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TMI Blog2024 (1) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... d the appeal of the assessee is allowed. - Shri Mahavir Singh, Vice President And Shri Manjunatha.G, Accountant Member For the Appellant : Shri. J. Prabhakar, C.A. For the Respondent : Shri. Nilay Baran Som, CIT. ORDER PER MAHAVIR SINGH, VICE PRESIDENT: This appeal filed by the assessee is directed against the Revision order passed by the Principal Commissioner of Income Tax, Chennai in Revision No.PCIT, Chennai-8/Revision-263/ 100000469495/2023 dated 30.03.2023. The assessment was framed by the Addl./Joint/Deputy/Asst. Commissioner of Income Tax/Income Tax Officer, National e-Assessment Centre, Delhi for the assessment year 2018-19 u/s. 143(3) r.w.s 143(3A) 143(3B) of the Income Tax Act, 1961 (hereinafter the Act ) vide order dated 02.03.2021. 2. The only issue in this appeal of the assessee is with regard to revision order passed by the PCIT, Chennai u/s. 263 of the Act, revising the assessment framed by the Assessing Officer u/s. 143(3) r.w.s 143(3A) 143(3B) of the Act dated 02.03.2021 on the reasoning that the Assessing Officer has erroneously allowed the deduction u/s. 80P(2)(a)(i) of the Act in respect of interest income of ₹2,34,56 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aside to the extent it relates to the issue of deduction U/s 80P on interest income earned from the Co-operative Banks. The Assessing Officer is directed to pass the order for AY 2018-19 in view of the above findings/conclusions by carrying out necessary verification after giving sufficient opportunity of being heard to the assessee. Aggrieved, now the assessee is in appeal before us. 5. We have heard rival contentions and gone through the facts and circumstances of the case. We note that revision order is restricted to claim of deduction made by the assessee and allowed by the Assessing Officer in respect of assessment order qua interest income earned from the Central Cooperative Bank Tamil Nadu State Apex Co-operative Bank amounting to ₹2,34,56,365/-. We note that there is no dispute that these interest income earned from Central Co-operative Bank Tamil Nadu State Apex Co-operative Bank. Before us, ld Counsel for the assessee stated that Central Co-operative Bank Tamil Nadu State Apex Co-operative Bank are governed by Tamil Nadu State Co-operative Act and registered under Tamil Nadu State Co-operative Act only. According to the Ld. Counsel for the assessee they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive 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 cooperative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. Explanation For the purposes of this sub-section --- (a) co-operative bank and primary agricultural credit society shall have the meanings 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. It is seen that the primary object of the society is to provide financial accommodation to its members to meet all the agricultural requirements and to provide credit facilities t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Cooperative Societies Act, 1983, governing the assessee-society, it is evident from the definition of 'member' u/s 2(16) that the same includes an 'associate member' recognition as per the Act. The net result is that once the 'nominal' members also enjoy statuary condition imposed by the legislature u/s 80P (2) (a) (i). We make it clear that we are dealing with the deduction provision to be interpreted liberally. In our considered opinion, the objections of the revenue that the 'members' defined in sub clause (i) of Section 80P should only include voting members would amount to a classification within classification which is beyond the purview of tax statute; unless provided specifically by the legislatur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayi 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 Co-operative Bank must be engaged in the business of Banking as defined in the Section 5(b) of the Banking Regulation Act, which means accepting, for the purpose of lending or investment of deposits of money from the public. Similarly, u/s. 22(1)(b) of the Banking Regulation Act, as applicable to Co-operative Societies, no Co-operative Society shall carry on in banking business in India, unless it is a Co-operative Bank and holds license issued on this behalf by the Reserve Bank of India. In the present case also, there is no banking activity and it is not registered as a Bank and it does not hold any license issued by the Reserve Bank of India. The Assessee b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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