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TMI Blog2019 (9) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... , Senior Standing Counsel JUDGMENT (DELIVERED BY T.S.SIVAGNANAM, J.) This appeal by the appellant/assessee filed under Section 260A of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), is directed against the order dated 27.03.2018, passed by the Income Tax Appellate Tribunal, 'C' Bench, Chennai in I.T.A.No.2607/Chny/2017 for the Assessment year 2014-15. 2.The assessee has raised the following substantial questions of law for consideration:- (i) In the facts and circumstance of the case, where the Appellant is admittedly a Primary Agricultural Co-operative Credit Society Registered under Tamil Nadu Co-operative Societies Act, Whether the Appellate Tribunal is correct in rejecting the deduction claimed by the Appellant under Section 80P (2) (a) (i) of Income Tax Act? (ii) Whether the Tribunal is correct in differentiating between the Class A Members and Class B Members for the purpose of claiming deduction under Section 80P (2) (a) (i) of Income Tax Act, in the absence of any such discrimination under the said Section 80P (2) (a) (i) of Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 sale of fertilizers (PDS) without considering the material fact that the profit in respect of the same is from the supply and purchase of fertilizers to its members. Further, the assessee referred to the communications received from the Government dated 19.2.1995, 06.11.1995 and 15.11.1995 and the copy of the circular of the Registrar of Cooperative Societies dated 21.1.1992 and also the registered By-laws of the assessee bank and in particular, By-law No.63. 9. In addition to the grounds raised before the CIT (A), written submissions were filed by the assessee wherein the assessee produced copies of sample sales bills to prove that the assessee sold fertilizers only to members and they contended that in view of the same, they are entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 appellant cannot be said to be an activity, which was not authorized to be done by the society. 16. Our view is strengthened by the decision of the Division Bench of the Bombay High Court in the case of CIT, Nasik Vs. Ahmednagar District Central Cooperative Bank Limited [reported in 2004 (1) Mh. LJ 853]. In the said case, the assessee was a cooperative bank carrying business of banking. Whole amount of profit and gains attributable to the business of banking was not included by the assessee in its income under Section 80P(1) read with Section 80P(2)(a)(i) of the IT Act. During the assessment year in question (1982-83), the assessee e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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 referred to the decision of the Hon'ble Supreme Court in the case of Citizen Cooperative Society Limited Vs. ACIT, Circle 9(1), Hyderabad [reported in (2017) 88 Taxmann.com 279]. By the said order, the review petition filed by the said society to review the judgment reported in (2017) 84 Taxmann.com 114 was rejected. 19. From the facts given in the copy of the judgment handed over to us by the learned Senior Standing Counsel for the Revenue, we find that in the decision in Citizen Cooperative Society Limited, the assessee was engaged in granting loans to general public without any approval fro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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