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TMI Blog2021 (1) TMI 1087X X X X Extracts X X X X X X X X Extracts X X X X ..... or availing loan only and was also charging a higher rate of interest at the rate of 14%, is not a ground to deny the exemption granted under Section 80P (2)(a) (i) of the Act. - Decided against the Revenue. - Tax Case Appeal Nos.466, 468, 469 and 472 of 2020 - - - Dated:- 18-12-2020 - Honourable Mr. Justice T.S. Sivagnanam And Honourable Mrs. Justice V. Bhavani Subbaroyan For the Appellant : Mr.N.V.Balaji For the Respondent : Mr.M.Swaminathan COMMON JUDGMENT T.S.SIVAGNANAM, J. These appeals, at the instance of the assessee filed under Section 260A of the Income Tax Act, 1961 (the 'Act' for brevity), are directed against the orders passed by the Income Tax Appellate Tribunal, Madras 'B' Bench, Chennai in ITA No.362/Mds/2017 dated 22.09.2017; dated 22.09.2017 in CO No.46/MDS/2017 in ITA No.362/Mds/2017; dated 22.09.2017 in CO No.47/MDS/2017 in ITA No.363/Mds/2017; ITA No.363/Mds/2017 dated 22.09.2017 for the Assessment Years 2013-2014 and 2014-2015 respectively. 2. The assessee has raised the following Substantial Questions of Law for consideration: 1. Whether in facts and circumstances of the case, the Income Tax Appellate Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were involved in the running of the assessee's business and can become the members of Administrative committee, etc. Class B members are anyone other than Class A member, who had availed loans from the assessee and is necessarily enrolled as Class B member. The Class B member is not recognized by the assessee for the purpose of the records in statute. Further, the majority of jewel loan and other non-farming loan at a higher interest were given to Class B members. Therefore, the Commissioner of Income Tax (Appeal) held that the asseessees cannot claim the benefit of deduction under Section 80P (2) (a) (i) on the interest received from the Class B non-members of the assessees' society. The deduction was also denied on the ground that the non-members did not undertake any agricultural activity as required under Section 80P (4). Therefore, the Commissioner of Income Tax (Appeal) held that the assessees had not provided credit facilities to its members to assist agricultural activity and thereby confirmed the Assessment orders. But, in the present cases the Commissioner of Income Tax (Appeal) followed the decision of the Tribunal and had allowed the appeals. 4. Aggrieved b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recognised as per record and bye-laws of the assessee society, for the purpose of voting, attending the board meeting etc. Therefore, as per Section 80P (4), the benefit under Section 80P cannot be extended to any cooperative Bank other than a primary agricultural credit society. The assessee cannot be treated as a credit society for the loan advanced to non-agricultural purposes and so the assessee societies are not entitled for the benefit under Section 80P (2) (a) (i) read with 80P (4). 6. Heard Mr.J. Narayanasamy, learned Senior Standing Counsel for the appellant and perused the material available on record. 7. On perusal of the order passed by the Tribunal, it is found that the Assessing Officer while completing the assessments had denied deduction under Section 80P (2) (a) (i) of the Income Tax Act, in respect of interest income towards jewel loan and other loans, on the ground that the purpose of loan issued was for commercial activities and not for agricultural purposes. Hence, the assessees filed appeals before the Commissioner of Income Tax (Appeal), which were allowed by the Commissioner, based on the decisions of the Co-ordinate Bench of the Tribunal in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecifically by the legislature. 4. Therefore, we find that the issue raised in these appeals stands adjudicated by the Tribunal in favour of the assessee. Accordingly, we set aside the orders of the lower authorities on this point and direct the assessing authority to grant the benefit to the assessee available under Section 80P(2)(a)(i). 8. In the case of ITO Vs. M/s. Veerakeralam Primary Agricultural Co-operative Credit Society in ITA No.197/Mds/2013 dated 11.02.2014, the Tribunal dismissed the appeal of the Revenue. Against the order of the Income Tax Appellate Tribunal, the aforesaid Veerakeralam Primary Agricultural Co-operative Credit Society filed an appeal under Section 260A of the Income Tax Act, 1961, in T.C.A. Nos. 735, 755 of 2014 and 460 of 2015 before this Court. By judgment dated 05.07.2016, the appeals were dismissed, on the following reasoning: 13. Sub-section (4) of Section 80P of the Income Tax Act, 1961 is extracted below : (4) The provisions of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. Explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are of the view, that the substantial question of law framed in the instant appeals, is answered against the Revenue. The exception barred out in Section 80P (4) of the Income Tax Act, 1961, is applicable to the assessee credit society. Hence, the appeals are accordingly dismissed. 9. In the instant cases, while allowing the appeals filed by the assessee, the Commissioner of Income Tax (Appeal), had relied upon, the following portion of the decision of the Tribunal arrived in ITA No.292/Chny/2014:- 7. We have heard both parties and gone through the case file. As stated in the preceding paragraphs, the CIT (A) has proceeded to enhance the assessment (supra) only on the ground that the assessee's credit and various other loan, facilities have been allowed to be availed by 'B' class 'nominal' members whose liability is limited, at the best; to the extent of loan repayable instead of 'A' class members who have voting rights and dividend claim, and also that the latter members are jointly and severely liable. In this backdrop, when we peruse the relevant provisions of the State Co-operative Societies Act, 1983, governing the assessee-society, i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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