TaxTMI 
TaxTMI 
2018 (1) TMI 856
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....tal loans granted under various heads. 4. While placing reliance on the decision of the Kerala High Court in the case of The Chirakkal Service Co-operative Bank Ltd in ITA No.212 of 2013, the Ld. CIT (A) ought to have considered whether the assessee-society claiming the status of "Primary Agricultural Credit Society" has actually fulfilled the primary object or principal business of providing agricultural loans to agriculturists. 5. The Ld. CIT (A) ought to have also considered an earlier decision of the jurisdictional High Court in WP No.14226 of 2012 dated 14-09-2012 in the case of Thathamangalam SCB Ltd. in which the court has held that "it is very much obligatory for the petitionersocieties who claim the status and the benefits of Primary Agricultural Credit Societies to substantiate that their main object of incorporation is being continued to be fulfilled as well". 6. In view of the two different judgments of the jurisdictional High Court on the same issue and also in accordance with section 80P(4) of the Act, the Ld. CIT (A) ought not to have allowed the deduction merely on the strength of the certificate issued by the Registrar of Co-operative Soc....
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.... has accepted deposits and disbursed loans to outsiders, hence, the judgment of the Hon'ble Apex Court in the case of The Citizens Co-operative Society Limited v. ACIT [(2017) 397 ITR 1 (SC)] has application to the facts of the instant case. 6. The learned AR, on the other hand, submitted that the issue is squarely covered in favour of the assessee by the judgment of the Hon'ble jurisdictional High Court in the case of The Chirakkal Service Co-operative Bank Ltd.&Others (supra). 7. We have heard the rival submission and perused the material on record. The undisputed facts are that the assessee in this case is primary agricultural credit society, registered as such under the Kerala Co-operative Societies Act. The Hon'ble jurisdictional High Court in the case of Chirakkal Service Co-operative Bank Limited & Ors. (supra) had categorically held in para 17 page 14 of the judgment that when a primary agricultural credit Society is registered as such under the Kerala Co-operative Societies Act, 1969, such society is entitled to the benefit of deduction u/s 80P(2) of the Income-tax Act. The Hon'ble High Court was considering the following substantial question of law: "a)....
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....f the BR Act having regard to the primary object or principal business of each of the appellants. It is also clear from the materials on record that the bye-laws of each of the appellants do not permit admission of any other co-operative society as member, except may be, in accordance with the proviso to sub-clause 2 of section 5(cciv) of the BR Act. The different orders of the Tribunal which are impeached in these appeals do not contain any finding of fact to the effect that the bye- laws of any of the appellant or its classification by the competent authority under the KCS Act is anything different from what we have stated herein above. For this reason, it cannot but be held that the appellants are entitled to exemption from the provisions of section 8OP of the IT Act by virtue of subsection 4 of that sect; on. In this view of the matter, the appeals succeed. 17. In the light of the aforesaid, we answer substantial question: `A' in favour of the appellants and hold that the Tribunal erred in law in deciding the issue regarding the entitlement of exemption under section BOP against the appellants. We hold that the primary agricultural credit societies, registered as such ....
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....red by the Hon'ble Supreme Court was established on 31-5-1997 and was registered under section 5 of the Andhra Pradesh Mutually Aided Co-operative Societies Act, 1995. Thereafter as the operations of the assessee had increased manifold and were spread over states of Erstwhile, Andhra Pradesh, Mahrashtra and Karnataka, the assessee-society got itself registered on 26.07.2005 under the Multi State Co-operative Societies Act, 2002 (MACSA) 8.2 The Hon'ble Apex Court in the aforementioned case specifically took note of the factual findings of the Assessing Officer (which was stated in para 15 of the judgment) referring to the bye laws and the provisions of Mutually Aided Cooperative Societies Act, 1995. The Assessing Officer was of the view that the assessee therein cannot admit `nominal members' and most of the deposits were taken from such category of person (as they were not members as per the provisions referred). The Apex Court in para 25 of the Judgment has pointed out that the main reason for disentitling the assessee from getting the deduction provided under section 80 P of the Act is not sub-section (4) of the Act. On the contrary, the Hon'vble Apex Court held that the Credi....
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.... or treated as from the nonmembers or from public as was noted by the Apex Court judgment cited supra. 8.6 In this context, it is relevant to mention that the Hon'ble Supreme Court in the case of U.P.Co-operative Cane Union v. Commissioner of Income-tax (1999) 237 ITR 574 (SC)-para 8 of the judgment has observed as under:- "8. The expression "members" is not defined in the Act. Since a co-operative society has to be established under the provisions of the law made by the State Legislature in that regard, the expression "members" in section 80P(2)(a)(i) must, therefore, be construed in the context of the provisions of the law enacted by the State Legislature under which the cooperative society claiming exemption, has been formed. It is, therefore, necessary to construe the expression "members" in Section80P(2)(a)(i) of the Act in the light of the definition of that expression as contained in Section 2(n) of the Co-operative Societies Act." 8.7 The Bombay High Court in Jalgaon District Central v. UOI (2004) 265 ITR 423 (Bom) in the light of the above Supreme Court judgment had held that nominal member is also member under the Maharashtra Co-operative Societies Act and ....