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Issues:
- Interpretation of section 80P(2)(a)(i) of the Income-tax Act regarding deduction for co-operative societies providing credit facilities to members. - Determining whether a co-operative society primarily engaged in marketing activities is entitled to deduction under section 80P(2)(a)(i). - Impact of amendment to the bye law of the co-operative society on its eligibility for deduction. - Comparison of the facts and circumstances of the present case with a previous judgment involving a similar issue. Analysis: 1. Interpretation of Section 80P(2)(a)(i): The primary issue in this case revolves around the interpretation of section 80P(2)(a)(i) of the Income-tax Act, which allows deduction for co-operative societies engaged in providing credit facilities to their members. The Tribunal analyzed the legislative intent behind this provision, emphasizing that the tax relief is granted to a specific category of assessee - co-operative societies providing credit facilities. The Tribunal highlighted the distinction between a credit society and a marketing society, citing the Tamilnadu Co-operative Societies Rules, 1963, which define a credit society as primarily involved in raising funds and providing loans for production purposes. The judgment underscores that the true object of the assessee should be the provision of credit facilities to qualify for the deduction under this section. 2. Eligibility of Marketing Society for Deduction: The Tribunal examined whether a co-operative society primarily engaged in marketing activities, like the assessee in this case, is entitled to the deduction under section 80P(2)(a)(i). It was observed that the core objective of the assessee was not providing credit facilities but facilitating the marketing of products for its members. The judgment stressed that the statute requires the primary object of the society to be the provision of credit facilities, and having a secondary object of advancing loans for raw material purchase does not suffice for eligibility under this section. 3. Impact of Bye Law Amendment: The Tribunal considered the impact of an amendment to the bye law of the co-operative society, which redefined its objectives to include providing credit facilities. The assessee argued that this change made them eligible for the deduction. However, the Tribunal held that the true character of the society as a marketing entity remained unchanged, and the amendment did not alter its primary objective. The judgment emphasized that the nature and object of the society are crucial in determining eligibility for the deduction, irrespective of bye law modifications. 4. Comparison with Previous Judgment: A significant aspect of the analysis involved comparing the facts and circumstances of the present case with a previous judgment involving a similar issue. The Tribunal differentiated the current scenario from the prior case by highlighting key distinctions, such as the nature of advances made by the assessee and the absence of bye law amendments in the earlier ruling. By referencing relevant legal precedents, including the Supreme Court's decision in a similar matter, the Tribunal reinforced its conclusion that the assessee, being primarily a marketing society, was not entitled to the deduction under section 80P(2)(a)(i). In conclusion, the Tribunal allowed the appeals filed by the Revenue, overturning the CIT (Appeals) order, and held that the assessee, a marketing society, did not qualify for the deduction under section 80P(2)(a)(i) of the Income-tax Act based on the specific criteria outlined in the legislation and established legal interpretations.
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