TMI Blog2022 (6) TMI 1009X X X X Extracts X X X X X X X X Extracts X X X X ..... td. [ 2016 (1) TMI 370 - MADRAS HIGH COURT] , the amended provision of section 194A w.e.f. 01.06.2015, which is held as prospective, will not apply to the present case because before us the assessment year is 2009-10. Hence, this issue of assessee s appeal is allowed. - ITA Nos. 179/CHNY/2019, 627, 628, 629 & 630/CHNY/2020 - - - Dated:- 8-6-2022 - SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER Appellant by : Shri Vasudevan, Advocate Respondent by : Shri Chinthapalli Mehar Chand,JCIT ORDER PER MAHAVIR SINGH, VP: These appeals filed by the assessee are directed against different orders of learned Commissioner of Income Tax (Appeals)- Puducherry in ITA No.32/CIT(A)-PDY/2017-18 353,355,374,375/ CIT(A)-PDY/2018-19 both dated 31.12.2018 27.02.2020. The assessments were framed by the ITO, Ward 4, Puducherry u/s.154 r.w.s. 254 of the Income Tax Act, 1961 (hereinafter the Act ), for the assessment year 2009-10 vide order dated 30.09.2017 and for the assessment years 2008-09, 2010-11, 2013-14 2014-15 u/s.143(3) r.w.s. 254 of the Act vide orders of even date 28.12.2018. 2. At the outset, it is noticed that the appeals filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the earlier Madras High Court decision and held that the distinction sought to be made by revenue between 'A' class and 'B' class members is non-existent and granted the deduction under sec.80P(2) as claimed by the assessee. 6. The CIT(A) failed to appreciate that the decision of the Supreme Court referred is factually different, in as much as, in that case, the activity of providing credit to 'B' class members was not authorised under the parent law and so the apex court held there was violation, thereby denying the claim of the deduction and hence merely following the said decision which does not apply to the facts herein is unjust and untenable in law. 7. The CIT(A) further failed to appreciate that the assessee does not possess the approval of RBI to function as a cooperative bank with core banking operations and is a cooperative society entitled to the statutory deduction. 8. The CIT(A), in any event, ought to have considered the contentions of the assessee in the proper perspective and thus accepted the claim of deduction u/s.80P(2) (a)(i) of the Act. 4. Brief facts noted by AO in his order u/s.154 r.w.s. 254 of the Act, givi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO considering the directions of JCIT u/s.144A of the Act and discussing that the assessee as a Co-operative Bank as it is carrying on the business of banking and also is a Primary Co-operative Bank as it fulfills the conditions laid down in section 56(ccv) of the Banking Regulation Act. Hence, the AO denied the claim of deduction u/s.80P(2)(a)(i) of the Act, amounting to Rs.33,46,074/-. Aggrieved against appeal effect given by AO and passing of assessment order u/s.154 r.w.s. 254 of the Act, assessee preferred appeal before CIT(A). 5. The CIT(A) noted down the decision of Hon ble Supreme Court in the case of Citizen Co-operative Bank Ltd., vs. ACIT, 397 ITR 1 (SC) for confirming the action of AO in denying the claim of deduction u/s.80P(2)(a)(i) of the Act to the assessee. Aggrieved, assessee preferred appeal before the Tribunal. 6. Now, before us the ld.counsel for the assessee only argued that the issue has been concluded by the decision of Hon ble Supreme Court in the case of The Mavilayi Service Co-operative Bank Ltd., vs. CIT, (2021) 431 ITR 1 (SC), wherein the Hon ble Supreme Court has considered the decision of Co-ordinate Bench of Supreme Court in the case of Ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which have a licence in this behalf from the RBI. Judged by this touchstone, it is clear that the impugned Full Bench judgment is wholly incorrect in its reading of Citizen Cooperative Society Ltd. (supra). Therefore, once section 80P(4) is out of harm s way, all the assessees in the present case are entitled to the benefit of the deduction contained in section 80P(2)(a)(i), notwithstanding that they may also be giving loans to their members which are not related to agriculture. Also, in case it is found that there are instances of loans being given to non members, profits attributable to such loans obviously cannot be deducted. 6.2 The Hon ble Supreme Court also considered the definition of member in the Kerala State Co-operative Bank and loan given to such nominal members and finally held that the same would qualify for the purpose of claiming deduction u/s.80P(2)(a)(i) of the Act. The Hon ble Supreme Court further held that unlike the facts in Citizen Cooperative Society Ltd., supra, the Kerala State Society Act expressly permits loans to non-members u/s.59(2) (3). It was noted that giving of loans by a primary agricultural credit society to non-members is not illegal, u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, all that is required is that the cooperative society should answer the description of a society engaged in carrying on the business of providing credit facilities to its member. Once the description is answered, then automatically, the benefit of Section 80P of the Act would stand attracted subject to the provisions contained in Sub-Section (2) of Section 80P of the Act. 14. Further, it is to be pointed out that in terms of Sub-Section (4) of Section 80P of the Act, which was inserted vide the Finance Act, 2006 with effect from 01.4.2007 i.e from the assessment year 2007-08, the primary cooperative agricultural and rural development bank means a society having its area of operation confined to a taluk, the principal object of which is to provide for long term credit for agricultural and rural development 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 Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee as confirmed by the Tribunal. We do not find any good ground to entertain these appeals. 18. Accordingly, the above tax case appeals are dismissed. The substantial questions of law framed are answered against the Revenue. 7. We noted that facts are exactly identical to recent decision delivered by Chennai Bench of ITAT in the case of TN Co-operative State Agricultural Rural Development in ITA Nos.31 to 33/Chny/2021 order dated 29.04.2022 and this issue has been dealt with after considering the recent decision of Hon ble Supreme Court in the case of The Mavilayi Service Co-operative Bank Ltd., supra. Admittedly, the assessee is a primary agricultural credit co-operative society and is governed by Tamil Nadu Co-operative Societies Act and it is carrying out its co-operative business with its members, the claim of deduction u/s.80P(2)(a)(i) of the Act cannot be denied. Hence, we reverse the orders of lower authorities and allow this issue of all five appeals of assessee. 8. The one issue remains in ITA No.179/CHNY/2019 is as regards to the order of CIT(A) confirming the action of AO in disallowing the interest paid to members of the society without deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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