TaxTMI 
TaxTMI 
2019 (9) TMI 735
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.... the Assessment year 2014-15. 2.The assessee has raised the following substantial questions of law for consideration:- "(i) In the facts and circumstance of the case, where the Appellant is admittedly a Primary Agricultural Co-operative Credit Society Registered under Tamil Nadu Co-operative Societies Act, Whether the Appellate Tribunal is correct in rejecting the deduction claimed by the Appellant under Section 80P (2) (a) (i) of Income Tax Act? (ii) Whether the Tribunal is correct in differentiating between the Class A Members and Class B Members for the purpose of claiming deduction under Section 80P (2) (a) (i) of Income Tax Act, in the absence of any such discrimination under the said Section 80P (2) (a) (i) of Income Tax Act? (....
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....essee. The operative portion of the judgment read as follows: "7. It is not disputed by the learned counsel on either side that the substantial question of law entertained in this appeal was considered by us in the decision in the case of AA 713 the Kodumudi Growers Co-operative Bank Ltd. Kodumudi Vs. ITO, Ward-II(1), Erode [TCA.No.1453 of 2008 dated 31.10.2018] wherein the assessee was a cooperative society and a similar view was taken by the Tribunal as in the impugned order. We allowed the appeal filed by the assessee in the said judgment wherein the relevant portions read thus :- ".............. 7. Thus, we are called upon to decide as to whether the assessee is entitled for deduction under Section 80P(2) of the IT Act in respect ....
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.... etc., or for such other purposes as the Government may, by notification, specify in this behalf. Thus, a credit society as defined under the provisions of the TNCS Act, 1983 is not only confined to extending loans to its members, but also to such other members as the Government may, by Notification, specify. 11. The assessee placed materials before the CIT (A) to show that the fair price shops for sale of fertilizers to the members were opened based on the directives issued by the Government of Tamil Nadu. Therefore, the activity done by the assessee in the sale of items under the PDS to its members would definitely fall within the ambit of a 'credit society' defined under Section 2(13) of the TNCS Act, 1983. 12. The learned Se....
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....e appellant/assessee before the CIT (A) wherein the appellant had produced sample sales bills to prove that they had sold fertilizers only to the members. Thus, we are fully convinced that the activity done by the appellant cannot be said to be an activity, which was not authorized to be done by the society. 16. Our view is strengthened by the decision of the Division Bench of the Bombay High Court in the case of CIT, Nasik Vs. Ahmednagar District Central Cooperative Bank Limited [reported in 2004 (1) Mh. LJ 853]. In the said case, the assessee was a cooperative bank carrying business of banking. Whole amount of profit and gains attributable to the business of banking was not included by the assessee in its income under Section 80P(1) rea....
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....anking' was not restricted only to accepting deposits from the customers for the purpose of lending, that the word 'banking' has been interpreted by the Hon'ble Supreme Court to cover even the rent charged by the banks for hiring out safe deposit vaults to its customers and that in the circumstances, income earned by the assessee bank by way of commission/fees from its customers, being public sector undertakings, would be exempt under Section 80P(2)(a)(i) of the IT Act. Further, the Division Bench pointed out that such view was supported by Section 6(1)(b) of the Banking Regulation Act, 1949, which stated that in addition to the business of banking, a banking company may engage itself as agent for Government or Local Authori....
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.... as a cooperative society meant only for providing credit facilities to its members and accordingly, would not be entitled to claim the benefit under Section 80P of the IT Act. This decision can, in no manner, advance the case of the Revenue, as factually we found that the assessee herein is entitled to distribute the items under the PDS, as it is one of the allied activities of the society and is bound by the directives of the Government. 20. Apart from that, the definition of 'credit society' is wider in import to include any activity that the Government may, by Notification, specify. Further, we find from By-law No.12(a) that if the society carries on an activity, which is not authorized under the By-laws or with the approval....