TaxTMI 
TaxTMI 
2020 (7) TMI 192
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....ed as Association of Persons(AOP) engaged in the business of providing credit facilities to the members of the society and filed the Return of Income for the Asst. Year 2016-17 on 12.10.2016 with total income of Rs. 3,01,750/-.The assessee's income includes income from house property, business income and interest income. The return of income was processed under Section 143(1) of the Act on 2.11.2016. Subsequently, the case was selected for scrutiny under CASS and e-Notice under Section 143(2) and 142(1) of the Act were issued. In compliance, the assessee has furnished copies of computation of income, Balance Sheet, Bank Statements, Bye-laws of the co-operative Society and other details electronically. The Assessing Officer has examined the details and observed that the assessee is a co-operative society engaged in the business of advancing of short term loans (agriculture loans for crop production and marketing of crops and advancing medium term loans for development of agricultural infrastructure) and has disclosed the rental income, profit on sale of agriculture commodities. And the exemption under Section 80P(2)(a)(i) of the Act was claimed. Further, the interest and dividend in....
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....ed the total income of Rs. 31,37,551/- and passed the order under Section 143(3) of the Act dt.13.12.2018. Aggrieved by the order, the assessee has filed an appeal with the CIT(Appeals), whereas the CIT(Appeals) concurred with the action of the Assessing Officer and dismissed the appeal. Aggrieved by the order of CIT (Appeals), the assessee has filed an appeal with the Tribunal. 6. At the time of hearing, the ld. AR submitted that the CIT(Appeals) has erred in confirming the denial of deduction under Section 80P(2) of the Act and the decisions relied by the CIT(Appeals) are distinguishable. Further the society accepts the deposits and lends finances to its members and details of members of the society are available and also interest on deposits are exempted and supported his arguments with the decisions of the Hon'ble High Court and Tribunal and prayed for allowing the appeal. Contra, the ld. DR relied on the orders of the CIT (Appeals). 7. We heard the rival submissions and perused the material on record. The learned Authorized Representative emphasizing on the claim of deduction in respect of interest earned from the co-operative societies/Banks, whereas the Assessing O....
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....8 to 2011- 12. In case decided by the Hon'ble Supreme Court in the case of the very same assessee, the Assessment Years involved was Assessment Years 1991-92 to 1999-2000. The nature of interest income for all the Assessment Years was identical. The bone of contention of the Assessee in AY 2007-08 to 2011-12 was that the deduction under Section 80P(2) of the Act is claimed by the respondent assessee under Section 80P(2)(d) of the Act and not under Section 80P(2)(a) of the Act which was the claim in AY 1991-92 to 1999- 2000. The reason given by the Assessee was that in AY 2007-08 to 2011-12 investments and deposits after the Supreme Court's decision against the assessee Totgar's Co-operative Sale Society Ltd. (supra), were shifted from Schedule Banks to Cooperative Bank. U/s.80P(2)(d) of the Act, income by way of interest or dividends derived by a Cooperative Society from its investments with any other Co-operative Society is entitled to deduction of the whole of such interest or dividend income. The claim of the Assessee was that Co-operative Bank is essentially a Co-operative Society and therefore deduction has to be allowed under Clause (d) of Sec.80P(2) of the Act. The H....
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....proceedings. The contention of the ld. AR that the nominal members are the contributors for earning surplus and does not participate /share the surplus of the society and do not have voting rights. We found the coordinate bench of the Tribunal in the case of M/s. Kodavoor Vyavasaya Seva Sahakari Sangha Niyamitha & Others Vs. ITO (ITA No.707/Bang/2019 dt.26.08.2019) has dealt on the criteria of nominal members. We considered the observations of the co-ordinate bench at Para 5 of the order which is read as - 5. Similarly, on the issue of definition of the Member where Nominal Members are also eligible for benefits. The Member defined under the co-operative society Act bye-laws includes Nominal Member. We found Ahmadabad Bench of ITAT in ITA No.1328/Ahmd/2018 for Asst. Year 2015-16 in the case of Trapaj Vibhageeya Khet Udyog Mal Rupantar Food Processing Sahakari Mandali Ltd. Vs. DCIT (supra) at para 7 has held as under : " 7. We have heard ld.DR and gone through the record. We have also gone through case laws cited both the sides before ld.CIT(A). We find that fundamental facts which are not disputed by the Revenue authorities are that the assessee is a primary agric....
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.... as from non-members or from public and in the nature of banking business. That being so, then, an assessee engaged in primary agriculture activities and providing credit facilities and agriculture facilities to the farmer-members of a particular region, claim of deduction under section 80P(2) cannot be denied. It is not denied by the Revenue that the activities of the assessee society are of primary agriculture activities. Competent authority has also recognized the assessee as primary agriculture credit society. In the earlier assessment year also, Revenue has accepted this fact and allowed the claim of the assessee. Judgment of Hon'ble Supreme Court in the case of Citizens Co-operative Society Ltd. (supra) is distinguishable on facts. In that case, status of the assessee is that of co-operative bank, whereas assessee in the present case is a primary agriculture credit society and applicability of section 80P(2)(4) of the Act. Considering all these facts, we are not convinced with the reasoning and finding given by the Revenue authority in denying claim of the assessee under section 80P(2). We allow the claim of the assessee and direct the ld.AO to re-compute income of the assess....
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.... 2.1. The Appellant is engaged in business of supply agricultural inputs, seeds, fertilizer, chemical fertilizer, to farmers being members of society which include nominal members. The Appellant is a Co-Operative Society registered under the Karnataka State Co-Operative Societies Act. As per section 2(f) of the said Act, member includes Nominal members and Associate members. 2.2. The Assessing officer has relied upon the Honourable Supreme Court judgment in case of Citizen Co-Operative bank in disallowing the business profits, but the facts appellant's case is completely different from the said case. The Hon'ble Apex court in the aforementioned case specifically took note of the factual finding that the assessee therein cannot admit 'nominal members' and most of deposits were taken from such category of persons as they were not members as per provisions of MACS Act. 2.3. As for the Karnataka State Co-Operative Societies Act, which is applicable to the present case is concerned the definition of a 'member' as provided in section 2(f) includes a nominal member and the appellant relies on following decisions in support of its contentions. ....
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....ct. 15. Further, for the assessment year 2014-15, the decision in the case http://www.judis.nic.in of Citizen Cooperative Society Limited was relied upon by the Revenue before the Tribunal, which, in paragraph 6.1 of its order dated 28.2.2018 for the assessment year 2014-15, extracted the operative portion of that judgment. In that case, the Hon'ble Supreme Court found that the society carried on certain activities, which were contrary to the provisions of the Andhra Pradesh Mutually Aided Cooperative Societies Act, 1995 and that they accepted deposits from third 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 Supr....