TaxTMI 
TaxTMI 
2018 (4) TMI 339
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....ies to its members. The assessees had filed return of income and claimed deduction u/s 80P of the Income-tax Act, 1961. The details of the assessment years, date of filing of the return, the income returned and the deduction claimed u/s 80P of the Income-tax Act, read as follows:- In case of M/s.The Chengala SCB Limited Asst.Year Date of filing of return Income returned (Rs.) Deduction claimed u/s 80P (Rs.) 2007-2008 11.09.2014 Nil 4,17,740 2008-2009 17.08.2015 Nil 6,13,867 2009-2010 31.03.2010 20,325 24,05,300 2012-2013 31.03.2014 13,670 64,81,550 2013-2014 30.03.2015 Nil 1,14,03,830 In case of M/s.The Kumbala SCB Limited Asst.Year Date of filing of return Income returned (Rs.) Deduction claimed u/s 80P (Rs.) 2007-2008 31.03.2008 81,770 29,71,032 2012-2013 28.03.2014 99,730 77,28,772 2013-2014 30.03.2015 2,13,510 39,89,083 In case of M/s. The Manjeshwar SCB Limited Asst.Year Date of filing of return Income returned (Rs.) Deduction claimed u/s 80P (Rs.) 2007-2008 01.07.2014 Nil 3,14,348 2008-2009 18.09.2015 19,740 16,14,230 2011-2012 29.03.2013 62,630 78,84,285 2012-2013 31.03.2014 52,990 49,06,830 2013-201....
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....cle- 9(1), Hyderabad taken into consideration the activities of the assessee society and not relied only on the certificate of registration issued by the Central Registrar of Cooperative societies. In view of this, is not the decision of the CIT(A) against the prevailing positions of law that differentiates between de jure and de facto positions and which permits the principle of penetration of the corporate veil to determine the true nature of the activities of the cooperative society? 3. Whether on the facts and in the circumstances of the case, the Commissioner of Income Tax (Appeals) is right in law in holding that the assessee is eligible for claiming deduction u/s 80P on the above lines, when in the recent decision in the case of The Citizen Co-Operative Society, the Honourable Supreme Court has, after taking into account the activities of the appellant Co-operative Society, held that the appellant could not be treated as a cooperative society meant only for its members and providing credit facilities only to its members. 4. The Honourable Supreme Court: had in the case of The Citizen Co-Operative Society limited Vs Assistant Commissioner of Income Tax, Circle- 9(1), Hy....
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....A) without merits? 8. The tax effect involved is Rs. 142195/-, which is below the monitory limit prescribed for filing appeal to the Hon'ble ITAT. However, this is a composite order of the CIT(A) for the Assessment Years 2007- 08, 2008-09, 2012-13 and 2013-14 involving identical issues and tax effect for the Assessment Years 2012-13 and 2013-14 exceed the monitory limit prescribed and appeal to the Hon'ble ITAT for the Assessment Years 2012-13 and 2013-14 are being preferred. In view of this appeal to the Hon'ble ITAT is filed for the Assessment Year 2007-08 also. 9. For these and other grounds that may be urged at the time of hearing, it is requested that the order of the CIT(A) may be set aside and that of the Assessing Officer restored." 5. The learned Departmental Representative, apart from relying on the grounds raised, submitted that the issue is covered in favour of the Revenue by 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)]. 6. The learned AR, on the other hand, submitted that the judgment of the Hon'ble Apex Court does not have application to the facts of the instant cases and cont....
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....t societies by the competent authority under the KCS Act it has necessarily to be held that the principal object of such societies is to undertake agricultural credit activities and to provide loans and advances for agricultural purposes; the rate of interest on such loans and advances to be at the rate fixed by the Registrar of co-operative societies under the KCS Act and having its area of operation confined to a village, panchayat or a municipality. This is the consequence of the definition clause in section 2(oaa) of the KCS Act. The authorities under the IT Act cannot probe into any issue or such matter relating to such applicants. 16. The position of law being as above with reference to the statutory provisions, the appellants had shown to the authorities and the Tribunal that they are primary agricultural credit societies in terms of clause (cciv) of section 5 of 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....
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....in the case of Citizen Co-operative Society (supra) Ltd. was rendered in the context of eligibility of a Credit Co-operative Society for deduction under section 80 P of the Act. The Apex Court, referring to the specific facts of the case held that the assessee therein is not entitled for deduction under section 80P of the Income-tax Act. In the aforesaid case, the Hon'ble Apex Court was not dealing with a case of eligibility of a Primary Agricultural Credit Society for deduction under section 80P of the Incometax Act. The Hon'ble Supreme Court at Para 23 of the aforesaid judgment had emphasized that even after the amendment made to the provisions of section 80P of the Act by insertion of section 80P(4) of the Income-tax Act, the Primary Agricultural Credit Society is eligible for deduction under section 80P of the Act. 8.1 The assessee society in the case considered 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, ....
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....in Section 2(1) of the Kerala Cooperative Societies Act includes a nominal member. Section 2 (1) of the said Act is as follows: "Member" means a person joining in the application for the registration of a co-operative society or a person admitted to membership after such registration in accordance with this Act, the Rules and the Bye law and includes a nominal or associate member" 8.4 The `normal member' is defined under 2(M) of the Kerala Co-operative Societies Act, 1969, which reads as follow:- "(m) `nominal or associate member' means a member who possesses only such privileges and rights of a member and who is subject only to such liabilities of a member as may be specified in the bye-laws;" 8.5 Therefore, in the present cases, the nominal members are members as provided in law and deposits from such nominal members cannot be considered or treated as from the non-members 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 expr....
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....nary member, his status is that of a member as defined in Section 2(19) of the Act. 20. Division Bench of this Court in the case of The Commissioner of Income Tax, Nasik (cited supra) has also taken a similar view that the definition of "Member" under section 2(19)(a) of the Maharashtra Co-operative Societies Act, 1960 includes a nominal member. It is further held by the Division Bench that there is nothing in Section 80P(2)(iii) of the Income Tax Act to the contrary." 8.8 As per section 3 of the Banking Regulation Act, 1949, the provisions of Banking Regulation Act shall not apply to Primary Agricultural Credit Societies. The explanation to section 80P(4) states that 'Primary Agricultural Credit Society' and 'Co-operative Bank' will have the same meaning as provided in Part V of the Banking Regulation Act, 1949. The explanation provided after clause (ccvi) of section 5 r.w.s 56 of the Banking Regulation Act specifically provides that if any dispute arises as to the primary object or principal business of any co-operative society referred to in clauses (cciv), (ccv) and (ccvi), a determination thereof by the Reserve Bank shall be final. The Reserve Bank of Indi....