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TMI Blog2015 (5) TMI 751X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer can examine the assessee's transactions. Just because assessee has deposits from Non Members, it does not prevent being a co-operative society nor it prevents claiming deduction u/s.80P(2)(a)(i), if it is otherwise eligible on the said incomes. In view of this, while accepting in principle that assessee is eligible for deduction u/s.80P(2)(a)(i) and 80P(2)(d), quantification of income ie. income/profits and gains on credit facilities provided to Members, is restored to the file of Assessing Officer for necessary examination of the details of the transactions and quantifying the same. Therefore, while upholding the order of the CIT(A) on the principles of law, the quantification of deductions made by CIT(A) is therefore set aside and restored to the file of Assessing Officer to examine it afresh, in the light of the above observations/ directions. - Decided in favour of revenue for statistical purpose. - I.T.A Nos. 348 & 1332/HYD/2012, I.T.A. No. 136/HYD/2014 - - - Dated:- 4-3-2015 - Shri B. Ramakotaiah And Smt. Asha Vijayaraghavan JJ. For the Appellant : Shri Rama Krishna Bandi, DR For the Respondent : Shri P. Prasad, AR ORDER P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of APMACS Act, CIT(A) was of the opinion that mobilizing funds from outsiders is not a violation of the provisions of governing Act i.e., APMACS Act. Even otherwise, Ld.CIT(A) held that the acceptance of deposits from Non-Members cannot said to disqualify assessee from the benefits of Section 80P. Since Section 80P(2)(a)(i) specifies only that assessee should be engaged in the business of providing credit facilities to its Members; what should be the source of funds of such credit is not specified in the section. Ld.CIT(A) also held that the principle of mutuality relied on by the Assessing Officer is not relevant to the facts of the assessee's case as assessee has not claimed any exemption on account of mutuality. The Ld.CIT(A) also held that there is no bar to categorize of Members as general, nominal and associate. By virtue of Section 19(3) of the Act, Ld.CIT(A) was of the opinion that assessee has not violated the provisions of APMACS Act and also not covered by the Banking Regulation Act as assessee is not engaged in banking activity but only providing credit facilities to its Members. Analysing the issue in detail, the Ld.CIT(A) held that assessee is eligible for deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has deposits from Non Members, it does not prevent being a co-operative society nor it prevents claiming deduction u/s.80P(2)(a)(i), if it is otherwise eligible on the said incomes. 7. Ground No.3 raised on principle of mutuality is also does not apply because assessee has not claimed any exemption of income on the principle of mutuality. As far as deduction u/s.80P(2)(d) is concerned, they are eligible under the Act. Assessee can claim deduction u/s.80P(2)(d) on the deposits of money made in Regional Rural Banks, Co-operative Societies etc. as per the provisions. The restrictions placed u/s.80P(4) does not apply to the facts of the case as the said provision is applicable only in the case of incomes received by a co-operative bank and not by a co-operative society. This issue is also discussed in the coordinate bench at Hyderabad decision in the case of The Advocates Mutually Aided Coop Society, Hyderabad pronounced on 20-02-2015 as under: 22.1 The ground No.3 regarding deduction under section 80P(2)(d) is in respect of interest received from Cooperative Societies and the Cooperative Banks. We are unable to understand why the Cooperative Banks are not considered as C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 8. However, we are unable to approve the calculations resorted by the Ld.CIT(A) in quantifying and allowing the deductions. While holding that assessee has transactions with Non-Members, it was incumbent on the CIT(A) to examine whether assessee has claimed any deduction u/s.80P(2)(a)(i) on the transactions with Non-Members also. There seems to be no examination of the above aspect. 9. As can be seen from the order of the Assessing Officer, Members are allowed with admission of minimum number of shares and face value of ₹ 10/-, whereas the Nominal Members/Associate Members are allowed with a share valued at Re.1/-. Moreover, Nominal Members/Associate Members does not have any voting rights. The Ld. Assessing Officer discussed the bye laws of the society but the full text of the bye laws are not placed on record. We had an occasion to examine the bye laws of the Advocates Mutually Aided Coop Society, Hyderabad , wherein it was noticed that by law (3)(iv)(b) defines Associate Member and Nominal Member means other than shareholder of the society. Even the Ld.CIT(A) gives a finding that Associate Members and Nominal Members are not regular Members, but the deposits from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit facilities provided to Members, is restored to the file of Assessing Officer for necessary examination of the details of the transactions and quantifying the same. Therefore, while upholding the order of the CIT(A) on the principles of law, the quantification of deductions made by CIT(A) is therefore set aside and restored to the file of Assessing Officer to examine it afresh, in the light of the above observations/ directions. 12. In view of this, Revenue's appeal is treated as partly allowed for statistical purposes. AY.2010-11: 13. In this year, the Revenue has raised the following grounds: 1. The order of CIT(A)-V, Hyderabad is against facts of the case. 2. Whether the Ld.CIT(A) is correct in law in holding that the assessee is eligible for deduction u/s.80P(2)(a)(i) of the Act, in view of the clear finding of the Assessing Officer that, the assessee had violated the provisions of AP Mutually Aided Co-Operative Societies Act, 1995. 3. Whether the Ld.CIT(A) is correct in Law in holding that the society eligible for deduction u/s.80P(2)(a)(i) of the Act, observing that the section does not stipulate any condition as to what should be the source of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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