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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 ..... ibunal in the case of Jankalyan Nagri Sahakari Pat Sanshta Ltd., [2012 (9) TMI 288 - ITAT, PUNE] and following the same hold that the assessee is eligible for deduction of 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. [ 2019 (1) TMI 116 - MADRAS HIGH COURT ] 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. X X X X Extracts X X X X X X X X Extracts X X X X ..... al Co-operative Bank. The learned IT-Authorities ought to have appreciated that deposits were kept with co-operative banks from safety and prudence perspective. 4. Alternatively and without prejudice to Ground No. 1, 2 & 3, the learned IT Authorities erred in law and on facts by not allowing proportionate deduction u/s 80P of the ITA, 1961 to the extent of eligible income earned; against the taxation of total income of ₹ 18,38,878/-." 4. Similar grounds have been raised in the all the remaining appeals by different assessees 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. Though the grounds are worded differently but the crux of the grounds is denial of claim of deduction u/s 80P of the Act. 5. Before me, at the outset, Ld.A.R. submitted that though assessee has raised various grounds but the sole controversy is with respect to denial of claim of deduction u/s 80P of the Act. 6. During the course of assessment proceedings, AO noticed that assessee was providing credit facilities to its members and was accepting the deposits from them. AO noticed that assessee had provided credits facilities to 10 new non-members ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sec.80P(2)(d) of the Act. He noted that since the assessee had invested surplus funds with PDDC i.e., Co-operative Banks and other Banks assessee was not eligible for deduction u/s 80P(2)(d) of the Act. He accordingly denied the claim of deduction of ₹ 18,38,878/- u/s 80P of the Act. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who upheld the order of AO by observing as under : "6. The submissions have been gone through. It is seen that Sec.80P is applicable only to the assessees which are co-operative societies and which are involved in the activities mentioned in the subsection- 2(1) and (b) of sec.80P. The appellant is a co-operative society as it is registered under the Maharashtra Co-operative Societies Act, 1960 and thus falls within the definition of co-operative society mentioned in Sec.2(19) of the I.T. Act. The activity of the appellant is that of accepting deposits and providing credit facilities to its members and therefore gets covered under the clause 80P(2)(a)(i) which refers to any co-operative society engaged in carrying on the business of banking or providing credit facilities to its members. However, with the introduction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that 80P(2)(a)(i) recognizes two kinds of co-operative societies namely i) Those carrying on the business of banking and ii) those providing credit facilities to its members. It further held that in order to do the business of a cooperative bank, it is imperative to have a license from the RBI and therefore held that the business of the appellant in that case does not amount to that of a co-operative bank and held that the appellant would not come within the mischief of Sec.80P(4). 6.1.4 Considering the facts of the appellant's case, the appellant also cannot be treated as a Co-operative bank as it does not have the license from the RBI to do the business of banking. Therefore, the provisions of Sec.80P(4) would not be applicable to the appellant also. 7. In the assessment order, the AO has brought on record that the appellant has nominal members who have deposited moneys and also availed loans. The nominal members are not regular members and they are not allotted any shares of the society and thus are not entitled to any profits or assets of the society. They are not entitled to vote and also not eligible to be a member of a committee or for appointment as a representat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sympathizer member which is different in Andhra Pradesh Mutually Aided Co-operative Societies Act. He submitted that on the contrary, the Maharashtra Co-operative Societies Act with respect to the definition of 'Members' was somewhat similar to that of Tamilnadu Co-operative Societies Act, 1983. In support of his contentions, he placed on record the comparative chart of the different relevant clauses in the Acts of Societies applicable in Maharashtra, Tamilnadu and Andhra Pradesh. He further submitted that the Madras High Court in the case of PCIT Vs. M/s. S-1308 Ammapet Primary Agricultural Co-operative Bank Ltd. reported in Tax Appeal No.882 and 891 of 2018 order dated 06.12.2018 and after considering the difference in the definition of members and after considering the decision of Hon'ble Apex Court in the case of Citizen Co-operative Society (supra), has decided the issue in favour of the assessee. He also placed on record the copy of the aforesaid decision. Ld.A.R. further relying on the decision of Hon'ble Bombay High Court in the case of Jalgaon District Central Cooperative Bank Ltd., (2004) 134 Taxmann.com 1 (Bom) submitted that the Hon'ble Bombay High Court has observed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not included but its identity is kept separate by way of independent definition in view of Clause (ccii) of Sec. 5 of the Banking Regulation Act which defines what is meaning of 'Credit Co-operative Society'. On plain reading of the Banking Regulation Act, 1949, nowhere it is suggested that the term "Co-operative Bank" also includes 'Co-Operative Credit Society" also. Meaning of any term or expression is to be ascertained in the context of provisions of referred Act. As per Sub-sec. (4) of Sec. 80P of the I. T. Act, Co-operative Bank means State Co-operative Bank, a Central Co-operative Bank and a Primary Co-operative Bank. It is seen that Cooperative Bank is deprived of the benefit of the deduction u/s. 80P(2)(a)(i) of the Act. As per the interpretation given by the AO, assessee Co-Operative Credit Society partakes the character of the Primary Co-operative Bank and as the Primary Co-operative Bank is included in the definition of the Cooperative Bank and hence, is not entitled to the benefits of Sec. 80P(2)(a)(i) of I. T. Act. In our opinion, this is not the correct interpretation. It is well settled principle in the interpretation of the 'taxing provisions' that the same are to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... society is registered under the provisions of the TNCS Act. It defines the word 'members' under Section 2(16) to mean a person joining in the application for the registration of society and a person admitted to the membership after registration in accordance with the provisions of the Act, the Rules framed thereunder and the By-laws and includes an associate member. The expression 'associate member' is defined under Section 2(6) of the TNCS Act to mean a member, who possesses only such privileges and rights of a member and who is subject only to such liabilities of a member as may be specified in this Act, the Rules and the By-law. 13. Thus, the definition of the word 'members' includes an associate member and therefore, the Assessing Officer fell into an error in drawing a distinction between A Class members and B Class members. For the purpose of being entitled to a relief under Section 80P of the Act, all that is required is that the cooperative society should answer the description of a society engaged in carrying on the business of providing credit facilities to its member. Once the description is answered, then automatically, the benefit of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eding paragraphs, we have pointed out the definitions of the expressions 'members' and 'associate member' under the TNCS Act and held that an 'associate member' is also a 'member' in terms of Section 2(16) of the TNCS Act. Furthermore, the Assessing Officer himself found that the associate members are also admitted as members of the society. In such circumstances, the Assessing Officer fell into an error in not granting any relief to the assessee society, which was rightly granted by the CIT (A) as confirmed by the Tribunal. In addition to that, the Assessing Officer has not pointed out that loans have been disbursed to all and sundry in terms of the provisions of the TNCS Act and in terms of Clause (b) to Sub-Section (4) of Section 80P of the Act, the society has an area of operation, operates within the taluk and will provide long term credit for agricultural and rural development activities as well. The CIT (A) rightly granted the relief to the assessee as confirmed by the Tribunal. We do not find any good ground to entertain these appeals." I further find that Hon'ble Bombay High Court in the case of Jalgaon District Co-operative Central Coopera ..... X X X X Extracts X X X X X X X X Extracts X X X X
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