TaxTMI 
TaxTMI 
2022 (7) TMI 1379
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.... took into cognizance the Order of the Hon'ble Supreme Court the "Suo Moto WP 03/2020 dated 20.03.2020 while considering the condonation of delay. It is a fact that 'Covid-19' pandemic was prevalent during the period and in term of the directions issued by the Hon'ble Supreme Court in Miscellaneous Application No.21/2022 in Suo Motu Writ Petition No.3 of 2020, we condone the delay of one day and admit the appeal for adjudication on merits. 3. The first issue in this appeal of the Assessee is as regards to the order of the CIT(A) confirming the action of the Assessing Officer in providing loans to its members, i.e. non-voting members and challenged the same. For this, the Assessee has raised Ground Nos.3 to 6, as under: "3) The CIT(A) ought to have seen that the Appellant is a Primary Agricultural Cooperative Society registered under the Tamil Nadu Cooperative Societies Act, 1983 and provides providing agricultural loans to its members (Class A and Class B). 4) The CIT(A) ought to have seen that there is no definition of members under the Income Tax Act, 1961 and all the members have to renew their membership once in three years. 5) The Appellant submit....
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.... issue is covered by the decision of the Hon'ble Madras High Court in the case of The Principal Commissioner of Income Tax Vs. M/s.S-1308, Ammapet Primary Agricultural Cooperative Bank Ltd., in Tax Case Appeal Nos.882 and 891 of 2018, dated 06.12.2018 and by the decision of the Hon'ble Supreme Court in the case of Mavilayi Service Co-operative Bank Limited vs. Commissioner of Income Tax, Calicut reported in [2021] 123 Taxmann.com 161, wherein the Hon'ble Supreme Court has held as under: "45. To sum up, therefore, the ratio dividend of Citizen Co-operative Society Limited (supra), must be given effect to Section 80P of the Income Tax Act, being a benevolent provision enacted by the Parliament to encourage and promote the credit of the co-operative sector in general must be read liberally and reasonably, and if there is ambiguity, in favour of the Assessee. A deduction that is given without any reference to any restriction or limitation cannot be restricted or limited by implication, as is sought to be done by the Revenue in the present case by adding the world "agriculture" into Section 80P(2)(a)(i) when it is not there. Further, Section 80P(4) is to be read as a proviso, w....
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.... not possess such right or power have no such liability or duty; Considering the definition of 'member' under the Kerala Act, loans given to such nominal members would qualify for the purpose of deduction under section 80P(2)(a)(i)." 6. On the other hand, the learned Senior Departmental Representative relied on the Assessment Order as well as the order of the CIT(A). 7. After hearing both the sides and on going through the facts and circumstances of the case, the Assessee's issue is squarely covered with the facts of the decision of the Hon'ble Madras High Court in the case of The Principal Commissioner of Income Tax, Salem Vs. M/s.S-1308, Ammapet Primary Agricultural Co-operative Bank Ltd., (supra) and in the decision of the Hon'ble Supreme Court in the case of Mavilayi Service Co-operative Bank Limited vs. Commissioner of Income Tax, Calicut (supra). Respectfully following the same, we direct the Assessing Officer to allow the claim of deduction u/s.80P(2)(a)(i) of the Act on the interest income amounting to Rs.68,79,255/- from the Associated Members. Thus, this issue in the Assessee's appeal is allowed. 8. The next issue in the appeal of the Assessee is as regards to....
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....that in view of Section 3 read with Section 56 of the Banking Regulation Act, 1949, the Assessee cannot be considered as a Primary Co-operative Bank but it is a Primary Agricultural Credit Society because Co-operative Bank must be engaged in the business of Banking as defined in the Section 5(b) of the Banking Regulation Act, which means accepting, for the purpose of lending or investment of deposits of money from the public. Similarly, u/s.22(1)(b) of the Banking Regulation Act, as applicable to Co-operative Societies, no Co-operative Society shall carry on in banking business in India, unless it is a Co-operative Bank and holds license issued on this behalf by the Reserve Bank of India. In the present case also, there is no banking activity and it is not registered as a Bank and it does not hold any license issued by the Reserve Bank of India. The Assessee being a Primary Agriculture Credit Society is a Co-operative Society. The primary object of which is to provide financial accommodation to its members, i.e. members as well as Associate members for agriculture purposes or for purpose connected with the agricultural activities. Further, we are of the view that the provi....