9911796707
TMI Blog2022 (9) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... ds taken by the assessee in the present appeal are reproduced as under: "i. The order passed by the ld. AO and confirmed by the ld. CIT(A) is not as per law and facts of the case. ii. That the ld. AO and the ld. CIT(A) have erred in denying the exemption claimed under section 80P(2)(a)(i) of the Income Tax Act, 1961 available to Co-operative Societies engaged in the business of banking or providing credit facilities to its members and accepting deposits from its members. iii. That the ld. CIT(A) has erred in deciding our case on the basis of judgement of Hon'ble Supreme Court in case of the Citizen Co-operative Society (TS-326-SC-2017) dated 16th August, 2017 facts of which are totally different from our case. This difference was brou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2017 dated 08.08.2017 held that deduction claimed by the assessee is not admissible since the assessee is earning income not only from the members but from associate/nominal i.e. non-members who are general public and the concept of mutuality is not satisfied. 5. Aggrieved, the assessee went in appeal before the Ld. CIT(A) who confirmed the addition so made by the ld. AO. 6. Aggrieved, the assessee is in appeal before the Tribunal. 7. At the outset, the ld. counsel of the assessee strongly submitted that the present issue is squarely covered by the latest decision of Hon'ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. vs CIT [2021] 123 taxmann.com 161 (SC) wherein it is held that full bench judgement in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay 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." 8. Further, ld. counsel pointed out that Hon'ble Supreme Court also held in the same decision that amendment to section 80P(4) is not applicable to co-operative societies providing credit facilities to its members. Section 80P of the Act is a benevolent provision, which was acted by the Parliament in order to encourage and promote the growth of co-operative section generally in the economic life of the country and must, therefore, be read liberally and in favour of the assessee. The relevant portion extracted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to receive any dividend or having any voting right as they were admitted as associate members for availing of loan only and were also being charged a higher rate of interest. 10. The ld. Sr. DR placed reliance on the order of Ld. CIT(A) and Ld. AO. 11. We have heard rival contentions, perused the material and gone through the submission made before us. We note that the assessee is a Co-operative Credit Society registered under the Karnataka State Co-operative Societies Act, 1959 having two categories of members i.e. regular members and associate/nominal members. We also note that the objective of the society is that of providing credit facilities to its members. The assessee has claimed deduction of Rs. 21,49,603/- u/s 80P(2)(a)(i) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be free from tax notwithstanding that the conditions of another head of deduction are not satisfied; iv. This is for the reason that when the legislature wanted to restrict the deduction to a particular type of co-operative society, such as is evident from section 80P(2)(b) qua milk co-operative societies, the legislature expressly says so - which is not the case with section 80P(2)(a)(i); v. That section 80P(4) is in the nature of a proviso to the main provision contained in section 80P(1) and (2). This proviso specifically excludes only co-operative banks, which are cooperative societies who must possess a license from the RBI to do banking business. Given the fact that the assessee is not so licensed, the assessee would not fall w ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
