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TMI Blog2019 (7) TMI 1582X X X X Extracts X X X X X X X X Extracts X X X X ..... s also and thus, all the six appeals can be heard together. In view of the aforesaid submissions of both the parties, I, for the sake of convenience, proceed to dispose of the six appeals by a consolidated order but however, proceed with narrating the facts in ITA No.1431/PUN/2018 for assessment year 2015-16 in the case of Sai Prerana Gramin Bigarsheti Sah. Pat. Sanstha Maryadit. 3. The relevant facts as culled out from the material on record are as under :- Assessee is a Co-operative Society registered under Maharashtra Co-operative Credit Societies Act, 1960 and is stated to be engaged in providing credit facilities to its Members and accepts deposits from its members. Assessee filed its return of income for A.Y. 2015-16 on 29.09.2015 declaring total income at Rs.Nil after claiming deduction of Rs. 18,38,878/- u/s 80P of the Act. The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order dt.29.12.2017 and the claim of deduction u/s 80P of the Act was denied to the assessee and the total income was thus determined at Rs. 18,38,878/-. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who vide order dt.01.06.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived interest at Rs. 37,652/-. AO also noticed that assessee had invested surplus funds with PDCC Banks and other Banks and from which assessee had received interest aggregating to Rs. 12,79,098/-. AO was of the view that as per the provisions of Sec.80P(2)(d) of the Act, the assessee Society has to invest the surplus funds with Co-operative Society and not with Co-operative Banks. AO noted that no details for justification were furnished by the assessee. AO noted that though assessee had provided credit facilities to the new non-members and nominal members but had failed to submit any evidence of approval from the Managing Committee for being taken the new non-members or nominal members and had submitted only registration numbers and hence, according to AO, assessee had violated the bye-laws of the Society. AO was of the view that since the assessee had neither enrolled the new non-members or nominal members nor any activities were carried out by them thereby violated the provisions of bye-laws of the Society by accepting the deposits from nominal members and new non-members. AO thereafter concluded that assessee was acted like a regular Bank by accepting deposits from any person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an a primary agricultural credit society or a primary co-operative agricultural and rural development bank. Explanation - For the purpose of this sub-section : a. 'Co-operative bank' and 'primary agricultural credit society' shall have the meaning respectively assigned to them in Part V of the Banking Regulation Act 1949 (10 of 1949). b. 'Primary Co-operative agricultural 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". 6.1 Subsequent to the introduction of Sec.80P(4), controversy arose as to whether all the credit cooperative societies fall within the definition of cooperative bank mentioned in sec.80P(4). This issue was examined by the various Tribunals in the country and also by the constitutional courts. 6.1.1 In the case of CIT Vs. Jafar Momin Vikas Co-op. Credit Society Ltd. reported in [2014] 49 Taxmann.com 571 (Guj.), the High Court of Gujarat held in its order dtd.15/1/2014 that Sec.80P(4) will not apply to the assessee which is not a co-operative bank and in ruling so that it relied on the clarification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to any class of persons or people from any specified area. As brought by the AO, the appellant has been admitting new members who are in need of loans. Thus, the activity of the appellant is more in the nature of business of finance. The Supreme Court in the case of Citizen Co-operative Society cited above, on similar grounds held that such societies would not be entitled to deduction u/s.80P(2)(a)(i) on the ground that it is not involved in co-operative activities. The borrowers and the depositors are quite distinct. As the facts of the appellant case are similar to that of the case decided by the Supreme Court, the decision of Supreme Court is also applicable to the appellant. Therefore, the action of the AO in disallowing the deduction u/s.80P(2)(a) is upheld. 7.1 As the society has been held to be not involved in co-operative activity, the deduction u/s.80P itself would not be applicable to the appellant. Therefore the claim of deduction u/s.80P(2)(d) would also not be available to the appellant." Aggrieved by the order of Ld.CIT(A), assessee is now in appeal. 