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2019 (1) TMI 116 - HC - Income TaxDeduction u/s 80P(2)(a)(i) - whether activity of the appellant is that of finance business and cannot be termed as cooperative society? - assessee society is registered under the provisions of the TNCS Act - definition of the word 'members' - Held that - Definitions of the expressions 'members' and 'associate member' under the TNCS Act held that an 'associate member' is also a 'member' in terms of Section 2(16) of the TNCS Act. Furthermore, the Assessing Officer himself found that the associate members are also admitted as members of the society. In such circumstances, the Assessing Officer fell into an error in not granting any relief to the assessee society, which was rightly granted by the CIT (A) as confirmed by the Tribunal. In addition to that, the Assessing Officer has not pointed out that loans have been disbursed to all and sundry in terms of the provisions of the TNCS Act and in terms of Clause (b) to Sub-Section (4) of Section 80P of the Act, the society has an area of operation, operates within the taluk and will provide long term credit for agricultural and rural development activities as well. The CIT (A) rightly granted the relief to the assessee as confirmed by the Tribunal. - Decided against the Revenue.
Issues:
- Appeal against orders passed by the Income Tax Appellate Tribunal for assessment years 2013-14 and 2014-15 - Interpretation of Section 80P(2)(a)(i) and Section 80P(2)(d) of the Income Tax Act - Classification of members in a cooperative society - Eligibility of a cooperative society for deductions under Section 80P of the Act - Application of the decision in the case of Citizen Cooperative Society Limited Analysis: 1. The appeals by the Revenue under Section 260A of the Income Tax Act were directed against the orders passed by the Income Tax Appellate Tribunal for the assessment years 2013-14 and 2014-15. The substantial questions of law framed for consideration included issues related to the Tribunal's decisions based on jurisdictional High Court's ruling versus a later Apex Court decision, the classification of activities of the appellant society, and the eligibility for deductions under Section 80P(2)(a)(i) and Section 80P(2)(d) of the Act. 2. The assessee, a primary agricultural cooperative credit society registered under the Tamil Nadu Cooperative Societies Act, filed returns for the respective assessment years claiming deductions under Section 80P(2)(a)(i) and Section 80P(2)(d) of the Act. The Assessing Officer raised concerns regarding the classification of members in the society and the eligibility of the society for the claimed deductions. 3. The Tribunal, in its orders, dismissed the appeals filed by the Revenue, upholding the decisions of the Commissioner of Income Tax (Appeals) who allowed the appeals filed by the assessee. The Revenue contended that recent decisions by the Hon'ble Supreme Court favored their case, but the Court found that the society met the criteria for deductions under Section 80P of the Act. 4. The Court analyzed the definitions of 'members' and 'associate members' under the Tamil Nadu Cooperative Societies Act and concluded that the Assessing Officer erred in not granting relief to the society. It was highlighted that the society's activities aligned with the requirements for deductions under Section 80P of the Act, and the Tribunal's decision was upheld based on the society's classification and operations. 5. The Court referenced the decision in the case of Citizen Cooperative Society Limited, emphasizing that deductions under Section 80P should not be admissible to cooperative banks but would still apply to primary agricultural credit societies. The Court found that the society in question met the criteria for deductions and dismissed the tax case appeals, answering the substantial questions of law against the Revenue. 6. In conclusion, the Court upheld the Tribunal's decision, emphasizing the eligibility of the cooperative society for deductions under Section 80P of the Income Tax Act and dismissing the Revenue's appeals.
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