9911796707
TMI Blog2025 (5) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... dit Society exclusively engaged in providing credit facilities to the members and therefore, he was not justified denying the bonafide claim of deduction u/s 80P(2)(a)(i) of the Income Tax Act, 1961 and Ld. CIT(A) also erred in sustaining the disallowance made by the Assessing Officer. 2. On the facts and in the circumstances of the case and in law, the Ld. Assessing Officer has wrongly interpreted the definition of "Primary Co-operative Bank" as laid down u/s 56(ccv) of the Banking Regulation Act, 1949 and thereby treating the appellant Society as Co-operative Bank and denying the deduction u/s 80P(2)(a)(i) of the Act. 3. On the facts and in the circumstances of the case and in law, the Ld. Assessing Officer as well as CIT(A) has failed to appreciate that the appellant is a a Cooperative Credit Society and transactions of the said Society are confined to members only and therefore, the judgement of Hon'ble Bombay High Court in case of Quepem Urban Co-operative Credit Society vs ACIT (2015)120DTR(Bom.) 153 is applicable to the appellant Society. 4. On the facts and in the circumstances of the case and in law, the Ld. Assessing Officer and CIT (A) has failed to follow bind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. On the facts and in the circumstances of the case and in law, the Ld. Assessing Officer has wrongly treated the tower rent as "Income from other sources and also failed to give deduction of expenses incurred to earn the said income. Further, CIT(A) has also erred in sustaining the said disallowance. 6. On the facts and in the circumstances of the case and in law, the Ld. Assessing Officer and CIT (A) have failed to consider the expenses incurred to earn tower rent income and wrongly treated entire gross receipts as income under the head "Income from Other Sources". 3. There is a delay of 22 days noted by the registry in filing the present appeal for which petition of condonation of delay along with affidavit is placed on record. According to assessee, the delay in filing the return was due to non availability of its Authorised Representative, as he was suffering from medical issues and therefore undergone intensive medical treatment for which all clinical reports such as pathology, MRI scan of brain and angiography, X-ray, etc., followed by medication and complete rest almost for two months. Thereafter, assessee proceeded to file the present appeal along with petition for con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction shall not apply in relation to any cooperative bank other than a primary agricultural credit society or a primary cooperative agricultural and rural development bank. He thus, held that assessee is a cooperative bank other than a primary agricultural credit society or a primary cooperative agricultural and rural development bank and disallowed the claim of deduction of Rs. 91,17,627/-. Aggrieved, assessee went in appeal before the ld. CIT(A). 6. Before the ld. CIT(A), assessee submitted that ld. Assessing Officer ignored the correct factual position while referring to Part V of the Banking Regulation Act,1949 and applied the provisions of Banking Regulation Act, 1949 on the Co-operative Society. According to the assessee, in the Banking Regulation Act,1949, in Section 56, definition of Co-operative Credit Society is as under: - (ccii) co-operative credit society means a co-operative society, the primary object of which is to provide financial accommodation to its members and includes a cooperative land mortgage bank. The expression financial accommodation, used in the definition of Co-operative Credit Society is not defined in Part V of Banking Regulation Act, 1949. Howeve ..... 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). Clearly, therefore, once section 80P(4) is out of harm's way, all the assessee's 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 that unlike the Andhra Act that Citizen Cooperative Society Ltd. (supra) considered, 'nominal members' are 'members' as defined under the Kerala Act. This Court in U.P. Cooperative Cane Unions' Federation Ltd., Lucknow v. Commissioner of Income Tax, Lucknow-I (1997) 11 SCC 287 referred to section 80P of the IT Act and then held: "8. The expression "members" is not defined in the Act. Since a cooperative society has to be established under the provisions of the law made by the State Legislature in that regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before appropriate benches of the Kerala High Court for disposal on merits in the light of this judgment." 6.3. Reliance was also placed on the decision of Hon'ble Supreme Court in the case of Kerala State Agricultural and Rural Development Bank Ltd. Vs. Assessing Officer in civil appeal No.10069 of 2016 dated 14.09.2023, wherein the Hon'ble Court dealt with its earlier decision in The Mavilayi Service Cooperative Bank (supra) and analysed in depth provisions of section 80P,highlighting the distinction between eligibility for deduction and attributability of amount of profits and gains from the activity of providing credit facilities to the members as well as deriving income from investments made with other cooperative societies. The relevant observations and findings are as under: 1. "In Mavilayi Service Co-operative Bank, it has been observed that Section 80P of the Act is a beneficial provision which was enacted in order to encourage and promote the growth of the co-operative sector generally in the economic life of the country and therefore, has to be read liberally in favour of the assessee. That once the assessee is entitled to avail of deduction, the entire amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivity are also liable to be deducted, but subject to the cap specified in sub-clause (c). 8. Eighthly, sub-clause (d) states that where interest or dividend income is derived by a co-operative society from investments with other co-operative societies, the whole of such income is eligible for deduction, the object of the provision being furtherance of the cooperative movement as a whole. Conclusion: In the instant case, although the appellant society is an apex cooperative society within the meaning of the State Act, 1984, it is not a co-operative bank within the meaning of Section 5(b) read with Section 56 of the BR Act, 1949. In the result, the appeals filed by the appellant are allowed and the order(s) of the Kerala High Court and other authorities to the contrary are set aside. Consequently, we hold that the appellant is entitled to the benefit of deduction under Section 80P of the Act. The questions for consideration are answered accordingly." 6.4. Ld. CIT(A) took note of 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es provided by the above related parties on the basis the assessee has given the commission. Ld. Assessing Officer thus, disallowed and added the entire payment of alleged commission to the total income of the assessee and initiated penalty proceedings u/s. 270A separately for under reporting of income. Aggrieved, assessee went in appeal before the ld. CIT(A), who confirmed the addition by the ld. Assessing Officer, on the basis that the assessee failed to justify the transactions, since it could not furnish the copy of bills raised by the related parties in respect of commission. 11. Assessee, in its paper book submitted during the course of hearing has contended that during the year under consideration, assessee has devised a "Daily Deposit Scheme" by appointing collection agents who are also members of the Society. They collect daily saving deposit by way of door collection from the members. The daily deposit collection agents are paid collection charges at a uniform rate of 3% and w.e.f. from 01.07.2016, date of 2.5% of the deposits so collected by them and the said amount is paid on monthly basis. Copy of statement showing details of deposits collection and commission paid on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for fixing the tower, so it cannot be treated as part of building, nor could it be treated as land appurtenant, thereto. Aggrieved, assessee went in appeal before the ld. CIT(A). 14. Before, ld. CIT(A), assessee relied upon the decision of Coordinate Bench of ITAT, Mumbai in the case of Maker Tower premises Cooperative Society Ltd., Vs. ACIT, wherein it was held that rent is for space to host the antennas and not for the antennas. As long as the rent is for the space, terrace and roof space in this case and which space is certainly a part of the building, the rent can only be taxed as "Income from house property". Ld. CIT(A), after considering the submissions made by the assessee confirmed the addition made by the ld. Assessing Officer. Aggrieved, assessee is in appeal before the Tribunal. 15. In view of the above discussions, and as the rent received by the assessee for use of space, by Telecom Companies, in a building, or part thereof, owned by the assessee, in our considered view, the rent so received must be taken into account in computation of annual value to be taxed under the head "income from house property". Accordingly, as ld. Counsel for the assessee rightly contends, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
