TMI Blog2019 (9) TMI 1333X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the different assessees. The appeals in ITA Nos.1606, 1608 1609/PUN/2018 are directed against the order of CIT(A)-6, Pune commonly dated 28.06.2018 for the Assessment Year 2015-16. The appeal in ITA No.1607/PUN/2018 is directed against the order of CIT(A)-6, Pune dated 28.06.2018 for the Assessment Year 2010-11. 2. Since the issues raised by the different assessees in the grounds are almost common in all the four appeals, therefore, all the four appeals were heard together and are being disposed of by this composite order. Facts Developments before Assessing Officer CIT(A) 3. Briefly stated the relevant facts include that the assessee is a registered cooperative society registered under the Maharashtra Co-op. Society Act, 1960. The assessee filed the return of income declaring Nil income after claiming of deduction u/s 80P of the Act. The Assessing Officer took the case for limited scrutiny in view of the CASS guidelines and found that the assessee is not entitled to claim the deduction u/s 80P of the Act where the activities relate to giving loans to members/nominal members etc are earned the interest income. Further, the Assessing Officer noticed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed hereunder :- 3. The relevant facts as culled out from the material on record are as under :- Assessee is a Co-operative Society registered under Maharashtra Cooperative Credit Societies Act, 1960 and is stated to be engaged in providing credit facilities to its Members and accepts deposits from its members. Assessee filed its return of income for A.Y. 2015-16 on 29.09.2015 declaring total income at Rs.Nil after claiming deduction of ₹ 18,38,878/- u/s 80P of the Act. The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order dt.29.12.2017 and the claim of deduction u/s 80P of the Act was denied to the assessee and the total income was thus determined at ₹ 18,38,878/-. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who vide order dt.01.06.2018 (in appeal No.PN/CIT(A)-6/ITO Wd.10(5)/10297/2017-18) dismissed the appeal of the assessee. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal before us and has raised the following grounds : 1. The Ld.CIT(A) 6, Pune erred in law and on facts, in confirming the action of the learned AO in denying the deduction u/s 80P(2)(a)(i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the surplus funds with Co-operative Society and not with Co-operative Banks. AO noted that no details for justification were furnished by the assessee. AO noted that though assessee had provided credit facilities to the new non-members and nominal members but had failed to submit any evidence of approval from the Managing Committee for being taken the new non-members or nominal members and had submitted only registration numbers and hence, according to AO, assessee had violated the bye-laws of the Society. AO was of the view that since the assessee had neither enrolled the new non-members or nominal members nor any activities were carried out by them thereby violated the provisions of bye-laws of the Society by accepting the deposits from nominal members and new non-members. AO thereafter concluded that assessee was acted like a regular Bank by accepting deposits from any person and also giving loans and therefore the main motto of the assessee is to earn more profits. 7. AO also noticed that the assessee was required to invest surplus funds with the Co-operative Society and not with the Co-operative Banks and the interest earned on investments, surplus funds with Co-operative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Banking Regulation Act 1949 (10 of 1949). b. Primary Co-operative agricultural and rural development bank means a society having its area of operation confined to a taluk and the principal object of which is to provide for long term credit for agricultural and rural development activities . 6.1 Subsequent to the introduction of Sec.80P(4), controversy arose as to whether all the credit cooperative societies fall within the definition of cooperative bank mentioned in sec.80P(4). This issue was examined by the various Tribunals in the country and also by the constitutional courts. 6.1.1 In the case of CIT Vs. Jafar Momin Vikas Co-op. Credit Society Ltd. reported in [2014] 49 Taxmann.com 571 (Guj.), the High Court of Gujarat held in its order dtd.15/1/2014 that Sec.80P(4) will not apply to the assessee which is not a co-operative bank and in ruling so that it relied on the clarification issued by the CBDT in Circular No.133 of 2007 dtd.9/5/2007 in respect of the Delhi Co-operative Urban Thrift and Credit Society Ltd. 6.1.2 The ITAT Pune Bench B in the case of ITO Vs. Jankalyan Nagari Sah. Pat Sanstha Ltd. reported in [2012] 24 Taxmann.com 127 (Pune) for A.Y. 07- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co-operative Society cited above, on similar grounds held that such societies would not be entitled to deduction u/s.80P(2)(a)(i) on the ground that it is not involved in co-operative activities. The borrowers and the depositors are quite distinct. As the facts of the appellant case are similar to that of the case decided by the Supreme Court, the decision of Supreme Court is also applicable to the appellant. Therefore, the action of the AO in disallowing the deduction u/s.80P(2)(a) is upheld. 