TMI Blog2017 (9) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... , Hyderabad (2017 (8) TMI 536 - SUPREME COURT ) In respect of claim of deduction under section 80P(2)(d) on dividend income received from the co-operative society is concerned, in our opinion this issue will depend upon the outcome of the first issue. If the assessee is entitled to deduction under section 80P(2)(a)(i) the assessee will also be entitled for deduction under section 80P(2)(d). Since the issue is consequential to the issue involved about the claim of the assessee under section 80P(2)(a)(i), therefore, the order of the CIT(A) is also set aside on this issue and this also is restored to the file of the AO with the direction that the AO shall redecide this issue. Appeal filed by the Revenue is allowed for statistical purposes. - ITA No.3567 /Mum/2017 - - - Dated:- 4-9-2017 - Shri P K Bansal, Vice President And Shri Pawan Singh, Judicial Member For The Appellant : Shri V. Vidhyadhar For The Respondent : Shri V.G. Ginde ORDER Per P.K. Bansal, Vice President This appeal has been filed by the Revenue against the order of the CIT(A)-28, Mumbai dated 01.02.2017 for A.Y. 2013-14 by taking the following effective grounds of appeal: - 1. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee from its share holdings in other co-operative societies. The Revenue is in appeal against allowing both the grounds of the assessee. 3. We have heard the rival submissions and carefully considered the same along with the orders of the Tax Authorities below. Before us the learned A.R. has vehemently relied on the order of the D Bench of this Tribunal in ITA No. 4994/Mum/2016 in the case of the assessee in which vide order dated 11.04.2017 the Tribunal has partly allowed the appeal of the assessee holding that the assessee will be entitled for deduction under section 80P(2)(a)(i) but subsequent to the decision we noted that there had been a decision of the Hon'ble Supreme Court recently on which the learned D.R. vehemently relied upon and the learned D.R. has contended that the CIT(A) in the impugned assessment year and the Tribunal in the assessment year 2012-13 has not examined this issue in accordance with the decision of Hon'ble Supreme Court in the case of The Citizen Co operative Society Limited vs. ACIT, Circle-9(1), Hyderabad in CA No. 10245/2017 dated 08.08.2017. The order of the CIT(A) be set aside and the issue be restored to the file of the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Limited Ors. V. Commissioner of Income Tax, this Court, while dealing with classes of societies covered by Section 80P of the Act, held as follows: 6. The classes of societies covered by Section 80-P of the Act are as follows: ( a) Engaged in business of banking and providing credit facilities to its members; 7. We may notice that the provision is introduced with a view to encouraging and promoting growth of cooperative sector in the economic life of the country and in pursuance of the declared policy of the Government. The correct way of reading the different heads of exemption enumerated in the section would be to treat each as a separate and distinct head of exemption. Whenever a question arises as to whether any particular category of an income of a cooperative society is exempt from tax what has to be seen is whether income fell within any of the several heads of exemption. If it fell within any one head of exemption, it would be free from tax notwithstanding that the conditions of another head of exemption are not satisfied and such income is not free from tax under that head of exemption... 21. In the case of Commissioner of Income Tax v. Pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision, it is made clear that such a deduction shall not be admissible to a cooperative bank. However, if it is a primary agriculture credit society or a primary co-operative agriculture and rural development bank, the deduction would still be provided. Thus, co-operative banks are now specifically excluded from the ambit of Section 80P of the Act. 24. Undoubtedly, if one has to go by the aforesaid definition of 'cooperative bank', the appellant does not get covered thereby. It is also a matter of common knowledge that in order to do the business of a co-operative bank, it is imperative to have a licence from the Reserve Bank of India, which the appellant does not possess. Not only this, as noticed above, the Reserve Bank of India has itself clarified that the business of the appellant does not amount to that of a co-operative bank. The appellant, therefore, would not come within the mischief of sub-section (4) of Section 80P. 25. So far so good. However, it is significant to point out that the main reason for disentitling the appellant from getting the deduction provided under Section SOP of the Act is not sub-section (4) thereof. What has been noticed by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment for example, ING Mutual Fund [as said by the MD vide his statement dated 20.12.2010]. [Though the bank formed the third party vis-avis the assessee entitled between contributor and recipient is lost in such case. The other ingredients of mutuality are also found to be missing as discussed in further paragraphs]. In the present case both the parties to the transaction are the contributors towards surplus, however, there are no participators in the surpluses. There is no common consent of whatsoever for participators as their identity is not established. Hence, the assessee fails to satisfy the test of mutuality at the time of making the payments the number in referred as members may not be the member of the society as such the AOP body by the society is not covered by concept of mutuality at all. 27. These are the findings of fact which have-remainedunshaken till the stage of the High Court. Once we keep the aforesaid aspects in mind, the conclusion is obvious, namely, the appellant cannot be treated as a co-operative society meant only for its members and providing credit facilities to its members. We are afraid such a society cannot claim the benefit of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l purposes. 6. So far as the second ground in respect of claim of deduction under section 80P(2)(d) on dividend income of ₹ 1,01,581/- received from the co-operative society is concerned, in our opinion this issue will depend upon the outcome of the first issue. If the assessee is entitled to deduction under section 80P(2)(a)(i) the assessee will also be entitled for deduction under section 80P(2)(d). Since the issue is consequential to the issue involved about the claim of the assessee under section 80P(2)(a)(i), therefore, the order of the CIT(A) is also set aside on this issue and this also is restored to the file of the AO with the direction that the AO shall redecide this issue after giving the finding in respect of the first issue whether the assessee is entitled for deduction under section 80P(2)(a)(i) in view of the recent decision of the Hon'ble Supreme Court in the case of Citizen Co-operative Society Ltd. vs. ACIT. Thus, this ground also is allowed for statistical purposes. 7. In the result, the appeal filed by the Revenue is allowed for statistical purposes. Order pronounced in the open court on 4th September, 2017. - - TaxTMI - TMITax - Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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