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TaxTMI 
TaxTMI 
TaxTMI 
2020 (3) TMI 555
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....dmission. 2. The challenge is to an order of assessment for the Assessment Year 2012-13, passed in terms of the Income Tax Act, 1961 (in short 'Act'). Two issues arise: (i) in relation to disallowance under Section 69A of the Act (ii) in relation to the claim of deduction under Section 80P of the Act. 3. The Petitioner is a Primary Agricultural Cooperative Society Limited. As regards the first issue, admittedly, no case has been made out to warrant interference under Article 226 of the Constitution of India. The petitioner is thus relegated to appeal remedy in relation to the same. 4. As regards the second issue, I have had occasion to consider an identical issue in a batch of writ petitions filed by several Primary Agricul....
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....ion by application of the principle of mutuality and the rejection of the same. According to the petitioner, credit facilities are offered by it to members in A as well as B classes. The petitioners argued before the Assessing Authority that their income would be exempt on the ground of application of mutuality, since the inflows as well as outflows related to one common group of members with which the Society is in complete identity. 25. However, the officer draws a distinction between the two classes of members - B class members are non-shareholding members admitted only for the purpose of availing loans against specified securities. Non-refundable admission fee is remitted by them and the duration of their membership is restrict....
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....he members of the two classes and hence the principle of mutuality that was relied upon by the petitioners was rejected as being inapplicable to its case. 28. A Division Bench of this Court has, on identical facts as in the present case, in the case of The Principal Commissioner of Income Tax, Salem V. M/s.S-1303 Ammapet Primary Agricultural Cooperative Bank Ltd., Ammapet, Salem (T.C.(A)Nos.882 and 891 of 2018 dated 06.12.2018) held that the assessee would be entitled to deduction under Section 80P. The reasoning was that under the TNCS Act, a member and an associate member are one and the same and an associate member has also been held to be holding the character of a member. The Division Bench has taken the view that as far as th....
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....e By-laws and includes an associate member. The expression 'associate member' is defined under Section 2(6) of the TNCS Act to mean 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 this Act, the Rules and the By-law. 13. Thus, the definition of the word 'members' includes an associate member and therefore, the Assessing Officer fell into an error in drawing a distinction between A Class members and B Class members. For the purpose of being entitled to a relief under Section 80P of the Act, all that is required is that the cooperative society should answer the description of a society engaged in carrying on the business ....
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....parties, who were not members in the real sense and were using those deposits to advance gold loans. Therefore, the Hon'ble Supreme Court pointed out that such an activity of the said society was that of a finance business and could not be termed as a cooperative society and that the loans, which were disbursed, were without the approval from the Registrar of Mutually Aided Cooperative Societies, Ranga Reddy District. The Hon'ble Supreme Court found that the said society was not entitled to deduction under Section 80P of the Act. 16. It is noteworthy to point out that the Hon'ble Supreme Court in the decision in the case of Citizen Cooperative Society Limited also observed that in the light of insertion of Sub- Section ....
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....d are answered against the Revenue. ' 31. Learned counsel for the Revenue states that there are cases of other identically placed Agricultural Cooperative Marketing Societies that the Revenue has carried/intends to carry to the Supreme Court where the stakes involved are significantly higher, such as, Tiruchengode Agricultural Producers Cooperative Marketing Society Ltd. and Veerakeralam Primary Agricultural Cooperative Credit Society, Coimbatore. In such a case, the questions of law would be decided in those cases. 32. In the light of the fact that the questions of law in this regard are still at large, the petitioners are directed to file a statutory appeal before the Commissioner of Income Tax (Appeals) within a per....