Agricultural Co-operative Credit Society Ltd. in I. T. A. Nos. 385 and 386/Mds/2014, M/s. 6648 Attur Mulluvadi Primary Agricultural Co-operative Credit Society Ltd. in I. T. A. No. 387/Mds/2014, vide common order dated May 1, 2014. After perusing the relevant provisions of the State Co-operative Societies Act, 1983, governing similar assessees, the Tribunal found that definition of 'members' includes 'associate members', as well. The Tribunal found that such nominal members also enjoy statutory recognition as per the State Co-operative Societies Act. The Tribunal further observed that the objections of the Revenue that 'members' defined in sub-clause (i) of section 80P(2) should only include voting members, would amount to a classification within classification which is beyond the purview of taxing statute ; unless provided specifically by the Legislature. 4. Therefore, we find that the issue raised in these appeals stands adjudicated by the Tribunal in favour of the assessee. Accordingly, we set aside the orders of the lower....
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.... the assessee society will not come under the object of the principal business of a co-operative bank, which is a banking business. The benefit of section 80P is excluded for deductions by co-operative banks, whereas the primary agricultural credit societies are entitled for the said deduction . . . In the recent decision of the Kerala High Court, in the case of Chirakkal Service Co-operative Bank Ltd. v. CIT reported in [2016] 384 ITR 490 (Ker); [2016] 68 taxmann.com 298 (Ker), the High Court considered similar substantial questions of law (Issue No. A) raised by the assessee, regarding the entitlement for exemption under sub-section (4) of section 80P. By considering the fact that the assessee is a primary agricultural society, the Kerala High Court has answered the substantial question of law in favour of the assessee and held that the primary agricultural credit societies, registered as such under the KCS Act and classified so under that Act, including the appellants, are entitled to such exemption. Therefore, the aforesaid decisions is applicable to the instant case. In the light of the aforesaid facts and circumstances of the case, we are of the view, that t....