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2014 (6) TMI 427 - AT - Income TaxDenial of claim of deduction u/s 80P of the Act Held that - CIT(A) was of the view that the assessee-society is not a co-operative bank, therefore, the provisions of section 80(P)(4) are not attracted CIT(A) has denied the deduction on the ground that the assessee has extended credit facilities to Class-B Members, who are not regular Members of the Society and thus the assessee is not eligible for claiming deduction u/s.80P(2)(a)(i) and (iv) - Member includes Associate Member - The reference of class B Members by CIT(A) is with respect to Associate Members - the authorities under the Act cannot go beyond their jurisdiction and make classification within a classification of members to deny the benefit of deduction. Relying upon M/s. SL(SPL) 151, Karkudalpatty Primary Agricultural Co-operative Credit Society Ltd. Versus The Income Tax Officer 2014 (5) TMI 556 - ITAT CHENNAI - the nominal members or non-voting members are themselves included in the definition of members , they satisfy the relevant condition imposed by the legislature u/s 80P(2)(a)(i) - thus, the assessee is eligible to claim benefit of deduction u/s 80P(2)(a)(i) & (iv) of the Act Decided in favour of Assessee.
Issues:
1. Eligibility of a primary agriculture credit co-operative society for deduction u/s.80P(2) of the Income Tax Act. 2. Interpretation of the term "Member" under the Tamil Nadu Co-operative Societies Act, 1983. 3. Classification of Members as Class-A and Class-B for claiming deduction u/s.80P. Issue 1: Eligibility for Deduction u/s.80P(2): The Appellate Tribunal ITAT Chennai heard two appeals concerning the eligibility of a primary agriculture credit co-operative society for deduction u/s.80P(2) of the Income Tax Act for AY 2007-08 & 2009-10. The Assessing Officer had disallowed the deduction, considering the society akin to commercial banking. The CIT(Appeals) upheld this decision, stating that the society provided credit facilities to non-members, thus not entitled to the deduction. The Tribunal disagreed, emphasizing the society's engagement in providing credit facilities to Members. The Tribunal referred to similar cases and held that classification of Members as Class-A and Class-B is irrelevant for claiming the deduction. Issue 2: Interpretation of "Member" under Societies Act: The Tribunal analyzed the definition of "Member" under Section 2(16) of the Tamil Nadu Co-operative Societies Act, 1983, which includes Associate Members. The CIT(Appeals) denied the deduction based on the extension of credit facilities to Class-B Members, who were not regular Members of the society. The Tribunal disagreed with this interpretation, stating that the authorities cannot make classifications within classifications of Members to deny deduction benefits. It cited previous case law and held that even nominal or non-voting Members satisfy the conditions for deduction u/s.80P(2)(a)(i). Issue 3: Classification of Members for Deduction: The Tribunal referenced a previous case where the Hon'ble Punjab & Haryana High Court ruled in favor of the assessee regarding the classification of Members for claiming the deduction. The Tribunal found the issue similar to a previous case it had adjudicated and allowed the appeals of the assessee, holding that the society is eligible for claiming the benefit of deduction u/s.80P(2)(a)(i) & (iv) of the Act. The Tribunal concluded that the society's activities aligned with the requirements for the deduction, emphasizing a liberal interpretation of the provision. In conclusion, the Appellate Tribunal ITAT Chennai allowed the appeals of the primary agriculture credit co-operative society, holding it eligible for deduction u/s.80P(2) of the Income Tax Act, emphasizing the inclusive interpretation of the term "Member" and dismissing the relevance of classification within the society for claiming the deduction.
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