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2020 (7) TMI 664 - HC - Income TaxDeduction u/s 80P - Assessee is a Cooperative Society carrying on business of Banking - whether the assessee was entitled to deduction under Section 80P(2)(a)(i) as the activity carried on by the assessee being a finance business, it cannot be termed as a Cooperative Society? - HELD THAT - As decided in M/S. S-1308 AMMAPET PRIMARY AGRICULTURAL COOPERATIVE BANK LTD. 2019 (1) TMI 116 - MADRAS HIGH COURT definitions of the expressions 'members' and 'associate member' under the TNCS Act and 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 AO 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. We do not find any good ground to entertain these appeals. - Decided in favour of the assessee.
Issues:
Interpretation of Section 80P of the Income Tax Act, 1961 for deduction eligibility. Analysis: The High Court of Madras heard appeals filed by the assessee challenging the Income Tax Appellate Tribunal's order regarding the entitlement to deduction under Section 80P of the Income Tax Act, 1961 for the assessment year 2011-12. The substantial question of law revolved around whether the appellant was entitled to the deduction under Section 80P. The court considered the case of a Cooperative Society engaged in banking activities to determine eligibility for the deduction. The court referred to a similar case decided by the Division Bench of the same court, where it was held that an 'associate member' is also considered a 'member' as per the Cooperative Societies Act. The court emphasized that for a cooperative society to qualify for relief under Section 80P, it must be engaged in providing credit facilities to its members. The court highlighted the importance of meeting the description of a society providing credit facilities to members to avail of the benefits under Section 80P. Additionally, the court discussed the insertion of Sub-Section (4) to Section 80P by the Finance Act, 2006, which clarified that the deduction would not be admissible to a cooperative bank. However, primary agricultural credit societies or primary cooperative agriculture and rural development banks would still be eligible for the deduction. The court reiterated the definitions of 'members' and 'associate members' under the Tamil Nadu Cooperative Societies Act and emphasized that the Assessing Officer erred in not granting relief to the assessee society, as confirmed by the CIT (A) and the Tribunal. In conclusion, the court dismissed the tax case appeals, stating that the substantial questions of law were answered against the Revenue. The court found the judgment applicable to the present case and allowed the Tax Case Appeals, answering the Substantial Questions of Law in favor of the assessee.
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