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TMI Blog2012 (10) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... borrowing, raising or taking up money and lending or advancing money for the purpose of agriculture, sale and purchase of seeds and fertilizers etc. The appellant society is financed by the District Central Co-operative Bank to provide further credit facilities in its specified area on behalf of State Govt. to facilitate the farmers of villages for their credit requirements as well as to fulfil other ancillary and logistic requirements. 4. The above appellant societies declared net profit and claimed deduction u/s 80P(2)(a)(i) and 80 P(2)(a)(iv) of the Act. On bare reading of the assessment order, we note that relevant findings read as under:- "3.4 From the reply filed by the assessee it is evident that they have accepted the version that deposits from non members were accepted by the society. When a society is accepting the deposit from non members, it tantamounts to the fact they have provided banking facilities to the persons other than members. Accepting deposits from the non members, opening their accounts with the PACS, allowing deposit and withdrawals to the public or we can say non-members means banking facilities are being provided to them. If a society is accepting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... embers, then the AO rightly held that the assessee did not discharge its onus of justifying claim for deduction sought u/s 80P(2)(a)(i) and (iv) and again he rightly rejected the same. 6. We have also considered the impugned order of the CIT(A) and its relevant findings read as under:- "4. I have considered the issue and the submissions made by the AR. It is not in dispute that the credit facilities and supply of seeds, urea etc. were given only to the members of the appellant society. Only with regard to the deposits, the appellant accepted from non-members also. Acceptance of deposits from non-members does not in any way affect the revenue generated by the appellant in providing credit facilities and supply of seeds, urea etc. to the members. Further, merely because the appellant is unable to bifurcate the expenditure for the deposits from the members and non-members, deduction u/s 80P(2)(a)(i) and u/s 80P(2)(a)(iv) cannot be disallowed. The ratio of case laws relied upon by the AO are distinguishable on facts. On the other hand, the ratio of Hon'ble Apex Court is relied upon by the AR, though on different set of facts, is applicable to the appellant. In view of above, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icted to the interest income earned from credit or loans provided to its members only. The DR also added by drawing our attention to para 3.4 in appeal nos. 2368/Del/11, 2369/Del/11 and 2370/Del/11 and para 3.2 in appeal no. 2371/Del/11 of assessment order and vehemently submitted that when the counsel of assessee society was asked to submit bifurcated details of income and expenditure pertaining to its members and non-members, he expressed his inability to submit the same. In the result, the AO rightly rejected the claim u/s 80P(2)(i) & (iv) and being a generous assessing officer, he suo moto granted/allowed exemption of Rs. 50,000/- to each of the above four assessees u/s 80P(2)(c)(ii) of the Act. 10. Section 80P(2)(a)(i) & (iv) of the Act is being reproduced as under for ready reference:- "80P(2) The sums referred to in sub-section (1) shall be the following, namely :- (a) in the case of a co-operative society engaged in- (i) carrying on the business of banking or providing credit facilities to its members, or (ii) & (iii) ** ** ** (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions to enable the assessee cooperative societies to carry on banking business but factual issue in appeals in hand is only related to the deposits which the appellant society accepted from non-members. The ld. CIT(A) noted that the acceptance of deposits from non-members does not, in any way, affect the revenue generated by the appellant in providing credit facilities and supply of seeds, urea etc. to the members. We observe that the deposits from non-members do not arise any income. On the other hand, the banking society used these deposits to provide credits to its members and paid interest to the non-member depositors. We also observe that these appeals have been filed by the Revenue, the AR appeared for the hearing on 29.11.2011 and sought adjournment on the ground that the assessees are in the process of engaging a counsel to plead the case and the Bench allowed the same and fixed the date of hearing for 20th March 2012, but on 20th March, 2012, neither the officer-in-charge of the assessee nor any counsel or representative attended the proceedings. Therefore, in these circumstances, we deem it just and proper to adjudicate the appeals on the basis of record and finall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d it was not carrying on the business of banking or providing credit facilities to its members, therefore, as a result, the assessee society was not found entitled to the benefits of section 80P(2)(a)(i) of the Act. We respectfully consider the ratio of this judgement but in the present case, the benefit of the ratio is not available to the revenue as the present case is related to the assessees of banking business as their main object. 16. On the basis of foregoing discussion, we are of the view that the AO was not justified in disallowing deduction on this sole ground that the income declared by the assessee includes income from business of banking from its non-members because there was no income from the same activities as the assessee accepted only deposits from non-members on which the assessee bank was under obligation to pay interest, therefore, these deposits from non-members, in any way, never brought any income to the assessee. Accordingly, we hold that ld. CIT(A) rightly allowed the deduction and accepted the appeals of assessee societies and we have no reason to interfere with the impugned orders. 17. Therefore, we conclude with the finding that these appeals by the R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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