TaxTMI 
TaxTMI 
TaxTMI 
2019 (6) TMI 1089
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....rity. The CIT(A) by following the judgment of the Hon'ble jurisdictional High Court in the case of Chirakkal Service Co-operative Bank Ltd. (384 ITR 490) allowed the claim of deduction u/s 80P of the I.T.Act. 5. Aggrieved by the order of the CIT(A), the Department has filed the present appeal before the Tribunal. The grounds raised in this appeal read as follows: "1. In view of the recent decision of the Hon'ble Supreme Court in the case of The Citizens Co-Operative Society Limited Vs Assistant Commissioner of Income Tax, Circle- 9(1), Hyderabad dated s" August 2017, is not the order of the learned Commissioner of Income Tax (Appeals) against law and the facts and circumstances of the case? 2. From the table given below, listing the similarities between M/s Citizen Service Co-Operative Society and the assessee, hasn't the CIT(A) erred in relying on the decision ITAT Cochin Bench in the case of M/s Maruthonkara Service Co-Operative Bank Ltd where it has been held that the decision of M/s Citizen Service CO-Operative Society is not applicable to the instant case of the assessee? M/s.Citizen Co-operative Society M/s.Pattikkad Service Cooperative Bank Ltd. Governed by ....
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....ndia to carry out banking business. The society does not hold any license from Reserve Bank of India to carry out banking business. 3. The learned CIT(A) ought to have appreciated the fact that there is not even a single point that can be projected as a difference between the M/s Citizen Co-Operative Society and our assessee, M/s Pattikkad Service Co-Operative Bank ltd. Therefore, the decision of the Apex Court in the case of MIs Citizen Co-Operative Society is squarely applicable in the instant case. 4. The assessee has got four classes of members - Class A, Class B, Class C and Class D members. The bye law of the assessee identifies only Class A members (ordinary members) as real share holders of the society and they have exclusive privileges over other class members like rights to attend the Annual general Body, right to vote in the administrative board election, right to dividends etc. However Class C members and Class D members are nominal members and do not any of these rights. The cardinal requirement of mutuality is that the contributor to the common fund must be entitled to participate in the surplus and that all the participators in the surplus must be contributor....
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....ce Co-Operative Bank and Kerala CoITA operative societies Act which governs our assessee admits nominal members. The crux of the Apex Court decision was not that the society had violated MACSA norms but it had failed the litmus test of principle of mutuality where the contributors to the fund ie both the category of members - ordinary and nominal were not identical to the participators of the surpluses which constituted only the ordinary members. The principle of mutuality forms the basic principle of any Co-operative Society. For the principle to hold good, there should exist complete identity between the contributors of the fund and the participators of the surpluses. This principle was defeated in the case of M/s Citizen Service Co-Operative Society as the ordinary members were making profit from the nominal members. The same is the issue in the instant case where there is no mutuality between the members of the assessee society where the Class - A members are making profit at the behest of nominal members ie the Class B,C and 0 members. Once the principle of mutuality is defeated, it has been laid down by the Apex Court that the society is not eligible for deduction u/s. 80....
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....ank Ltd had upheld the order of the Commissioner of income Tax revising the order of the assessing officer in which the assessing officer had granted deduction u/s. 80P merely looking at the registration certificate provided by the Registrar of the Kerala Co- Operative Societies. The Court held that the Assessing Officer has to complete the assessment proceedings after conducting an enquiry and not by merely looking at the registration certificate provided by the Registrar. Whereas, vide order No : 212 of 2013 & Ors, the High Court in the case of M/s Chirakkal Service Co-Operative Bank Ltd had ruled that the assessee was classified as Primary Agricultural Credit Society by the competent authority under the Kerala Co-operative Societies Act, it has necessarily to be held that the principal object of such society is to undertake agricultural credit activities and to provide loans and advances for agricultural purposes. The authorities under the Income Tax Act cannot probe into any issue or such matter relating to such assesses. However, when the case was again taken for hearing in the case of other assessees, the Hon'ble High Court of Kerala vide order in ITA No : 97 of 2016 da....
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....ve Society classifying the assessee-society as a cooperative society. The Hon'ble High Court held that each assessment year is separate and eligibility shall be verified by the Assessing Officer for each of the assessment years. The finding of the Larger Bench of the Hon'ble High Court reads as follows:- "33. In view of the law laid down by the Apex Court in Citizen Co-operative Society [397 ITR 1] it cannot be contended that, while considering the claim made by an assessee society for deduction under Section 80P of the IT Act, after the introduction of sub-section (4) thereof, the Assessing Officer has to extend the benefits available, merely looking at the class of the society as per the certificate of registration issued under the Central or State Co-operative Societies Act and the Rules made thereunder. On such a claim for deduction under Section 80P of the IT Act, the Assessing Officer has to conduct an enquiry into the factual situation as to the activities of the assessee society and arrive at a conclusion whether benefits can be extended or not in the light of the provisions under subsection (4) of Section 80P. 33. In Chirakkal [384 ITR 490] the Division Bench held that....