TaxTMI 
TaxTMI 
2021 (1) TMI 1087
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....se, the Income Tax Appellate Tribunal was right in holding that the assessing officer did not exceed his jurisdiction while giving effect to the order of the appellate authority in giving deduction under Section 80(P)(2)(a)(i) of the Income Tax Act? 2. Whether in facts and circumstances of the case, the Income Tax Appellate Tribunal was right in upholding the order of the assessing officer restricting the claim for deduction under Section 80P(2)(a)(i) of the Income Tax Act?" 3. We have heard Mr.N.V.Balaji, learned counsel appearing for the appellant / assesee and Mr.M.Swaminathan, learned Senior Standing Counsel appearing for the respondent / revenue. 4. It is not disputed before us that in the assessee's own case for the assessment Year 2008-2009 in T.C.A.Nos.484 to 487 and 490 of 2016, identical Substantial Questions of Law were decided in favour of the assessee in the appeals filed by the Revenue by Judgment dated 02.08.2016. The operative portion of the Judgment reads as follows: "2. The facts of the case are as follows :- The Assessees are co-operative societies engaged in banking and trading activities. It admitted 'Nil' return of ....
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....l and had allowed the appeals. 4. Aggrieved by the orders of the Commissioner of Income Tax (Appeal), Revenue filed appeals before the Income Tax Appellate Tribunal. The Tribunal held that as per the definition of a member under Section 2(16), the associate member under Section 2(6) is also included as per the State Cooperative Societies Act, 1983. Therefore, the Class B members cannot be treated as non-member and consequently held that the assessee is entitled for deduction under Section 80P (2)(a)(i). The Tribunal held that the assessees will be entitled for deduction under Sectopm 80P (2) (a) (iv) eventhough the issue did not arise for consideration. The Tribunal did not consider the issue as to whether the interest on the loan lent for non-agricultural activity could be entitled for deduction as per Section 80P (2) (a) (i) read with 80P (4) and the assessees' violation to lend amount on par with commercial banks at higher interest. The Tribunal had followed its own order and had allowed the appeal. 5. Aggrieved by the order of the Income Tax Appellate Tribunal, the appellants have filing these appeals, on raising the following substantial questions of law:....
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....ssioner, based on the decisions of the Co-ordinate Bench of the Tribunal in the case of ITO Vs. M/s. Veerakeralam Primary Agricultural Co-operative Credit Society in ITA No.197/Mds/2013 dated 11.02.2014 and the case of Karkudalpatty Primary Agricultural Co-operative Credit Society Ltd., Vs. ITO in ITA No.292/Mds/2014 dated 17.03.2014. Further, in another decision of the Tribunal in the case of the Salem Agricultural Producers Co-operative Marketing Society Ltd., Vs. ITO in ITA Nos.730 to 732/Mds/2014 dated 30.06.2014, it has been held as follows :- 2. The common issue raised in all these appeals is that the Commissioner of Income Tax (Appeals) has erred in confirming the order of the Assessing authority in denying the claim of benefits available under Section 80P (2)(a)(i) of the Income Tax Act, 1961. The case of the assessee is that the bye-laws of the society allow the assessee to lend/advance loans to its members on agricultural produce loan and on the pledge of gold jewels and silver articles, earned interest income only as per the objects and submitted before the lower authorities that the claim of the assessee has to be considered under Section 80P(2)(a)(i) ....
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....imary agricultural credit society or a primary co-operative agricultural and rural development bank. Explanation For the purposes of this sub-section --- (a) co-operative bank and primary agricultural credit society shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949); (b) primary co-operative agricultural and rural development bank means a society having its area of operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities. It is seen that the primary object of the society is to provide financial accommodation to its members to meet all the agricultural requirements and to provide credit facilities to the members, as per the bye-laws and as laid down in Section 5 (cciv) of the Banking Regulation Act, 1949. Further, from the CPT Circular dated 12.03.2008, it is evident that a credit co-operative society is not a co-operative bank, as defined in Part V of the Banking Regulation Act, 1949. The object of a 'Co-operative bank' is to accept deposits from the public, for lending or investment of ....
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....severely liable. In this backdrop, when we peruse the relevant provisions of the State Co-operative Societies Act, 1983, governing the assessee-society, it is evident from the definition of 'member' u/s 2(16) that the same includes an 'associate member' recognition as per the Act. The net result is that once the 'nominal' members also enjoy statuary condition imposed by the legislature u/s 80P (2) (a) (i). We make it clear that we are dealing with the deduction provision to be interpreted liberally. In our considered opinion, the objections of the revenue that the 'members' defined in sub clause (i) of Section 80P should only include voting members would amount to a classification within classification which is beyond the purview of tax statute; unless provided specifically by the legislature. Moreover, we find that the case law of Hon'ble Punjab and Haryana High Court (Supra) also supports the assessee's case wherein it has been held under the very provision that for the purpose of impugned deduction, it is irrelevant so far as classification of the members in 'A' or 'B' category is concerned. Following the decision of the Pu....