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TMI Blog2018 (12) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... e PDS, as it is one of the allied activities of the society and is bound by the directives of the Government. Apart from that, the definition of 'credit society' is wider in import to include any activity that the Government may, by Notification, specify. As find from By-law No.12(a) that if the society carries on an activity, which is not authorized under the By-laws or with the approval of the Registrar, the society is liable to strike off the Rules and the members engaged in the same are liable to be removed. Furthermore, in terms of Bylaw No.51, the society is entitled to purchase, in bulk, articles and materials required for its members and distribute the same. Therefore, viewed from any angle, the activity done by the appellant society cannot be truncated from the activity as a credit society and we are of the considered view that the Authorities below as well as the Tribunal committed an error in rejecting the stand taken by the appellant/ assessee - AO is directed to extend the benefit of deduction under Section 80P(1) read with Section 80P(2)(a)(i) of the IT Act to the appellant/assessee. - Decided in favour of assessee. - Tax Case Appeal No.1453 of 2008 - - - Da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee also contended that they are entitled to deduction under Section 80P(2)(a) of the IT Act in respect of income from the PDS sales in terms of the provisions of Sections 2(22) and 2(13) of the TNCS Act, 1983. However, the CIT (A) rejected the contention of the assessee and confirmed the order of assessment. 6. Aggrieved by the same, the assessee again preferred an appeal to the Tribunal. The Tribunal, by the impugned order, concurred with the view taken by the CIT (A) and pointed out that nothing was placed before it to demonstrate as to how the income earned from the fair price shops could be treated as income from banking activities. Hence, the assessee is before us. 7. Thus, we are called upon to decide as to whether the assessee is entitled for deduction under Section 80P(2) of the IT Act in respect of the income earned from the sale under the PDS. 8. It is not in dispute that the fair price shops were set up pursuant to the direction issued by the Government of Tamil Nadu and communicated through the District Collector. The assessee, while filing the appeal before the CIT (A), specifically contended that the Assessing Officer erred in fixing the income from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... society are mentioned. By-law No.3 contains two Sub- Clauses namely (a), which deals with main activities of the appellant society and (b), which deals with ancillary activities of the appellant society. The activity of establishing a fair price shop clearly falls within the scope of By-law No.3(b)(2). Furthermore, the directives issued by the Government of Tamil Nadu, as communicated by the Registrar of Cooperative Societies, are binding on the appellant society. Hence, it cannot be said that the appellant carried on an activity, which was not authorized to be conducted by a credit society. 14. One more argument is advanced by the learned Senior Standing Counsel for the Revenue by contending that there were two categories of people, to whom the items under the PDS were sold. 15. We find that this argument is wholly unsubstantiated and factually incorrect. In this regard, we have earlier referred to the grounds of appeal as well as the written submissions given by the appellant/assessee before the CIT (A) wherein the appellant had produced sample sales bills to prove that they had sold fertilizers only to the members. Thus, we are fully convinced that the activity done by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by way of commission/fees from its customers, being public sector undertakings, would be exempt under Section 80P(2)(a)(i) of the IT Act. Further, the Division Bench pointed out that such view was supported by Section 6(1)(b) of the Banking Regulation Act, 1949, which stated that in addition to the business of banking, a banking company may engage itself as agent for Government or Local Authority or any other person for giving receipts and discharges that is to say for collecting electricity bills from the customers for and on behalf of the Electricity Board and other organizations. 17. The case on hand is factually a better case since the By-laws themselves provide for such an activity as an ancillary activity by the cooperative society. Furthermore, the appellant society is bound by the directives issued by the Government as well as the Registrar of Cooperative Societies. In the instant case, the Revenue has not disputed the fact that the fair price shops were opened based on the directions issued by the Government of Tamil Nadu as communicated by the Registrar of Cooperative Societies and the District Collector. 18. The learned Senior Standing Counsel for the Revenue has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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