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TMI Blog2024 (5) TMI 851X X X X Extracts X X X X X X X X Extracts X X X X ..... ociety Act and involved in providing credit facilities only to members as provided in the act and Hence ought to have allowed the same. 5. The learned CIT(A), Bangalore has erred in relying on various case laws, which are not at all applicable to the Appellant's case. 6. The Appellant craves leave to add, amend or alter any of the foregoing grounds. 7. For these and any other grounds that may be urged before the Hon'ble ITAT, it is prayed that the Hon'ble ITAT may allow the appeal with cost." 2. At the outset, the Ld.AR submitted that there is delay of 2 days in filing of the present appeal. 2.1 The assessee has filed condonation petition vide affidavit dated 29.11.2023 seeking the delay to be condoned. 2.2 The assessee in the affidavit submitted as under: 2.3 The Ld.AR submitted that in view of the above, the assessee could not file the appeal before this Tribunal well in time and by the time the appeal papers were prepared for filing, there arose delay of about 2 days in filing these present appeal before this Tribunal. The reason for the delay in filing the present appeal was due to reason beyond the control of the assessee. He thus prayed for the delay to be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delay caused in filing the present appeal. Accordingly, the delay of two days in filing the present appeal stands condoned. 3. Brief facts of the case are as under: 3.1 The assessee is a Primary Agriculture Co-operative society, engaged in the business of acceptance of deposits from members, lending loans, providing banking facility in rural village. For the A.Y.2016-17, assessee society has filed its Return of Income on 23.09.2016 declaring Total Income of Rs. 71,330/- after claiming deduction of Rs. 52,39,262/- u/s. 80P of the Income Tax Act. The Return of Income was processed u/s. 143(1) of the Act on 06.10.2016. 3.2 During the year under scrutiny, the Ld.AO observed that the assessee had earned Rs. 22,87,757/- as interest and Rs. 3,33,116/- as dividend on investment in South Canara District Co-op. Bank. Assessee society has claimed deduction u/s. 80P of the Income Tax Act on the interest and dividend earned through investments in South Canara District Co-op. Bank of Rs. 26,20,873/-(Rs. 22,87,757/- + Rs. 3,33,116/-). The assessee had claimed that, as the society is engaged in the business of providing credit facilities to its members, the whole of the amount of profits and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the orders passed by authorities below. We have perused the submissions advanced by both sides in the light of records placed before us. 6. We note that the disallowance of Rs. 26,18,389/- has been made in the hands of the assessee as assessee was also having nominal members from whom deposits were taken and credit facilities were provided. In respect of associate/nominal members, Hon'ble Supreme Court in the case of Mavilayi Service Cooperative Bank Ltd. v. CIT reported in (2021) 123 taxmann.com 161 (SC) has held that the expression "Members" is not defined in the Income-tax Act. Hence, it is necessary to construe the expression "Members" in section 80P(2)(a)(i) of the Act in the light of definition of that expression as contained in the concerned co- operative societies Act. In view of this, the facts are to be examined in the light of principles laid down by the Hon'ble Supreme Court in Mavilayi Service Cooperative Bank Ltd. (supra). The ratio laid down by Hon'ble Supreme Court is as under: "39. The above material would clearly indicate that the limited object of Section 80P(4) is to exclude co-operative banks that function at par with other commercial banks, i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. A deduction that is given without any reference to any restriction or limitation cannot be restricted or limited by implication, as is sought to be done by the Revenue in the present case by adding the world "agriculture" into Section 80P(2)(a)(i) when it is not there. Further, Section 80P(4) is to be read as a proviso, which proviso now specifically excludes co- operative banks which are co-operative societies engaged in banking business, i.e. engaged in lending money to members of the public, which have a license in this behalf from the RBI. Judged by this touchstone, it is clear that the impugned Full Bench Judgement is wholly incorrect in its reading of Citizen Co-operative Society Limited (supra). Clearly, 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. 46. It must also be mentioned here ..... X X X X Extracts X X X X X X X X Extracts X X X X
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