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TMI Blog2015 (9) TMI 1422X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Appellant : Shri Sanjiv Jain Shri Rakesh Sethi, C.A. For the Respondent: Shri Raj Mehra, JCIT ORDER PER LALIET KUMAR, JM This is an appeal filed by the assessee against the order of the ld. CIT(A), Ajmer dated 09-09-2013 for the assessment year 2007-08 wherein the assessee has raised solitary ground as under:- The ld. CIT(A) has erred in law as well as on facts of the case by disallowing the claim of ₹ 70,49,499/- for deduction u/s 80P(2)(a)(i) of the I.T. Act, 1961. 2.1 The present appeal is in second round of the litigation of the assessee before us. In the first round of litigation, the Tribunal vide its order dated 23-03-2012 in ITA No. 764/JP/2011 had restored the matter to the file of the AO with following directions. Next, we consider the assessee s case from the stand point of it falling within the two excepted categories as specified in section 80P(4). For this, we reproduce here-in-below appeal its main objects (refer para 3, page 2 of the appellate order): `2. The objects for which the society is formed are as under: a) To provide finance to its members against immovable property, agricultural land, residentia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be argued that such principal business could be taken the cognizance of where it finds reflection in the assessee's charter/object clause, we do not think it to be so. This is as such an interpretation would render the words principal business occurring in the provision as superfluous and otiose, while it is well settled that each and every word of the statue has to be given its due meaning and, thus, effect. As such, though not expressly through its object clause, if it could yet be shown by the assessee that its principal business consists of providing financial accommodation to its members for agricultural purposes or for purposes connected with agricultural activities (including marketing of crops), it would in law qualify to be a PACS and, thus, exempt u/s. 80P(2)(a)(i) r/w s. 80P(4). As apparent, the purpose for which the finance is provided, as against its securitization, is only relevant, so that that the assessee would need to satisfy the taxing authority with regard thereto. Needless to add, this requirement has to be satisfied by it independently for each year, as there could well be a change in the profile of its lending activities with time. Further, we observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p of ₹ 411.56 lacs i.e. for animal farming should be considered as part of loan for purposes connected with the agricultural activities however same is not acceptable as this loan is for separate activity and not for agricultural purposes or purposes connected with the agricultural activities. These activities are separate from agricultural activities though same person may be carrying out agricultural activities as well as animal rearing. The assessee's reliance in this context on the agricultural debt and debt relief scheme 2008 is misplaced as this scheme was for various activities and not exclusively for the agricultural activities. As per Explanation to Section 80P(4), the definition of primary agricultural credit society, is to be take as per Part-V of Banking Regulation Act, 1949. The same has been reproduced in the order of Hon'ble ITAT on page 7 as under:- (cciv) primary agricultural credit society means a co-operative society,-- (1) the primary object or principal business of which is to provide financial accommodation to its members for agricultural purposes or for purposes connected with agricultural activities (including the marketing of crops ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or loans sanctioned under the guidelines will continue to be classified under the priority sector namely agricultural. Lastly, it was contended that the loan which has been advanced by the society to its members pre-dominantly for the purpose of agricultural or activities incidental to the agriculture is covered under section 80 P of the Act , therefore, the assessee society is entitled to deduction u/s 80P(4) of the Act. 2.5 Per contra, the Revenue has taken us to the order passed by the Tribunal dated 23-03-2012 and it was argued that the Tribunal in its earlier order has rejected the contention of the assessee and more particularly reliance was placed by the Revenue on para 4 of Section 80P referred herein above . It was therefore submitted that the activities of the assessee is not covered under the provisions of Section 80P(4)of the Act and is therefore not entitled to avail the deduction. It was further contended that the order passed by the Tribunal is correct and the assessee is not entitled to claim deduction u/s 80P(2)(a)(i) in view of Section 80P(4)of the Act. 2.6 We have heard the rival contentions and perused the materials available on record. Before we proceed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ependently of, or in addition to, all or any of the activities so specified), so much of its profits and gains attributable to such activities as does not exceed, (i) where such co-operative society is a consumers co-operative society, 2[one hundred] thousand rupees; and (ii) in any other case, 3[fifty] thousand rupees. Explanation : In this clause, consumers co-operative society means a society for the benefit of the consumers; (d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other cooperative society, the whole of such income; (e) in respect of any income derived by the co-operative society from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities, the whole of such income; (f) in the case of a co-operative society, not being a housing society or an urban consumers society or a society carrying on transport business or a society engaged in the performance of any manufacturing operations with the aid of power, where the gross total income does not exceed twenty thousand rupees, the amount of any income by way of interest on se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltural and Rural Development Bank means a society having its area of operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities 2.8 Thus it is clear is a society having principal object is to provide long term credit for agricultural and rural development activities is entitle to deduction under this provision of the act . 2.9 Moreover, the Hon ble Gujarat High Court in Tax Appeal No.1149 of 2013 titled as CIT-II vs. Surat Vankar Sahkari Sangh Ltd., vide order dated 17th January, 2014 held vide paragraph 7 as under: 7. From the above clarification, it can be gathered that subsection( 4) of section 80P will not apply to an assessee which is not a co-operative bank. In the case clarified by CBDT, Delhi Coop Urban Thrift Credit Society Ltd. was under consideration. Circular clarified that the said entity not being a cooperative bank, section 80P (4) of the Act would not apply to it. In view of such clarification, we cannot entertain the Revenues contention that section 80P(4) would exclude not only the co-operative banks other than those fulfilling the description contained therein ..... X X X X Extracts X X X X X X X X Extracts X X X X
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