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TMI Blog2022 (7) TMI 1379X X X X Extracts X X X X X X X X Extracts X X X X ..... ing license under the Banking Regulations Act, 1949? - HELD THAT:-This fact is not coming out of the order of the AO or of the CIT (Appeals). Hence, this issue is remanded back to the file of the Assessing Officer who will verify as to whether the Assessee has earned interest from the Co-operative Banks governed by the Reserve Bank of India holding banking license under the Banking Regulations Act, 1949 or as to whether it is governed by the Tamilnadu Co-operative Societies Act, 1983, the Assessing Officer will verify the facts and will decide accordingly. Thus, the appeal of the Assessee is partly allowed as indicated above. - I.T.A No. 586/CHNY/2021 - - - Dated:- 20-7-2022 - SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER For the Appellant : Ms. Vardini Karthick, Advocate For the Respondent : Mr. P. Sajit Kumar, JCIT ORDER PER MAHAVIR SINGH, VP: This appeal by the Assessee is arising out of the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi in Appeal No.CIT(A), Coimbatore 3/11150/2019-20; dated 12.10.2021. The Assessment was framed by the Income Tax Officer, Ward 1(3), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to its agricultural farmer members and supplies seeds, fertilizers and other agricultural implements to them and accepts deposits from the members and borrowings from the EDCC Bank Limited. It was pointed out by the learned Counsel for the Assessee that during the year under consideration, it is seen that there exists two categories of members in the Co-operative Society, i.e. A Category members and Associate Members who are eligible to avail loan from the Society and pay interest on the same to the Society. However, the A category members are only eligible to avail the three privileges, namely (i) to contest in the elections of the Society (ii) to vote in such elections of the Society and (iii) towards receipt of the dividend from the Society, whereas the Associate member are not eligible for the above three privileges, even though the Associate members do contribute to the income / profit of the Society by way of paying interest on the loans availed but no dividend is sanctioned. The learned Counsel for the Assessee stated that it is apparent that in the case of the Assessee, the participators to the profit are different from the contributors to that profit. 5. The Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It must also be mentioned here that unlike the Andhra Act that Citizen Co-operative Society Limited (supra) considered, nominal members are members as defined under the Kerala Act. This Court in U.P. Cooperative Cane Unions Federation Limited vs. Commissioner of Income Tax [1997] 11 SCC 287 referred to section 80P of the Income Tax Act and then held: 8. The expression members is not defined in the Act. Since a co-operative society has to be established under the provisions of the law made by the State Legislature in that regard, the expression members in section 80P(2)(a)(i) must, therefore, be construed in the context of the provisions of the law enacted by the State Legislature under which the Co-operative Society claiming exemption has been formed. It is therefore, necessary to construe the expression members in Section 80-P(2)(a)(i) of the Act in the light of the definition of that expression as contained in Section 2(n) of the Co-operative Societies Act. The said provision reads as under: 2.(n). Member means a person who joined in the application for registration of a Society or a person admitted to membership after such registration in accordance with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts that the Hon ble Madras High Court in the case of the Commissioner of Income Tax Vs. Veerakeralam Primary Agricultural Co-operative Credit Society [2016] 388 ITR 492 (Mad), after referring to the decision of the Hon ble Supreme Court in the case of Totagars Co-operative Sales Society Limited held that the benefits of deduction u/s.80P of the Act is excluded for Co-operative Banks but Credit Co-operative Societies are entitled to claim deduction u/s.80P of the Act in respect of the interest income earned from deposits kept in other Co-operative Banks. 9. We have heard the rival contentions and had gone through the facts and circumstances of the case. We have noted now that the issue has been thrashed by the decision of the Co-ordinate Bench of the Tribunal 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 Cooperative Bank Limited vs. CIT, Calicut (supra) held as under:- 30. In view of the above facts discussed and the caselaws of the Hon ble Supreme Court in the case of Mavi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. Thus, we reverse the orders of the lower authorities and allow these three appeals of the Assessee. 9.1 It is to be seen as to whether the interest earned by the Assessee is from the Co-operative Bank which is governed and registered under the Tamilnadu Co-operative Societies Act, 1983 or as to whether it is governed by the Reserve Bank of India holding banking license under the Banking Regulations Act, 1949. This fact is not coming out of the order of the Assessing Officer or of the Commissioner of Income Tax (Appeals). Hence, this issue is remanded back to the file of the Assessing Officer who will verify as to whether the Assessee has earned interest from the Co-operative Banks governed by the Reserve Bank of India holding banking license under the Banking Regulations Act, 1949 or as to whether it is governed by the Tamilnadu Co-operative Societies Act, 1983, the Assessing Officer will verify the facts and will decide accordingly. Thus, the appeal of the Assessee is partly allowed as indicated above. 10. In the result, the appeal of the Assessee in I.T.A No.:586/CHNY/2021 is partly allowed. Order pronounced in the court on 20th July, 2022 at Chennai. - - TaxT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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