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TMI Blog2019 (8) TMI 1269X X X X Extracts X X X X X X X X Extracts X X X X ..... URT] . Whereas in respect of the claim of Nominal Members included in the definition of Member we find support on our view rely on the decision of Trapaj Vibhageeya Khet Udyog Mal Rupantar Food Processing Sahakari Mandali Ltd. Vs. DCIT [ 2018 (8) TMI 273 - ITAT AHMEDABAD] and Prin. CIT Vs. S-1308 Ammapet Primary Agricultural Co-operative Bank Ltd. [ 2019 (1) TMI 116 - MADRAS HIGH COURT] which is covered in favour of the assessee Nominal members are also eligible for the Benefits of credit society. Accordingly we restore entire disputed issue to the file of Assessing Officer to grant the benefit to the nominal members and the assessee should be provided adequate opportunity of hearing and co-operate in submitting the information for early disposal of the case and allow the grounds of appeal of the assessee for statistical purposes. X X X X Extracts X X X X X X X X Extracts X X X X ..... the judicial decisions referred at para 8.13 of the order. But the Assessing Officer was not satisfied with the explanations and relied on the judicial decisions and finally computed the income of the society in the status of AOP declining the claim of deduction under 80P(2)(a)(i) and assessed the total income of ₹ 65,63,380 and passed order under section 143(3) of the Act Dt.22.12.2018. Aggrieved by the order, the assessee has filed an appeal in Form 35 with the CIT (Appeals). In the appellate proceedings, the assessee has filed submissions on the disputed issues supported with judicial decisions whereas CIT (Appeals) found that the Assessing Officer was correct in his action in disallowing the claims and confirmed the additions and dismissed the assessee's appeal. Aggrieved by the CIT (Appeals) order, the assessee has filed an appeal with the Tribunal. 3. At the time of hearing, the learned Authorised Representative submitted that the CIT (Appeals) has erred in confirming the denial of deduction of claim under Section 80P(2) of the Act to the assessee and the decisions relied by CIT (Appeals) are distinguishable and further submitted that the assessee society is provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income Tax Act, 1961 (in short 'the Act') on interest income earned and under section 80P(2)(d) of the Act in respect of interest received from Co-operative institutions. The Assessing Officer (AO) denied the claim of the assessee on the ground that interest income earned by making investment of surplus funds has to be assessed under the head "Income from Other Sources" and not income from business and since interest income is not assessed as business income, the claim for deduction under section 57 of the Act cannot be allowed. In upholding the above conclusions, the CIT(A), inter alia, relied on the decision of the Hon'ble Supreme Court in the case of The Totgar's Co-operative Sales Society Ltd., Vs. ITO 322 ITR 283 (SC) wherein the Hon'ble Supreme Court held that the benefit of deduction under section 80P(2)(a)(i) of the Act is only on income which is assessable under the head "Income from Business". Interest earned on investment of surplus funds not immediately required in short term deposits and securities by a Co-operative Society providing credit facilities to members or marketing agricultural produce to members is not business income but income from other sources and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability was not subject matter of the decision of the Hon'ble Karnataka High Court in the decision cited by the learned DR. To this extent the decision of the Hon'ble Karnataka High Court in the case of Tumukur Merchants Souharda Co-operative Ltd. (supra) still holds good. Hence, on this aspect, the issue should be restored back to the AO for a fresh decision after examining the facts in the light of these judgment of the Hon'ble Apex Court rendered in the case of The Totgars Co-operative Sale Society Ltd. (supra) and of Hon'ble Karnataka high Court rendered in the case of Tumukur Merchants Souharda Co-operative Ltd. (supra)." 5. Similarly, on the issue of definition of the Member where Nominal Members are also eligible for benefits. The Member defined under the co-operative society Act bye-laws includes Nominal Member. We found Ahmedabad Bench of ITAT in ITA No.1328/Ahmd/2018 for Asst. Year 2015-16 in the case of Trapaj Vibhageeya Khet Udyog Mal Rupantar Food Processing Sahakari Mandali Ltd. Vs. DCIT (supra) at para 7 has held as under : " 7. We have heard ld.DR and gone through the record. We have also gone through case laws cited both the sides before ld.CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nominal members are members as provided in the Act and that deposits received and loan advanced to the nominal cannot be treated as from non-members or from public and in the nature of banking business. That being so, then, an assessee engaged in primary agriculture activities and providing credit facilities and agriculture facilities to the farmer-members of a particular region, claim of deduction under section 80P(2) cannot be denied. It is not denied by the Revenue that the activities of the assessee society are of primary agriculture activities. Competent authority has also recognized the assessee as primary agriculture credit society. In the earlier assessment year also, Revenue has accepted this fact and allowed the claim of the assessee. Judgment of Hon'ble Supreme Court in the case of Citizens Co-operative Society Ltd. (supra) is distinguishable on facts. In that case, status of the assessee is that of co-operative bank, whereas assessee in the present case is a primary agriculture credit society and applicability of section 80P(2)(4) of the Act. Considering all these facts, we are not convinced with the reasoning and finding given by the Revenue authority in denying cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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