9911796707
TMI Blog2017 (8) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... have gone through the copy of the challans and find that the payment of appeal fee was made on 12.11.2016. Therefore, we accept the contentions of the assessee and condone the delay of 9 days in filing of the appeal before us. 3. The assessee is aggrieved by the order of the CIT (A) in confirming the disallowance of deduction claimed u/s 80P of the I.T. Act of Rs. 2,08,70,799. 4. Brief facts of the case are that the assessee, a cooperative society deriving income from the activity of providing credit facilities to the members/nominal members, filed its return of income for the relevant A.Y. During the assessment proceedings u/s 143(3) of the Act, the AO observed that the assessee has admitted nominal members in violation of the rules of the A.P. Cooperative Societies Act, 1964 and further by accepting the deposits from the nominal members, but not allowing any loans to these people, there is no co-operative spirit followed by the assessee. He therefore, disallowed the claim of deduction u/s 80P of the Act and brought the entire amount to tax. Aggrieved, the assessee preferred an appeal before the CIT (A) who dismissed the same and further aggrieved, the assessee is in appeal befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... op. Credit Society Ltd (cited Supra) and at Para 4 to 11, the Coordinate Bench of this Tribunal held as under: "4. The learned Commissioner of Income-tax (Appeals) having noticed that the assessee is registered under APMACS Act and bye laws permit acceptance of deposits from the non-members also did not find any merit in the Assessing Officer's contentions. Since mobilisation of funds is permitted under section 14(2) of APMACS Act, the Commissioner of Income-tax (Appeals) was of the opinion that mobilising funds from outsiders is not a violation of the provisions of governing Act i.e., APMACS Act. Even otherwise, the learned Commissioner of Income-tax (Appeals) held that the acceptance of deposits from non-members cannot said to disqualify the assessee from the benefits of section 80P. Since section 80P(2)(a)(i) specifies only that the 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. The learned Commissioner of Income-tax (Appeals) also held that the principle of mutuality relied on by the Assessing Officer is not relevant to the facts of the assessee&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... qualify for deduction under section 80P(2)(d)." 5. As can be seen from the above, the ground No. 1 is misplaced. The assessee-society is clearly a co-operative society and the Assessing Officer herself has stated that the assessee is a co-operative society, but violated the provisions of the Co-operative Societies Act. Therefore, ground No. 1 in our view is misconceived. 6. Ground No. 2 is also not maintainable as there is no restriction of getting any deposits from outsiders, leave alone from nominal members and associate members. As rightly pointed out by the learned Commissioner of Income-tax (Appeals), the source of funds for doing the business is not a criteria. What is required to be examined by the Assessing Officer is whether the deduction under section 80P(2)(a)(i) is from the profits and gains of providing credit facilities to its members. To that extent the Assessing Officer can examine the assessee's transactions. Just because the assessee has deposits from non-members, it does not prevent being a cooperative society nor it prevents claiming deduction under section 80P(2)(a)(i), if it is otherwise eligible on the said incomes. 7. Ground No. 3 raised on prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iety. Section 80P(2)(d) is applicable to the assessee-society in respect of incomes by way of interest or dividends received by the co-operative society from its investments with any other co-operative society. Therefore, in the case of the assessee-society, sub-section (4) is not applicable and deduction under section 80P(2)(d) is certainly eligible to the assessee. In the assessment of a co-operative bank, the incomes may not be exempt after April 1, 2007 by virtue of sub-section (4), but the assessee is not a co-operative bank. Therefore, the Revenue ground is not only illogical but also not supported by the facts of the case. Moreover as seen, the recommendation made by the Assessing Officer to the learned Commissioner of Income-tax in their internal correspondence is extracted as a ground. This also indicates non-application of mind either by the Assessing Officer or by higher authority like Commissioner of Income-tax. This sorry state of affairs should come to an end and Officers should act responsibly while preferring second appeal on the orders of the senior officer like the learned Commissioner of Income-tax (Appeals). The Revenue's appeal is dismissed". 8. In view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss, by virtue of which distinction between members and non-members was not considered material and their equal treatment as far as business of banking is concerned was accepted. However, as rightly pointed out by the learned Commissioner of Income-tax (Appeals), the assessee is not involved in business of banking and has only involved in providing credit facilities to the members of the society. 11. In view of this it is to be examined whether there are incomes from the credit facilities provided to non-members i.e., nominal/associate members. If so, the assessee is not eligible for deduction on those profits. In the case of Advocates Mutually Aided Co-operative Society, (supra) it was noticed that the said cooperative society was claiming only proportionate deduction under section 80P excluding the transactions with the non-members. We did not find any such working in this case. Since the Commissioners of Income-tax (Appeals) took open themselves to quantify section 80P, we are not sure whether, having given a finding that nominal/associate members are not members of the society, the incomes from them are excluded while calculating deduction under section 80P(2)(a)(i)". 8. As ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