8. Before me, Ld.A.R. reiterated the submissions made before AO and Ld.CIT(A). Before me Ld.A.R. reiterated the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er member. He further submitted that the other reason for denying the claim of deduction u/s 80P was that since the assessee has deposited surplus funds with Co-operative Credit Society, it is not eligible for deduction. He submitted that the Co-ordinate Bench of the Tribunal on identical issue in the case of ITO Vs. Jankalyan Nagri Sahakari Pat Sanshta Ltd., (ITA No.598/PN/2011 order dt.26.06.2012) has decided the issue in favour of the assessee. He placed on record the copy of the aforesaid decision. He therefore submitted that following the decision of Co-ordinate Bench of the Tribunal in the case of Jankalyan Nagri Sahakari Pat Sanshta Ltd., (supra), the issue be decided in assessee's favour. Similar arguments were raised by other Authorized Representatives also. Ld. D.R. on the other hand, supported the order of lower authorities. 9. I have heard the rival submissions and perused the material on record. The issue in the present case is with respect to denial of claim of deduction u/s 80P of the Act. I find that AO while denying the claim of assessee had held the assessee can be treated as a Cooperative Bank looking at the nature of activities of the assessee and since Co-oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Banking Regulation Act, 1949. It is called Legislation by reference and we have to give the strict interpretation while interpreting the effect of Sub-sec. (4) to Sec. 80 P. In our opinion, Cooperative Credit Society is distinct and separate from the Co-operative Bank nor it can be said as a Primary Co-operative Bank within the meaning of Banking Regulation Act, 1949. Hence, the assessee being a Co-operative Credit Society is entitled for deduction u/s. 80 P(2)(a)(i) of the Act. We accordingly uphold the order of the Ld CIT(A)." 10. Before me, it is assessee's contention that the facts in the year under consideration are similar to the case of Jankalyan Nagri Sahakari Pat Sanshta Ltd., (supra). The aforesaid contention of the assessee has not been controverted by Revenue. Revenue has also not placed any contrary binding decision in its support nor has placed any material to demonstrate that the order passed by the Tribunal in the case of Jankalyan Nagri Sahakari Pat Sanshta Ltd., (supra) in A.Y. 2007-08 has been set aside by higher Judicial Forum. 11. I further find that Ld.CIT(A) while upholding the order of AO, had relied on the decision of Hon'ble Apex Court in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year 2007- 08, the 'primary cooperative agricultural and rural development bank' means 'a society having its area of operation confined to a taluk, the principal object of which is to provide for long term credit for agricultural and rural development activities'. What was excluded was the 'cooperative banks' and admittedly, the assessee society is aprimary agricultural cooperative credit society and therefore, would be entitled to the benefit of Section 80P of the Act. 15. Further, for the assessment year 2014-15, the decision in the case of Citizen Cooperative Society Limited was relied upon by the Revenue before the Tribunal, which, in paragraph 6.1 of its order dated 28.2.2018 for the assessment year 2014-15, extracted the operative portion of that judgment. In that case, the Hon'ble Supreme Court found that the society carried on certain activities, which were contrary to the provisions of the Andhra Pradesh Mutually Aided Cooperative Societies Act, 1995 and that they accepted deposits from third parties, who were not members in the real sense and were using those deposits to advance gold loans. Therefore, the Hon'ble Supreme Court pointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpathizer member. I therefore, following the decision of Co-ordinate Bench of the Tribunal in the case of Jankalyan Nagri Sahakari Pat Sanshta Ltd., (supra) and following the same hold that the assessee is eligible for deduction of Rs. 18,38,878/- u/s 80P(2)(d) of the Act in respect of the amount invested in PDCC i.e., Co-operative Banks and other Banks. I am further of the view that in the present case, the ratio of decision of the High Court in the case of M/s. S-1308 Ammapet Primary Agricultural Co-operative Bank Ltd. (supra) would be applicable. I therefore following the ratio of the decisions cited herein above and the decision of Hon'ble Bombay High Court hold that assessee is eligible for deduction u/s 80P of the Act. Thus, the grounds of the assessee are allowed. 11. In the result, the appeal of the assessee in ITA No.1431/PUN/2018 for A.Y. 2015-16 is allowed. 12. Now I take up the remaining appeals i.e., ITA Nos.1361, 1386,1430 & 1517/PUN/2018 for A.Y. 2015-16 and ITA No.1940/PUN/2018 for A.Y. 2014-15 filed by different assessees. 13. Before me all the A.Rs of the various have admitted that the facts of the case of assessee i.e., Sai Prerana Gramin Bigarsheti Sah. Pat. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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