TMI Blog2018 (8) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of a particular region, claim of deduction under section 80P(2) cannot be denied. It is not denied by the Revenue that the activities of the assessee society are of primary agriculture activities. Competent authority has also recognized the assessee as primary agriculture credit society. In the earlier assessment year also, Revenue has accepted this fact and allowed the claim of the assessee - We allow the claim of the assessee and direct the ld.AO to re-compute income of the assessee by allowing claim under section 80P(2)(4) - Decided in favour of assessee - ITA No. 1328/Ahd/2018 - - - Dated:- 1-8-2018 - Shri Rajpal Yadav, Judicial Member And Shri Amarjit Singh, Accountant Member Assessee by : None Revenue by : Shri V.K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of members, the AO noted that there were 138 nominal members and 88 regular members, which means, nominal members far exceeded regular members. Assessee has stated that it was providing same facilities to the nominal members as provided to the regular members. AO was of the view that since same type of credit facilities were extended to the nominal members who has no voting power, the concept of principle of mutuality will be broken and consequently benefit under section 80P would stand withdrawn. AO issued a show cause notice to the assessee to justify allowability of deduction under section 80P of the Act. Assessee submitted that assessee society is a primary agricultural credit society and main object was to provide credit facilities t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2014-15. The AO presumed that assessee with profit motive provided credit facilities to the nominal members who exceeded far more in number than the regular members, and therefore, there was break-down of principle of mutuality for claiming 80P benefits. Judgment of Hon ble Supreme Court in the case of Citizen Co-operative Society Ltd. relied upon by the AO was not applicable to the case of the assessee, because, Hon ble Supreme Court was not dealing with the case of primary agricultural credit society, but in the context of a Co-operative society. Rather, the Hon ble Apex Court emphasised that by insertion of subsection (4) to section 80P of the Act, primary agricultural credit society is eligible for deduction under section 80P. The ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court in the case of Citizen Cooperative Society Ltd. is clearly distinguishable on the facts of the present case. Assessee also relied upon orders of ITAT Cochin Bench in the case of ITO Vs. Muttom Services Cooperative Bank Ltd., ITA No.451/Coch/2016 dated 15.1.2018 and ITO Vs. Nilambur Services Cooperative Bank Ltd., ITA No.400/Coch/2017 dated 1.2.2018. 6. The ld.DR on the other hand, relied upon the orders of the Revenue authorities and submitted that since orders of both authorities are in line with judgment of the Hon ble Supreme Court in the case of Citizen s Cooperative Society Ltd. (supra), impugned order be upheld. 7. We have heard ld.DR and gone through the record. We have also gone through case laws cited both the si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, and most of the business of the assessee was with carved out category of persons without approval of Registrar of the Societies. Weighing point of view of both sides, we find that balance tilt in favour of the assessee. We find that by virtue of sub-section (4) of section 80P, the assessee is entitled for deduction under section 80P(2). Further, Income Tax Act does not define member , nor has provided distinction between regular member and nominal member and therefore, its meaning and objects has to be understood in the context of definition given in the State Act. The Revenue authorities are trying to extrapolate the meaning of expression Member contrary to the spirit of the Act. It is evident from the definition of member pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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