7.1 As the society has been held to be not involved in co-operative activity, the deduction u/s.80P itself would not be applicable to the appellant. Therefore the claim of deduction u/s.80P(2)(d) would also not be available to the appellant. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal. 8. Before me, Ld.A.R. reiterated the submissions made before AO and Ld.CIT(A). Before me Ld.A.R. reiterated the submissions made before AO and Ld.CIT(A) and submitted that Ld.CIT(A) while upholding the order of AO had relied on the decision of Hon ble Apex Court in the case of Citizen Cooperative Society Limited Vs. ACIT in Civil Appeal No.10245 of 2017 order dated 08.08.2017. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l on identical issue in the case of ITO Vs. Jankalyan Nagri Sahakari Pat Sanshta Ltd., (ITA No.598/PN/2011 order dt.26.06.2012) has decided the issue in favour of the assessee. He placed on record the copy of the aforesaid decision. He therefore submitted that following the decision of Co-ordinate Bench of the Tribunal in the case of Jankalyan Nagri Sahakari Pat Sanshta Ltd., (supra), the issue be decided in assessee s favour. Similar arguments were raised by other Authorized Representatives also. Ld. D.R. on the other hand, supported the order of lower authorities. 9. I have heard the rival submissions and perused the material on record. The issue in the present case is with respect to denial of claim of deduction u/s 80P of the Act. I find that AO while denying the claim of assessee had held the assessee can be treated as a Co-operative Bank looking at the nature of activities of the assessee and since Co-operative Banks are not eligible for deduction u/s 80P on the amount invested in banks other than those mentioned u/s 80P(2)(d) of the Act, he denied the claim of deduction. I find that the Co-ordinate Bench of the Tribunal while deciding the identical issue in the case of J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk nor it can be said as a Primary Co-operative Bank within the meaning of Banking Regulation Act, 1949. Hence, the assessee being a Co-operative Credit Society is entitled for deduction u/s. 80 P(2)(a)(i) of the Act. We accordingly uphold the order of the Ld CIT(A). 10. Before me, it is assessee s contention that the facts in the year under consideration are similar to the case of Jankalyan Nagri Sahakari Pat Sanshta Ltd., (supra). The aforesaid contention of the assessee has not been controverted by Revenue. Revenue has also not placed any contrary binding decision in its support nor has placed any material to demonstrate that the order passed by the Tribunal in the case of Jankalyan Nagri Sahakari Pat Sanshta Ltd., (supra) in A.Y. 2007-08 has been set aside by higher Judicial Forum. 11. I further find that Ld.CIT(A) while upholding the order of AO, had relied on the decision of Hon ble Apex Court in the case of Citizen Co-operative Society (supra). Before me, Ld.A.R. has pointed to the difference in the definition of member in case of Andhra Pradesh Mutually Aided Co-operative Societies Act, 1995 and Maharashtra Co-operative Societies Act, 1960 and Tamilnadu Co-operativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lopment activities'. What was excluded was the 'cooperative banks' and admittedly, the assessee society is a primary agricultural cooperative credit society and therefore, would be entitled to the benefit of Section 80P of the Act. 15. Further, for the assessment year 2014-15, the decision in the case of Citizen Cooperative Society Limited was relied upon by the Revenue before the Tribunal, which, in paragraph 6.1 of its order dated 28.2.2018 for the assessment year 2014-15, extracted the operative portion of that judgment. In that case, the Hon'ble Supreme Court found that the society carried on certain activities, which were contrary to the provisions of the Andhra Pradesh Mutually Aided Cooperative Societies Act, 1995 and that they accepted deposits from third parties, who were not members in the real sense and were using those deposits to advance gold loans. Therefore, the Hon'ble Supreme Court pointed out that such an activity of the said society was that of a finance business and could not be termed as a cooperative society and that the loans, which were disbursed, were without the approval from the Registrar of Mutually Aided Cooperative Societies, Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
