2014 (5) TMI 1084 - AT - Income Tax

Entitlement to benefit to the assessee- societies available u/s. 80P(2)(a)(i) - Held that - This issue has been considered in M/s. SL(SPL) 151, Karkudalpatty Primary Agricultural Co-operative Credit Society Ltd. Versus The Income Tax Officer 2014 (5) TMI 556 - ITAT CHENNAI as afer perusing the relevant provisions of State Co-operative Societies Act, 1983, governing similar assessees, the Tribunal found that definition of members includes associate members , as well. The Tribunal found that such nominal members also enjoy statutory recognition as per the State Cooperative Societies Act. The Tribunal further observed that the objections of the Revenue that members defined in sub-clause (i) of section 80P(2) should only include voting members, would amount to a classification within classification which is beyond the purview of taxing statute; unless provided specifically by the legislature. Therefore, we find that the issue raised in these appeals stands adjudicated by the Tribunal in favour of the assessees. Accordingly, we set aside the orders of the lower authorities on this point and direct the assessing authority to grant the benefit to the assessee- societies available u/s. 80P(2)(a)(i). - Decided in favour of assessee

Summary

Issues:
- Denial of benefits under section 80P(2)(a)(i) of the Income Tax Act, 1961 to Co-operative Societies based on the classification of members.

Analysis:
The judgment by the Appellate Tribunal ITAT Chennai involved three appeals filed by two Co-operative Societies against the orders of the Commissioner of Income Tax (Appeals) at Salem for the assessment years 2007-2008 and 2008-2009. The common issue in all three appeals was the denial of benefits under section 80P(2)(a)(i) of the Income Tax Act, 1961. The assessees, being Primary Agricultural Credit Co-operative Societies, contended that they met the statutory requirements by providing credit facilities to their members, including 'B' class members. The lower authorities had denied the benefits by classifying 'B' class members as non-members. However, the Tribunal referred to similar cases and the State Co-operative Societies Act, 1983, and concluded that the definition of 'members' included 'associate members' as well. The Tribunal emphasized that such nominal members also had statutory recognition under the State Cooperative Societies Act, rejecting the Revenue's argument that only voting members should be considered. The Tribunal held that any further classification within the definition of 'members' was beyond the legislative purview unless explicitly provided for by the legislature.

The Tribunal's analysis led to the conclusion that the issue raised in the appeals was already adjudicated in favor of the assessees in similar cases. Therefore, the Tribunal set aside the orders of the lower authorities and directed the assessing authority to grant the benefits to the assessees under section 80P(2)(a)(i) of the Income Tax Act, 1961. Consequently, the appeals filed by the assessees were allowed, and the benefits were granted to the Co-operative Societies. The judgment was pronounced in an open court on Thursday, the 1st of May, 2014, in Chennai.