TMI Blog2016 (8) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the appellant that the members of the assessee society are not entitled to receive any dividend or having any voting right or no right to participate in the general administration or to attend any meeting etc., because they are admitted as associate members for availing loan only and was also charging a higher rate of interest, is not a ground to deny the exemption granted under Section 80P (2)(a) (i) of the Act. - Decided against revenue - Tax Case Appeal Nos.3 and 4 of 2015 - - - Dated:- 9-8-2016 - MR. JUSTICE S.MANIKUMAR AND MR. JUSTICE D.KRISHNAKUMAR For the Appellant : Mr.J. Narayanasamy Senior Standing Counsel for I.T COMMON JUDGMENT (Judgement of the Court was made by D. KRISHNAKUMAR, J) These Appeals have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner of Income Tax (Appeal). It is submitted that on identical issue in other cases, the Commissioner of Income Tax (Appeal) has found that as per the bye-laws, there were two types of members viz., Class A and Class B members. Class A members are regular members who have voting rights and were involved in the running of the assessee's business and can become the members of Administrative committee, etc. Class B members are those, other than Class A member, who had availed loans from the assessee and is necessarily enrolled as Class B member. The Class B member is not recognized by the assessee for the purpose of records in statute. Further, the majority of jewel loan and other non-farming loan at a higher interest were given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Tribunal had failed to 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 assessee's violation to lend amount on par with commercial banks at higher interest. 5. Being not satisfied with the common order dated 30.06.2014 of the Income Tax Appellate Tribunal in I.T.A. Nos.730, 731 and 732/Mds/2014, the Revenue has filed these appeals, on raising the following substantial questions of law:- 1. Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the assessee is to be treated as primary agricultural society and is carrying on the business of banking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it under Section 80P (2) (a) (i) read with 80P (4). 7. Heard Mr.J. Narayanasamy, learned Senior Standing Counsel for the appellant and perused the material available on record. 8. On perusal of the order passed by the Tribunal, it is found that the Assessing Officer, while completing the assessments had denied exemption under Section 80P (2) (a) (i) of the Income Tax Act, in respect of interest income towards jewel loan and other loans, on the ground that the purpose of loan issued was for commercial activities and not for agricultural purposes. Hence, the appeals filed by the assessee before the Commissioner of Income Tax (Appeal), were partly allowed. However, the Income Tax Appellate Tribunal, Chennai 'D' Bench considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available under Section 80P(2)(a)(i). Following the decisions cited supra, the Income Tax Appellate Tribunal, has passed the order impugned. 9. As the appeal of the Revenue, 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, was dismissed by the Tribunal, the Revenue filed an appeal under Section 260A of the Income Tax Act, 1961, in T.C.A. Nos. 735, 755 of 2014 and 460 of 2015 before this Court. By judgment dated 05.07.2016, the appeals were dismissed, on the following reasoning: 13. Sub-section (4) of Section 80P of the Income Tax Act, 1961 is extracted below : (4) The provisions of this section shall not apply in relation to any co-operative bank othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deductions by co-operative banks, whereas the primary agricultural credit societies are entitled for the said deduction. 14. .... 15. In the recent decision of the Kerala High Court, in the case of Chirakkal Service Co-operative Bank Ltd., Kannur vs. the Commissioner of Income Tax, reported in (2016) 68 taxmann.com.298 (Kerala), the High Court considered similar substantial questions of law (Issue No.A) raised by the assessee, regarding the entitlement for exemption under sub section (4) of Section 80P. By considering the fact that the assessee is a primary agricultural society, the Kerala High Court has answered the substantial question of law in favour of the assessee and held that the primary agricultural credit societies, register ..... X X X X Extracts X X X X X X X X Extracts X X X X
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