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TMI Blog2022 (7) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... ely in the nature of commercial banking activity and therefore hit by provisions of section 80P(4). As the issue is squarely covered and the facts are identical to the above referred case laws, respectfully following the Hon ble Supreme Court decision in the case of Mavilayi Service Cooperative Bank Limited [ 2021 (1) TMI 488 - SUPREME COURT] , Hon ble Madras High Court decision in the assessee s own case [ 2021 (1) TMI 1087 - MADRAS HIGH COURT] S-1308, Ammapet Primary Agricultural Co-operative Bank Ltd., 2015 (9) TMI 1540 - ITAT CHENNAI] and the Co-ordinate Bench decision in the case of Tamilnadu Co-operative State Agriculture and Rural Development Bank Limited [ 2022 (6) TMI 770 - ITAT CHENNAI] we dismiss the appeal of Revenue. Consequently, all the three appeals of Revenue are dismissed. - ITA Nos.:2954, 2955 & 2956/CHNY/2017, ITA Nos.:298, 299 & 300/CHNY/2021 - - - Dated:- 13-7-2022 - Shri Mahavir Singh, Vice President And Shri Manoj Kumar Aggarwal, Accountant Member For the Assessee : Shri Y. Sridhar, Advocate For the Revenue : Shri AR.V. Sreenivasan, Addl.CIT ORDER PER MAHAVIR SINGH, VICE PRESIDENT: These three appeals by the Revenue in I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce business and cannot be treated as a Co-operative society so as to be eligible for the said deduction. 8. The learned Commissioner of Income-tax (Appeals) failed to take cognizance of the latest decision of the Hon'ble Apex Court in the case of The Citizen Co-operative Limited reported in 84 taxmann.com 114(SC)(2017), wherein the facts are identical and squarely applicable to the fact of the instant case. 9. The learned Commissioner of Income-tax(Appeals) failed to note that the principles of mutuality was missing between the society and the nominal members who do not have any share in voting etc. and receipt of interest from those members will automatically be in violation of the Mutually Aided Co-operative Societies Act, 1995(MACS) under which the assessee society is formed. 2.1 Since, the facts and circumstances in all the three appeals are identical and the issue is also exactly identical, we are taking up ITA No.2954/Chny/2017 for AY 2009-10 and will decide the issue. 3. Briefly stated facts are that the assessee is a co-operative society and its main object is arranging finances to its members for development of agricultural activity, milk products, etc. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... @ Rounded of - Rs.1,79,09,230 Aggrieved, assessee preferred appeal before CIT(A). 3.1 The CIT(A) allowed the claim of assessee that the loan given to associated members, they are actual members of the society although they are not entitled to receive any dividend nor they have any voting right to participate in the general administration or to attend any meetings. They are admitted for availing loan and subsequently discharging their loan. The CIT(A) relied on the decision of ITAT, C Bench in the case of M/s.S-1308, Ammapet Primary Agricultural Co-operative Bank Ltd., in ITA No.825/Mds/2015, order dated 23.09.2015. The CIT(A) also noted that the Hon ble Madras High Court has affirmed the decision of this Tribunal in the case of M/s.S-1308, Ammapet Primary Agricultural Co-operative Bank Ltd., supra. Aggrieved, Revenue is in appeal before us. 4. Now before us, the ld.counsel for the assessee Shri S. Sridhar, Advocate appeared, on the other hand Shri AR.V. Sreenivasan, Addl.CIT argued on behalf of the Revenue. 5. We have heard rival contentions and gone through facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fically 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 Cooperative 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: 3. 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 cooperative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. Explanation For the purposes o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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, it is evident from the definition of 'me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e substantial questions of law raised in the instant appeals are answered against the Revenue. 5.1 Further, this issue is now covered by the Co-ordinate Bench decision in the case of Tamilnadu Co-operative State Agriculture and Rural Development Bank Limited, in ITA Nos.31 to 33/Chny/2021, order dated 29.04.2022, wherein we have already considered the decision of Hon ble Supreme Court in the case of Mavilayi Service Co-operative Bank Limited vs. CIT, Calicut reported in [2021] 123 Taxmann.com 161 (SC) and held as under:- 30. In view of the above facts discussed and the case-laws of the Hon ble Supreme Court in the case of Mavilayi Service Co-operative Bank Limited vs. Commissioner of Income Tax, Calicut (supra), we are of the view that the Assessee is a Co-operative Society under the name and style as Tamil Nadu Co-operative State Agricultural and Rural Development Bank Limited and it is not engaged in the banking activities. It is also clear that in view of Section 3 read with Section 56 of the Banking Regulation Act, 1949, the Assessee cannot be considered as a Primary Co-operative Bank but it is a Primary Agricultural Credit Society because Cooperative Bank must be engag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lopment Bank Limited, supra, we dismiss the appeal of Revenue. Consequently, all the three appeals of Revenue are dismissed. ITA Nos.298 to 300/CHNY/2021 6. These three appeals by the assessee for the same assessment years as we have already dealt with in the above three appeals of Revenue i.e., 2009-10, 2013-14 2014-15 are arising out of the common order of CIT(A), Salem-7 in ITA No.E13 28, 29, 30/2017-18, order dated 13.02.2019. The AO while giving appeal effect to the order of CIT(A) in CIT(A), Salem order in ITA No.111/2016-2017, 110/2016-17 147/2016-17 dt. 26.09.2017 for assessment years 2009-10, 2013-14 2014-15 respectively vide orders of even order dated 14.11.2017 have not followed the directions of CIT(A) but disallowed the claim of deduction u/s.80P(2)(a)(i) of the Act repeating the same additions which was made originally. 7. We noted that the subject matter of these three appeals by assessee for assessment years 2009-10, 2013-14 2014-15 is exactly identical to the subject matter raised by Revenue in ITA Nos.2954, 2955 2956/Chny/2017 above, wherein we have already adjudicated the issue of claim of deduction u/s.80P(2)(a)(i) of the Act. 8. We noted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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